UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of: February, 2025
Commission File Number: 001-39557
Siyata Mobile Inc.
(Translation of registrant’s name into English)
7404 King George Blvd., Suite 200, King’s
Cross
Surrey, British Columbia V3W 1N6, Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
☒ Form
20-F ☐ Form 40-F
Exhibit 99.1 to this Current Report on Form
6-K contains additional information relating to the Merger, Purchaser and the Company (in each case, as defined below), including risk
factors relating to the Merger, Purchaser and the Company, the Company’s management’s discussion and analysis of financial
condition and results of operations, a description of Company’s business, and the financial statements of the Company’s operating
subsidiary. Stockholders of Purchaser and other interested parties are encouraged to carefully read this report, including the information
attached hereto and all of the exhibits hereto, because they contain important information about the Merger, Purchaser and Company.
Entry into a Material Definitive Agreement.
Merger Agreement
On February 26, 2025, Siyata Mobile Inc., a corporation
existing under the laws of the Province of British Columbia (“Purchaser” or “Siyata”), entered into
a Merger Agreement (the “Merger Agreement”) with Core Gaming, Inc., a Delaware corporation (the “Company”
or “Core”), and Siyata Core Acquisition U.S., Inc., a Delaware Corporation and wholly-owned subsidiary of Purchaser
(“Merger Sub”). Purchaser, Merger Sub and the Company may each be referred to hereinafter as a “Party”
and, collectively, as the “Parties.”
Merger
Pursuant to the Merger Agreement, the Parties
will effect the following transactions:
| a) | The Company will merge (the “Merger”)
with and into Merger Sub, with the Company continuing as the surviving entity and a wholly owned subsidiary of Purchaser; |
| b) | In exchange for the outstanding shares of the Company’s
common stock, Purchaser will issue common shares to the shareholders of the Company based on an exchange ratio calculated as $160,000,000
divided by the volume-weighted average closing price of Purchaser’s common shares on the Nasdaq Stock Market LLC for the 10-day
trading period immediately preceding the effective time of the Merger; |
| c) | On the Closing Date (as defined in the Merger Agreement),
the Parties will cause a certificate of merger (the “Certificate of Merger”) to be executed and filed with the Secretary
of State of Delaware. The Merger will become effective on the date and time specified in the Certificate of Merger (the “Effective
Time”); and |
| d) | At the Effective Time, all assets, properties, rights, privileges,
powers, and franchises of the Company and Merger Sub will vest in the Company as the surviving corporation in the Merger. |
In the event that the number of Siyata common
shares (the “Legacy Siyata Shares”) held by Siyata’s stockholders who are Siyata’s stockholders immediately
prior to the Effective Time (the “Legacy Stockholders”) would equal, following issuance of the merger consideration
shares, less than 10% of the issued and outstanding common shares of Siyata on a fully diluted basis, then Siyata shall declare a stock
dividend on the Legacy Siyata Shares outstanding as of the record date that is one business day prior to the Effective Time, such that
the number of Siyata common shares held by the Legacy Stockholders represents at least 10% of the then-issued and outstanding common shares
of Siyata. The stock dividend shall be paid on a date that is no more than six months after the Effective Time.
Representations and Warranties; Covenants
Pursuant to the Merger Agreement, the Parties
made customary representations and warranties for transactions of this type. The covenants and agreements of Purchaser, Merger Sub and
the Company that by their terms are to be performed prior to the closing of the transactions contemplated by the Merger Agreement (the
“Closing”) or otherwise relate solely to the period prior to the Closing shall, in each case, terminate at the Closing.
The covenants and agreements of Purchaser, Merger Sub and the Company that by their terms are to be performed at or after the Closing
shall, in each case, survive until fully performed. In addition, the Parties agreed to be bound by certain covenants that are customary
for transactions of this type, including obligations of the Parties during the period between the date of the execution of the Merger
Agreement and the Closing (the “Interim Period”) to use commercially reasonable efforts to operate their respective
businesses in the ordinary course, and to refrain from taking certain specified actions without the prior written consent of the other
Party, in each case, subject to certain exceptions and qualifications.
Closing Conditions
Pursuant to the Merger Agreement, the
obligations of the Parties to effect the transactions contemplated by the Merger Agreement are subject to the satisfaction or waiver
of certain customary closing conditions of the respective Parties, including, without limitation: (i) the approval by the
Company’s stockholders of the Merger Agreement; (ii) the receipt of all necessary governmental approvals to consummate the
transactions contemplated by the Merger Agreement; (iii) the absence of any law or government order enacted or made effective after
the date of the Merger Agreement that enjoins, prohibits, or makes illegal the consummation of the transactions contemplated by the
Merger Agreement; (iv) the representations and warranties of the Parties being true and correct as of the Closing Date, subject to
the materiality standards set forth in the Merger Agreement; (v) material compliance by the Parties with their pre-closing
obligations and covenants, subject to the standards set forth in the Merger Agreement; (vi) the Parties having obtained all
necessary corporate approvals, including approval from their Board of Directors; (vii) no material adverse effect having occurred
with respect to the other Party or Parties since the date of the Merger Agreement; (viii) the delivery of required closing documents
by the Company to Purchaser, as set forth in the Merger Agreement; (ix) the absence of any event that would reasonably be expected
to cause a material adverse effect on the Parties; (x) with respect to the Company’s obligations to effect the
transactions contemplated by the Merger Agreement, Purchaser’s common shares being continuously listed on Nasdaq and no orders
from Nasdaq that could result in the delisting of Purchaser’s common shares; and (xi) the receipt of an officer’s
certificate of the other Party certifying as to satisfaction of certain of the closing conditions.
Purchaser’s Conduct of Business During the Interim Period
During the Interim Period, the conduct of Purchaser’s
business will be subject to the restrictions contained in the Merger Agreement, which include restrictions on/to: (i) amending, modifying,
or supplementing its organizational documents, except as provided for in the Merger Agreement; (ii) amending, waiving, or otherwise changing
any provision of, terminating, or compromising any material right under any Material Contract (as defined in the Merger Agreement) prior
to its scheduled expiration date; (iii) other than in the ordinary course of business, modifying, amending, or entering into any contract,
including for capital expenditures, that extends for a term of one year or more or obligates the payment by Purchaser (or any of its subsidiaries)
of more than $200,000 individually or $1,000,000 in the aggregate; (iv) making any capital expenditures in excess of $200,000 individually
or $1,000,000 in the aggregate; (v) selling, leasing, or otherwise disposing of any of its material assets, except pursuant to existing
contracts or commitments disclosed in the Merger Agreement or in the ordinary course of business; (vi) selling, abandoning, permitting
to lapse, assigning, transferring, or otherwise disposing of any intellectual property owned by Purchaser, except where such action would
not reasonably be expected to cause a material adverse effect on the Company or Purchaser; (vii) (A) paying, declaring, or setting aside
any dividends, distributions, or other amounts with respect to its capital stock or other equity interests, other than dividends or distributions
declared, set aside, or paid by any wholly-owned subsidiary; (B) paying, declaring, or promising to pay any other amount to any stockholder
or other equity holder in its capacity as such; and (C) amending any term, right, or obligation with respect to any outstanding shares
of its capital stock or other equity interests; (viii) (A) making any loan, advance, or capital contribution to, or guarantee for the
benefit of, any person or entity; (B) incurring any indebtedness other than intercompany indebtedness and trade payables in the ordinary
course of business; and (C) repaying or satisfying any indebtedness other than in accordance with its terms; (ix) suffering or incurring
any lien, other than Permitted Liens (as defined in the Merger Agreement), on its assets; (x) delaying, accelerating or cancelling, or
waiving any material right with respect to, any receivables or indebtedness owed to it, or writing off or making reserves against the
same, other than in the ordinary course of business; (xi) merging, consolidating, or entering a similar transaction with, or acquiring
all or substantially all of the assets or business of, any other person or entity, making any material investment in any person or entity,
or being acquired by any other person or entity; (xii) adopting any severance, retention, or other employee benefit plan or failing to
continue to make timely contributions to each such plan in accordance with the terms thereof; (xiii) waiving, releasing, settling, compromising,
or otherwise resolving any action, except in the ordinary course of business or where such waivers, releases, settlements, or compromises
involve only the payment of monetary damages in an amount less than $500,000 in the aggregate; (xiv) changing its principal place of business
or jurisdiction of organization; and (xv) authorizing, recommending, proposing, or announcing an intention to adopt, or otherwise effect,
a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, reorganization, or similar transaction involving
it or any of its subsidiaries.
Notwithstanding the foregoing restrictions on
Purchaser’s activities, pursuant to the Merger Agreement, during the Interim Period and prior to the Closing, Purchaser will be
permitted to continue raising capital through its existing equity line of credit and at the market agreement with Hudson Global Ventures,
LLC by way of the offer and sale of shares of Purchaser’s common shares. The amount of capital raised by Purchaser will have no
impact on the aggregate ownership percentage of Purchaser that will be owned by stockholders of Purchaser and the Company at the Effective
Time.
Post-Closing Board of Directors and Officers
of Purchaser
The board of directors of Purchaser at the Effective
Time will consist of five members, four of whom will be designated by the Company and one of whom will be Marc Seelenfreund. The officers
of Purchaser at the Effective Time will be Aitan Zacharin as the Chief Executive Officer and Gerald Bernstein as the Chief Financial Officer.
The Merger Agreement provides that, to the extent
permitted and in accordance with applicable law, none of the PTT Subsidiaries (as defined in the Merger Agreement) will have a board of
directors and Marc Seelenfreund will be the sole officer of each of the PTT Subsidiaries, with full executive power and authority to operate
the PTT Retained Business (as defined in the Merger Agreement).
Termination
The Merger Agreement may be terminated at any
time prior to the Closing: (i) by the mutual written consent of Purchaser and the Company; (ii) by either Purchaser or the Company if
the transactions have not been consummated by December 31, 2025 (the “Termination Date”), unless the failure to close
is caused by the terminating Party’s breach of the Merger Agreement; (iii) by either Purchaser or the Company if a governmental
order or law permanently prevents the consummation of the transactions contemplated by the Merger Agreement and such order or law has
become final and non-appealable; (iv) by the Company if Purchaser breaches any representations, warranties, covenants, or agreements under
the Merger Agreement that would cause a failure of certain Closing conditions, and such breach is not cured within specified timeframes,
or if Purchaser fails to close the transaction within three business days after satisfaction of all Closing conditions and notice from
the Company; (v) by Purchaser if the Company breaches its representations, warranties, covenants, or agreements under the Merger Agreement
that would cause a failure of certain Closing conditions, and such breach is not cured within specified timeframes, or if the Company
fails to close the transaction within three business days after satisfaction of all Closing conditions and notice from Purchaser.
If validly terminated the Merger Agreement becomes
void with no further force or effect, except for liability in cases of fraud, willful and material breach, or failure to perform obligations
under the Merger Agreement. In such cases, the breaching Party may be held liable for damages incurred, capped at $200,000.
The foregoing description of the Merger Agreement
does not purport to be a complete description thereof and is qualified in its entirety by reference to the full text of the Merger Agreement
filed as Exhibit 2.1 to this Form 6-K. The Merger Agreement provides investors with information regarding its terms and is not intended
to provide any other factual information about the Parties. In particular, the assertions embodied in the representations and warranties
contained in the Merger Agreement were made as of the execution date of the Merger Agreement only and are qualified by information in
confidential disclosure schedules provided by the Parties in connection with the signing of the Merger Agreement. These disclosure schedules
contain information that modifies, qualifies, and creates exceptions to the representations and warranties set forth in the Merger Agreement.
Moreover, certain representations and warranties in the Merger Agreement may have been used for the purpose of allocating risk between
the Parties rather than establishing matters of fact. Accordingly, you should not rely on the representations and warranties in the Merger
Agreement as characterizations of the actual statements of fact about the Parties. Any terms not defined herein shall have the same meaning
attributed to them in the Merger Agreement.
Fairness Opinion
The Company has obtained an independent fairness
opinion from ValueScope, LLC., a marshall + stevens company (“ValueScope”),
dated January 31, 2025. The full text of the ValueScope fairness opinion, which sets forth, among other things, the assumptions made,
matters considered, procedures followed and limitations and qualifications in connection with the ValueScope fairness opinion, is included
as Exhibit 99.2 attached to this Report. This summary of the ValueScope fairness opinion is qualified in its entirety by the full text
of the opinion and the shareholders are urged to review the ValueScope fairness opinion in its entirety.
Registration Rights Agreement
In connection with entry into the Merger Agreement,
the Company and Purchaser will enter into a registration rights agreement as a closing condition, in such form as shall be mutually agreed
to by the Parties.
Employment Agreements
In connection with entry into the Merger Agreement,
the Company and each individual as shall be mutually agreed upon by the Parties will enter into an employment agreement as a closing condition,
in such form as shall be mutually agreed to by the Parties.
Unregistered Sales of Equity Securities.
The common shares to be issued to the Core shareholders
in consideration and in connection with the Merger will not be registered under the Securities Act of 1933, as amended (the “Securities
Act”), in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder.
Regulation FD Disclosure
Attached as Exhibit 99.3 hereto is a press release
issued by the Purchaser announcing the execution of the Merger Agreement.
The information set forth under this Item 7.01,
including the exhibits attached hereto, is intended to be furnished and shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities
of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as
expressly set forth by specific reference in such filing.
Forward
Looking Statements
Certain
statements in this Report and in the exhibits hereto that are not historical facts, including, without limitation, statements relating
to the Merger, including the ability to complete, and the timing of completion of, the transactions contemplated by the Merger Agreement,
including the Parties’ ability to satisfy the conditions set forth in the Merger Agreement and the possibility of any
termination of the Merger Agreement and the assumptions upon which those statements are based, are “forward-looking statements.”
These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events
or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,”
“estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,”
“may,” “will,” “should,” “could,” “potential,” “continues,” or
similar expressions. Such statements are based upon the current beliefs and expectations of management of the Company. These statements
are subject to risks, uncertainties, changes in circumstances, assumptions and other important factors, many of which are outside management’s
control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Actual results
may differ materially from current expectations because of numerous risks and uncertainties including, among others: (1) the risk
that the proposed transaction may not be completed in a timely manner or at all; (2) the risk of legal proceedings that may be instituted
against Purchaser and/or the Company related to the Merger Agreement, which may result in significant costs of defense, indemnification
and liability; (3) the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied
or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the Merger; (4) the
occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; (5) the
effects of disruption from the transactions on Purchaser’s or the Company’s business and the fact that the announcement and
pendency of the transactions may make it more difficult to establish or maintain relationships with employees and business partners; and
(6) conditions beyond Purchaser’s and the Company’s control such as timing of holidays, weather, natural disasters, acts of
war or terrorism. The foregoing factors should be read in conjunction with the risks and cautionary statements discussed or identified
in Purchaser’s public filings with the Securities and Exchange Commission from time to time, including Purchaser’s most recent
Annual Report on Form 20-F for the year ended December 31, 2023. The Purchaser’s stockholders and other readers
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.
Purchaser undertakes no obligation to update any forward-looking statements, except as required by law.
Item 9.01 Financial Statements and Exhibits.
EXHIBIT INDEX
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
| Date: February 26, 2025 |
SIYATA MOBILE INC. |
| |
|
|
| |
By: |
/s/ Marc Seelenfreund |
| |
Name: |
Marc Seelenfreund |
| |
Title: |
Chief Executive Officer |
6
Exhibit 2.1
MERGER AGREEMENT
by and among
SIYATA MOBILE INC.,
SIYATA CORE ACQUISITION U.S., INC.,
and
CORE GAMING, INC.
*****
February 26, 2025
MERGER AGREEMENT
THIS MERGER AGREEMENT
(this “Agreement”) is made and entered into as of February 26, 2025, (the “Effective Date”)
by and among SIYATA MOBILE INC., a corporation existing under the laws of the Province of British Columbia (“Purchaser”),
SIYATA CORE ACQUISITION U.S., INC., a Delaware Corporation (“Merger Sub”), and CORE GAMING, INC.,
a Delaware corporation (the “Company”). Purchaser, Merger Sub and the Company may each be referred to hereinafter
as a “Party” and, collectively, as the “Parties.”
RECITALS
WHEREAS, the Company
owns all of the issued and outstanding ordinary shares of Newbyera Technology Limited, a Hong Kong limited liability company (the “Company
Subsidiary”);
WHEREAS, Purchaser
desires to acquire the Company and the Company Subsidiary, the Company’s operating subsidiary, via merger of the Company with and
into Merger Sub;
WHEREAS, Purchaser
is authorized to issue an unlimited number of common shares, no par value per share (the “Siyata Shares”), of
which 1,646,287 are issued and outstanding;
WHEREAS, Purchaser
desires to acquire the Company and the Company Subsidiary in exchange for the issuance of Siyata Shares, pursuant to the terms and conditions
set forth in this Agreement; and
WHEREAS, each of the
Parties intends for U.S. federal income tax purposes that (a) this Agreement constitute a “plan of reorganization” within
the meaning of Section 368 of the Code and Treasury Regulations and (b) the Merger be treated as a transaction that qualifies as a “reorganization”
within the meaning of Section 368 of the Code (clauses (a)-(b), the “Intended Tax Treatment”).
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
ARTICLE I. DEFINITIONS
Section 1.1. Definitions
As used herein, the following
terms shall have the following meanings:
“Action”
means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation,
summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Affiliate”
means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under common control
with, such specified Person, through one or more intermediaries or otherwise, and its and their respective stockholders, partners, directors,
officers, members, managers and employees, and with respect to a particular individual: (i) each other member of such individual’s
family who resides with such individual and (ii) any Person that is controlled by one or more members of such individual’s family.
“Agreement”
has the meaning specified in the preamble to this Agreement.
“Alternative Proposal”
has the meaning specified in Section 7.2(b).
“Alternative Transaction”
has the meaning specified in Section 7.2(a).
“Business”
means the business of the Company as conducted through the Company Subsidiary immediately prior to the Closing Date.
“Business Day”
means a day other than Saturday, Sunday or any day on which banks located in New York are authorized or obligated to close.
“Buyback Agreement”
has the meaning specified in Section 4.1(b).
“Certificate of
Merger” has the meaning specified in Section 2.1(b).
“Certificates”
has the meaning specified in Section 3.1(a).
“Closing”
means the closing of the transactions contemplated hereby.
“Closing Date”
means the date on which the Closing occurs.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Confidential
Information” has the meaning specified in Section 7.6.
“Consideration”
has the meaning specified in Section 3.1(a).
“Contracts”
means any contracts, agreements, subcontracts, leases, notes, indentures, commitments, memoranda of understanding and purchase orders,
whether written or oral, whether implied or express, and each amendment, supplement, or modification (whether written or oral) in respect
of any of the foregoing, in each case as currently in effect.
“Company”
has the meaning specified in the preamble to this Agreement.
“Company Disclosure
Schedule” has the meaning specified in the introductory paragraph of Article IV.
“Company Intellectual
Property” has the meaning specified in Section 4.19.
“Company Material
Adverse Effect” means any effect, change, event, occurrence, statement of facts or development that is, or is reasonably
likely to be, individually or in the aggregate, materially adverse with respect to the Business, the assets, financial condition, results
of operations or prospects of the Company, or the right or ability of the Company to consummate any of the transactions contemplated hereby;
provided, however, that “Company Material Adverse Effect” shall not include any event, occurrence, fact, condition or change,
directly or indirectly, arising out of or attributable to: (i) general business, economic, or political conditions; (ii) conditions generally
affecting the industries in which the Company operates; (iii) any changes in financial, banking, or securities markets in general, including
any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv)
any matter disclosed in the Company Disclosure Schedule; (v) any changes in applicable Laws or accounting rules; (vi) the announcement,
pendency, or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers,
suppliers, distributors, or others having relationships with the Company; (vii) any natural or man-made disaster or acts of God; (viii)
any acts of terrorism or war (whether or not declared), sabotage, civil unrest, terrorism, curfews, public disorder, riots, the outbreak
or escalation of hostilities, geopolitical conditions, local, regional, state, national or international political conditions, or social
conditions or (ix) any epidemics, pandemics, disease outbreaks, or other public health emergencies; and the foregoing (i)-(ix) shall not
be deemed to be a Company Material Adverse Effect unless such events, changes, developments, or occurrences, taken as a whole, have a
material disproportionate effect on the Company relative to other participants in the industries in which the Company operates.
“Company Shares”
means shares of common stock, no par value per share, of the Company.
“Company Stockholder
Approval” has the meaning specified in Section 6.1(a).
“Company Stockholders”
means, collectively, the holders of Company Shares as of any determination time prior to the Effective Time.
“Company Subsidiary”
has the meaning specified in the Recitals.
“Company Subsidiary
Acquisition Documents” has the meaning specified in the preamble to ARTICLE IV.
“Company Financial
Statements” has the meaning specified in Section 4.16.
“Company License
Agreements” has the meaning specified in Section 4.19.
“DGCL”
means the General Corporation Law of the State of Delaware.
“Effective Time”
has the meaning specified in Section 2.1(b).
“Employment Agreement(s)”
has the meaning ascribed to it in Section 3.4(f).
“Employee Benefit
Plans” means each written employee benefit plan, scheme, program, policy, agreement, arrangement and contract (including,
but not limited to, any “employee benefit plan” as defined in Section 3(3) of ERISA, whether or not subject to ERISA,
and any bonus, incentive compensation, deferred compensation, profit sharing, or equity based arrangement, and any employment, termination,
retention, bonus, change in control, severance, supplemental unemployment, layoff, salary continuation, retirement, pension, health, life
insurance, disability, group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan, program, policy, arrangement or
contract and any trust, escrow or other funding arrangement related thereto which is currently or has been at any time maintained or contributed
to by either Company or any ERISA Affiliate for the benefit of any current or former partner, officer, employee or director or the dependents
thereof.
“Equity Interest”
means, with respect to any Person, any capital stock of, or other ownership, membership, partnership, voting, joint venture, equity interest,
preemptive right, stock appreciation, phantom stock, profit participation or similar rights in, such Person or any indebtedness, securities,
options, warrants, call, subscription or other rights or entitlements of, or granted by, such Person or any of its Affiliates that are
convertible into, or are exercisable or exchangeable for, or give any person any right or entitlement to acquire any such capital stock
or other ownership, partnership, voting, joint venture, equity interest, preemptive right, stock appreciation, phantom stock, profit participation
or similar rights, in all cases, whether vested or unvested, of such Person or any of its Affiliates or any similar security or right
that is derivative or provides any economic benefit based, directly or indirectly, on the value or price of any such capital stock or
other ownership, partnership, voting, joint venture, equity interest, preemptive right, stock appreciation, phantom stock, profit participation
or similar rights, in all cases, whether vested or unvested.
“Environmental
Laws” means any law, common law, ordinance, regulation or binding policy of any Governmental Authority, as well as any order,
decree, permit, judgment or injunction issued, promulgated, approved or entered thereunder, relating to the environment, health and safety,
Hazardous Materials (including the use, handling, transportation, production, disposal, discharge or storage thereof), industrial hygiene,
the environmental conditions on, under or about any real property owned, leased or operated at any time by the Company, including soil,
groundwater, and indoor and ambient air conditions or the reporting or remediation of environmental contamination. Environmental Laws
include the Clean Air Act, the Federal Water Pollution Control Act, the Oil Pollution Act, the Occupational Safety and Health Act, the
Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, state and local counterparts, in each
case as amended, and any other federal, state and local law whose purpose is to conserve or protect employee safety and health, human
health in respect to exposure to Hazardous Materials, the environment, wildlife or natural resources.
“ERISA”
means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate”
means any trade or business, whether or not incorporated, which together with the Company would be deemed a single employer within the
meaning of Section 414(b), (c) or (m) of the Code or Section 4001(b)(1) of ERISA.
“Exchange Act”
means the Securities and Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Agent”
has the meaning ascribed to it in Section 3.6(a).
“Exchange Ratio”
means the quotient obtained by dividing (i) the Merger Consideration Shares by (ii) the aggregate number of the Company Shares immediately
prior to the Effective Time, rounded up to the nearest whole Siyata Share.
“Former Parent”
has the meaning set forth in the preamble to ARTICLE IV.
“Expenses”
has the meaning specified in Section 10.10.
“GAAP”
means generally accepted accounting principles in the United States as in effect (a) with respect to financial information for periods
on or after the date hereof, as of the date hereof, and (b) with respect to financial information for periods prior to the date hereof,
as of such applicable time.
“Governmental
Authority” means any domestic or foreign national, state, multi-state or municipal or other local government, any subdivision,
agency, commission or authority thereof, exercising any executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, or any quasi-governmental or private body that is government owned or established to perform such functions.
“Governmental
Order” means any order, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental
Authority.
“Hazardous Materials”
means and includes petroleum and refined petroleum products, asbestos, polychlorinated biphenyls, and any other substance defined, designated
or classified as a hazardous waste, hazardous substance, hazardous material, pollutant, contaminant or toxic substance under, or for which
liability or standards of care are imposed by, any Environmental Law.
“Indebtedness”
means, with respect to any Person (without duplication), any obligations, contingent or otherwise, in respect of: (i) the principal amount
of any indebtedness for borrowed money outstanding, together with all prepayment premiums or penalties and other amounts with respect
to such indebtedness becoming due as a result of the transactions contemplated by this Agreement and including accrued interest and any
per diem interest accruals, (ii) the principal and interest components of capitalized lease obligations under GAAP or IFRS, as applicable,
(iii) amounts drawn (including any accrued and unpaid interest) on letters of credit, bank guarantees, bankers’ acceptances and
other similar instruments (solely to the extent such amounts have actually been drawn), (iv) the principal of and premium (if any) in
respect of obligations evidenced by bonds, debentures, notes and similar instruments, (v) the termination value of interest rate protection
agreements and currency obligation swaps, hedges or similar arrangements (without duplication of other indebtedness supported or guaranteed
thereby), (vi) the principal component of all obligations to pay the deferred and unpaid purchase price of property and equipment that
have been delivered, including “earn outs” and “seller notes,” and (vii) breakage costs, prepayment or early termination
premiums, penalties, or other fees or expenses payable as a result of the consummation of the Transactions in respect of any of the items
in the foregoing clauses (i) through (vi), and (viii) all Indebtedness of another Person referred to in clauses (i) through (vii) above
guaranteed directly or indirectly, jointly or severally.
“Intellectual
Property” means all intellectual property and industrial property rights and assets, and all rights, interests and protections
that are associated with, similar to, or required for the exercise of, any of the foregoing, however arising, pursuant to the Laws of
any jurisdiction throughout the world, whether registered or unregistered, including any and all: (i) trademarks, service marks, trade
names, brand names, logos, trade dress, design rights, and other similar designations of source, sponsorship, association, or origin,
together with the goodwill connected with the use of and symbolized by, and all registrations, applications, and renewals for, any of
the foregoing; (ii) e-mail addresses, internet domain names, whether or not trademarked, registered in any top-level domain by any authorized
private registrar or Governmental Authority, web addresses, web pages, websites and related content, accounts with Twitter, Facebook,
and other social media companies and the content found thereon and related thereto, and URLs; (iii) works of authorship, expressions,
designs, and design registrations, whether or not copyrightable, including copyrights, author, performer, moral, and neighboring rights,
and all registrations, applications for registration, and renewals of such copyrights; (iv) inventions, discoveries, trade secrets, business
and technical information, and know how, databases, data collections, and other confidential and proprietary information and all rights
therein; (v) patents (including all reissues, divisionals, provisionals, continuations, and continuations in part, re-examinations, renewals,
substitutions, and extensions thereof), patent applications, and other patent rights and any other Governmental Authority issued indicia
of invention ownership (including inventor’s certificates, petty patents and patent utility models); (vi) software and firmware,
including data files, source code, object code, application programming interfaces, architecture, files, records, schematics, computerized
databases, and other related specifications and documentation; (vii) semiconductor chips and mask works; (viii) royalties, fees, income,
payments, and other proceeds now or hereafter due or payable with respect to any and all of the foregoing; and (ix) all rights to any
Actions of any nature available to or being pursued to the extent related to the foregoing, whether accruing before, on or after the Closing
Date, including all rights to and claims for damages, restitution, and injunctive relief for infringement, dilution, misappropriation,
violation, misuse, breach, or default, with the right but no obligation to sue for such legal and equitable relief, and to collect, or
otherwise recover, any such damages.
“Intended Tax
Treatment” has the meaning specified in the Recitals.
“Interim Period”
has the meaning specified in Section 7.1(a).
“Knowledge of
the Company” means the actual and constructive knowledge of Aitan Zacharin, its Chief Executive Officer, and Xiao Ling,
its Chief Financial Officer, after reasonable inquiry of each such individual’s direct reports.
“Knowledge of
Purchaser” means the actual and constructive knowledge of Marc Seelenfreund after reasonable inquiry of each such individual’s
direct reports.
“Law”
or “Laws” means any federal, state, local, municipal, or other law, statute, legislation, constitution, principle
of common law, resolution, ordinance, code, edict, judgment, decree, proclamation, treaty, rule, regulation, ruling, or requirement issued,
enacted, adopted, passed, approved, promulgated, made, implemented, or otherwise put into effect by or under the authority of any Governmental
Authority.
“Legacy Siyata
Shares” has the meaning set forth in Section 3.2(a).
“Legacy Stockholders”
has the meaning set forth in Section 3.2(a).
“Lien”
means any claim, lien, pledge, option, right of first refusal, easement, security interest, deed of trust, mortgage, right of way, encroachment,
restrictive covenant, or other encumbrance, whether voluntarily incurred or arising by operation of law, and includes, without limitation,
any agreement to give any of the foregoing in the future, and any contingent or conditional sale agreement or other title retention agreement
or lease in the nature thereof.
“Letter of Transmittal”
has the meaning set forth in Section 3.6(b).
“Material Contract(s)”
of a Person means all Contracts to which the Person or a Subsidiary of such Person is a party (i) involving obligations (contingent or
otherwise) of, or payments to, such Person or Subsidiary in excess of $2,000,000, (ii) containing any covenant limiting the freedom of
such Person or Subsidiary to engage in any business activity or compete with any Person, and (iii) solely in the case of Purchaser, is
filed or required to be filed by Purchaser with the SEC pursuant to the Securities Act or the Exchange Act.
“Merger”
has the meaning specified in Section 2.1(a).
“Merger Consideration
Shares” has the meaning specified in Section 3.2(a).
“Merger Sub”
has the meaning specified in the preamble to this Agreement.
“Merger Sub Common
Stock” has the meaning specified in Section 5.7(c).
“MI 61-101”
means Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions of the Canadian Securities
Administrators;
“Nasdaq”
means the Nasdaq Stock Market LLC.
“Ordinary Course
of Business” means the ordinary course of conduct of a business consistent with past custom and practice of such business.
“Organizational
Documents” means with respect to any Person, the articles of incorporation, certificate of incorporation, certificate of
formation, certificate of limited partnership, bylaws, limited liability company agreement, operating agreement, partnership agreement,
stockholders’ agreement, and all other similar documents, instruments, or certificates executed, adopted, or filed in connection
with the creation, formation, or organization of such Person, including any amendments and other modifications thereto.
“Party”
and “Parties” have the meanings specified in the preamble to this Agreement.
“Permits”
has the meaning specified in Section 5.17.
“Permitted Liens”
means (i) Liens for Taxes not yet due or, if due, being contested in good faith by appropriate proceedings and, in each case, for which
specific and adequate accruals or reserves have been established in accordance with GAAP or IFRS, as applicable, (ii) mechanic’s,
materialman’s, carrier’s, repairer’s, and other similar statutory Liens arising or incurred in the Ordinary Course of
Business for sums not yet due and payable or, if due and payable, are being contested in good faith by appropriate proceedings and, in
either case, for which specific and adequate accruals or reserves have been established in accordance with GAAP or IFRS, as applicable,
(iii) non-exclusive licenses of Intellectual Property rights granted to customers in the Ordinary Course of Business, (iv) statutory Liens
of landlords and Liens of carriers imposed by applicable Law, in each case, in the Ordinary Course of Business (other than, for the avoidance
of doubt, any breach or default), (v) Liens incurred or deposits made in the Ordinary Course of Business in connection with workers’
compensation, unemployment insurance, or other types of social security, (vi) defects or imperfections of title, easements, covenants,
rights of way, restrictions, and other similar charges, defects, or encumbrances affecting title to real property that do not and would
not reasonably be expected to materially interfere with the value or occupancy of such real property or the conduct of business as currently
conducted thereon, or (vii) Liens arising pursuant to the express terms of this Agreement.
“Person”
means any individual, company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited
liability company, or government or other entity.
“PTT Minimum Cash”
has the meaning specified in Section 7.14.
“PTT Retained
Business” means: (i) those businesses operated by Purchaser prior to the Effective Date as set forth on Section 1 of
the Purchaser Disclosure Schedule, (ii) those Equity Interest or businesses acquired or established by or for Purchaser after the
Effective Date but prior to the Effective Time and (iii) any new businesses created, developed or acquired after the Effective Time
relating to the Purchaser Former Business, which shall be conducted exclusively by the PTT Subsidiaries.
“PTT Subsidiaries”
means Siyata PTT, Siyata Mobile Israel Ltd. and Signifi Mobile Inc.
“Purchaser”
has the meaning specified in the preamble to this Agreement.
“Purchaser Disclosure
Schedule” has the meaning specified in the introductory paragraph of Article V.
“Purchaser Equity”
has the meaning specified in Section 5.7(a).
“Purchaser Financial
Statements” means all of the financial statements of Purchaser included in the Purchaser SEC Reports.
“Purchaser
Former Business” means any corporation, partnership, entity, division, business unit or business (in each case, including
any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred, spun-off, split-off or
otherwise disposed of or divested (in whole or in part) to a Person or Persons other than Purchaser or the Purchaser Group or the operations,
activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part), in each case,
prior to the Effective Date.
“Purchaser Group”
means Purchaser, the PTT Retained Business and each Person that is a direct or indirect Subsidiary of Purchaser as of immediately
prior to the Effective Date, other than Merger Sub.
“Purchaser Material
Adverse Effect” means any effect, change, event, occurrence, statement of facts or development that is, or is reasonably
likely to be, individually or in the aggregate, materially adverse with respect to the assets, business, financial condition, results
of operations or prospects of Purchaser or the right or ability of Purchaser to consummate any of the transactions contemplated hereby;
provided, however, that “Purchaser Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change,
directly or indirectly, arising out of or attributable to: (i) general business, economic, or political conditions; (ii) conditions generally
affecting the industries in which Purchaser operates; (iii) any changes in financial, banking, or securities markets in general, including
any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates; (iv)
any matter disclosed in the Purchaser Disclosure Schedule; (v) any changes in applicable Laws or accounting rules; (vi) the announcement,
pendency, or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers,
suppliers, distributors, or others having relationships with Purchaser; (vii) any natural or man-made disaster or acts of God; (viii)
any acts of terrorism or war (whether or not declared), sabotage, civil unrest, terrorism, curfews, public disorder, riots, the outbreak
or escalation of hostilities, geopolitical conditions, local, regional, state, national, or international political conditions, or social
conditions; or (ix) any epidemics, pandemics, disease outbreaks, or other public health emergencies; and the foregoing (i)-(ix) shall
not be deemed to be a Purchaser Material Adverse Effect unless such events, changes, developments, or occurrences, taken as a whole, have
a material disproportionate effect on Purchaser relative to other participants in the industries in which Purchaser operates.
“Purchaser Parties”
has the meaning specified in the introductory paragraph of Article V.
“Purchaser SEC
Reports” has the meaning specified in Section 5.9(a).
“Purchaser Stockholders”
means, at any given time, the holders of Siyata Shares.
“Registration
Rights Agreement” has the meaning specified in Section 3.4(e).
“Representatives”
means a Party’s officers, directors, Affiliates, managers, consultants, employees, representatives, and agents.
“SEC”
means the U.S. Securities and Exchange Commission.
“Securities Act”
means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Siyata Shares”
has the meaning specified in the Recitals.
“Subsidiary(ies)”
means, when used with respect to any Person, any other Person that such Person directly or indirectly owns or has the power to vote or
control via contractual or other arrangements more than 50% of the voting stock or other interests the holders of which are generally
entitled to vote for the election of the board of directors or other applicable governing body of such other Person.
“Surviving Corporation”
has the meaning specified in Section 2.1(a).
“Tangible Personal
Property” has the meaning specified in Section 5.15(a).
“Tax”
or “Taxes” means (i) any and all federal, state, local, and foreign taxes, charges, fees, levies, assessments,
duties, or other amounts payable to any Governmental Authority, including: income, franchise, profits, margin, gross receipts, minimum,
alternative minimum, estimated, ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation, unemployment compensation, utility, severance, excise, stamp,
windfall profits, transfer, environmental, escheat or unclaimed property, occupation, premium, registration, and gains taxes, customs,
duties, imposts, charges, levies, or other similar assessments of any kind whatsoever, whether disputed or not, together with any interest,
penalties, and additions imposed with respect thereto and any interest in respect of such penalties or additions; (ii) any liability for
the payment of any item described in clause (i) as a result of being a member of an affiliated, consolidated, combined, unitary, or aggregate
group for any period, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar state, local, or foreign
Law; (iii) any liability for the payment of any item described in clause (i) or (ii) as a result of any express or implied obligation
to indemnify any Person or as a result of any obligations under any agreements or arrangements with any Person with respect to such item;
or (iv) any successor or transferee liability for the payment of any item described in clause (i), (ii), or (iii) of any Person, including
by reason of being a party to any merger, consolidation, conversion, or otherwise.
“Tax Return”
means any return, document, declaration, report, claim for refund, information return, or statement required to be filed with a Governmental
Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Termination Date”
has the meaning specified in Section 9.2(a).
“Transaction Litigation”
has the meaning specified in Section 7.7(c).
“Transfer Agent”
means Computershare, Inc., located at 510 Burrard Street, 2nd Floor, Vancouver, British Columbia V6C 3B9, Canada.
“Treasury Regulations”
means the interpretive treasury regulations promulgated under the Code.
Section 1.2.
Other Definitional and Interpretative Provisions
The words “hereof,”
“herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement (including
any Exhibits and Schedules annexed hereto) as a whole and not to any particular provision of this Agreement. The captions herein are included
for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections,
Exhibits and Schedules are to Articles, Sections, Exhibits, and Schedules of this Agreement unless otherwise specified. All Exhibits and
Schedules annexed hereto or referred to herein, including the Purchaser Disclosure Schedules and the Company Disclosure Schedules, are
hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or
Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall
be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes,” or
“including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,”
whether or not they are in fact followed by those words or words of like import. “Writing,” “written,” and comparable
terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. The word “will”
shall be construed to have the same meaning and effect as the word “shall.” The word “or” when used in this Agreement
is not exclusive. The phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase
shall not mean simply “if.” References to any statute, rule, regulation, law, or applicable Law shall be deemed to refer to
such statute, rule, regulation, law, or applicable Law as amended or supplemented from time to time and to any rules, regulations and
interpretations promulgated thereunder (except to the extent otherwise expressly provided herein). References to any Contract are to that
Contract as amended, modified, or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person
include the successors and permitted assigns of that Person. Whenever this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified. Except as otherwise expressly provided herein, any reference in this Agreement to
a date or time shall be deemed to be such date or time in Wilmington, Delaware. References from or through any date mean, unless otherwise
specified, from and including or through and including, respectively. References to one gender include all genders. Except as otherwise
expressly set forth herein, all amounts required to be paid hereunder shall be paid in U.S. dollars currency in the manner and at the
times set forth herein and all monetary references used herein, including references to “$” shall be to United States dollars
unless otherwise specified. The Parties have participated jointly in the negotiation and drafting of this Agreement and each has been
represented by counsel of its choosing and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any provision of this Agreement.
ARTICLE II. MERGER
Section 2.1. The
Merger
(a) Upon
the terms and conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, (i) the Company shall be
merged with and into Merger Sub (the “Merger”) and (ii) the separate corporate existence of Merger Sub shall
thereupon cease and the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”)
and become the wholly-owned subsidiary of Purchaser.
(b) On
the Closing Date, the Parties shall cause a certificate of merger, in a form reasonably satisfactory to the Company and Purchaser (the
“Certificate of Merger”), to be executed and filed with the Secretary of State of the State of Delaware. The
Merger shall become effective on the date and at the time agreed by Purchaser and the Company and specified in the Certificate of Merger
(the time the Merger becomes effective being referred to herein as the “Effective Time”).
(c) The
Merger shall have the effects set forth in Section 259 of the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all of the assets, properties, rights, privileges, powers, and franchises of the Company and Merger Sub shall vest
in the Surviving Corporation and all debts, liabilities, obligations, restrictions, disabilities, and duties of each of the Company and
Merger Sub shall become the debts, liabilities, obligations, and duties of the Surviving Corporation, in each case, in accordance with
the DGCL.
(d) At
the Effective Time, the Organizational Documents of the Company shall become the Organizational Documents of the Surviving Corporation.
(e) On
or prior to the Closing Date, Purchaser’s Board of Directors will approve a name change and file such change with the Registrar
of British Columbia.
Section 2.2. Directors
and Officers of the Surviving Corporation
(a) At
the Effective Time, the initial directors of the Surviving Corporation shall consist of 5 members, all of whom shall be designated by
the Company (one of whom shall be Aitan Zacharin), and such directors shall hold office until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation, or removal in accordance with the Surviving Corporation’s
Organizational Documents.
(b) At
the Effective Time, the initial officers of the Surviving Corporation shall consist of Aitan Zacharin as Chief Executive Officer and Secretary,
and such officers shall hold office until their respective successors are duly elected or appointed and qualified, or until their earlier
death, resignation, or removal.
Section 2.3. Directors
and Officers of Purchaser
(a) At
the Effective Time, Purchaser’s Board of Directors will consist of 5 members, four of whom shall be designated by the Company (and
one of whom shall be designated by the Company Subsidiary) and one of whom shall be Marc Seelenfreund, provided that at least three of
the four designees shall qualify as “independent directors” under Nasdaq’s listing rules.
(b) At
the Effective Time, the officers of Purchaser shall be as set forth immediately below, and such officers shall hold office until their
respective successors are duly elected or appointed and qualified, or until their earlier death, resignation, or removal:
| ● | Chief Executive Officer: Aitan Zacharin |
| ● | Chief Financial Officer: Gerald Bernstein |
Section 2.4. Directors
and Officers of the PTT Subsidiaries
(a) Provided
that applicable Law permits the same, none of the PTT Subsidiaries shall have a board of directors and each shall have Marc Seelenfreund
as its sole officer with full executive power and authority to operate the PTT Retained Business, at all times in his exclusive discretion
subject to applicable Laws and subject to the oversight obligations of the Surviving Corporation or Purchaser, as the case may be, in
accordance with applicable Law.
Section 2.5. U.S.
Tax Treatment
(a) The Parties hereby
(a) adopt this Agreement insofar as it relates to the Merger as a “plan of reorganization” within the meaning of Section
1.368-2(g) of the Treasury Regulations, (b) agree to file and retain such information as shall be required under Section 1.368-3 of the
Treasury Regulations, and (c) agree to file all Tax Returns and other informational returns on a basis consistent with such characterization.
Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the Parties acknowledge and agree that, other
than the representations set forth herein, no Party is making any representation or warranty as to the qualification of the Merger as
a reorganization under Section 368(a) of the Code or as to the effect, if any, that any transaction consummated on, after or prior to
the Effective Time has or may have on any such reorganization status. Each of the Parties acknowledges and agrees that each such Party
(i) has had the opportunity to obtain independent legal and tax advice with respect to the transactions contemplated by this Agreement
and (ii) is responsible for paying its own Taxes, including any adverse Tax consequences that may result if the Merger is determined
not to qualify as a reorganization under Section 368(a) of the Code.
ARTICLE III. EFFECT OF THE MERGER; CLOSING
Section 3.1. Effect
of the Merger on Company Shares; Capital Stock of Merger Sub
(a) At
the Effective Time, by virtue of the Merger and without any action on the part of any Party or any other Person, each Company Share (other
than the Company Shares canceled and extinguished pursuant to Section 3.1(b)) issued and outstanding as of immediately prior to
the Effective Time shall be automatically canceled and extinguished and converted into the right to receive that number of Siyata Shares
equal to the Exchange Ratio (the aggregate number of Siyata Shares to be issued pursuant to this Section 3.1(a), the “Consideration”).
From and after the Effective Time, each certificate (collectively, the “Certificates”) evidencing ownership
of Company Shares and the Company Shares held in book-entry form issued and outstanding immediately prior to the Effective Time shall
each cease to have any rights with respect to such Company Shares except as otherwise expressly provided for herein or under applicable
Law.
(b) At
the Effective Time, by virtue of the Merger and without any action on the part of any Party or any other Person, each Company Share held
immediately prior to the Effective Time by the Company as treasury stock shall be automatically canceled and extinguished, and no consideration
shall be paid with respect thereto.
(c) At
the Effective Time, by virtue of the Merger and without any action on the part of any Party or any other Person, each share of capital
stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be automatically canceled and extinguished, and
no consideration shall be paid with respect thereto.
Section 3.2. Issuance
of Siyata Shares; Calculation of Number of Merger Consideration Shares
(a) The number of Siyata Shares
constituting the Consideration (the “Merger Consideration Shares”) shall be equal the quotient of $160,000,000
divided by the volume-weighted average closing price of the Siyata Shares on Nasdaq for the 10-day trading period immediately preceding
the Effective Time. In the event that the number of Siyata Shares (the “Legacy Siyata Shares”) held by the Purchaser
Stockholders who are Purchaser Stockholders immediately prior to the Effective Time (the “Legacy Stockholders”)
would equal, following issuance of the Merger Consideration Shares, less than 10% of the issued and outstanding Siyata Shares, on a fully
diluted basis, then Purchaser shall, in compliance with and as permitted by applicable Law, declare a stock dividend on the Legacy Siyata
Shares outstanding as of the record date that is one Business Day prior to the Effective Time, such that the number of Siyata Shares held
by the Legacy Stockholders shall represent at least 10% of the then-issued and outstanding Siyata Shares. The stock dividend shall be
paid on a date that is no more than six months after the Effective Time. The Merger Consideration Shares shall be issued by Purchaser
to the Company Stockholders in reliance upon exemption from the registration requirements of the Securities Act and applicable state securities
laws. Agreed
(b) The number of Merger Consideration
Shares shall be adjusted to reflect appropriately (i) the issuance of any Siyata Shares or securities convertible into or exercisable
for Siyata Shares after the Effective Date and (ii) the effect of any stock split, reverse stock split, stock dividend, reorganization,
recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Purchaser occurring on or
after the date of this Agreement and prior to the Effective Time.
Section 3.3. Closing
In accordance with the terms
and subject to the conditions of this Agreement, the Closing will take place remotely by the exchange of counterpart signature pages via
facsimile, electronic mail or portable document format, on the date that is three Business Days after the first date on which all conditions
set forth in Article VI shall have been satisfied or waived (other than those conditions that by their terms are to be satisfied
at the Closing, but subject to the satisfaction or waiver thereof), or at such other time, date and place as may be mutually agreed in
writing by the Company and Purchaser.
Section 3.4. Deliverables
by the Company at Closing
At or prior to the Closing
(or, to the extent specifically set forth below, subsequent to Closing), the Company shall deliver or cause to be delivered or, in the
case of items referred to in sub-clauses (c) and (k), made available to Purchaser:
(a) a
counterpart signature page to this Agreement duly executed by the Company;
(b) any
share transfer ledger or similar records of the Company and, to the extent in the possession of the Company, of the Company Subsidiary;
(c) all
of the other books and records of the Company and the Company Subsidiary, including all Organizational Documents of the Company and the
Company Subsidiary;
(d) any
consents required to be obtained by the Company in connection with the transactions contemplated by this Agreement in a form reasonably
acceptable to Purchaser, duly executed by the Person from whom consent is required;
(e) duly
executed counterpart signature pages to a registration rights agreement, dated as of the Closing Date, by and between Purchaser and the
Company Stockholders, in such form as shall be mutually agreed to by the Parties in good faith (the “Registration Rights Agreement”),
with respect to each Company Stockholder;
(f) a
duly executed counterpart signature page to an employment agreement, dated as of the Closing Date, by and between Purchaser and each individual
as shall be mutually agreed upon by the Parties, substantially in such form as shall also be mutually agreed to by the Parties, in each
instance in good faith and providing for each such individual’s employment with the Purchaser or the Company, as applicable, following
the Closing (each, an “Employment Agreement” and, collectively, the “Employment Agreements”);
(g) a
certificate of an officer of the Company, in form and substance reasonably satisfactory to Purchaser, attaching copies of the (i) Certificate
of Incorporation of the Company, as amended to date, certified by the Secretary of State of the State of Delaware, (ii) the bylaws of
the Company, (iii) resolutions of the Board of Directors of the Company approving this Agreement and declaring its advisability, and approving
the consummation of the transactions contemplated hereby, and (iv) written evidence of the Company Stockholder Approval, and certifying
that each of the documents attached pursuant to clauses (i)-(iv) is true and complete;
(h) a
certificate of good standing and status as to the Company from the Secretary of State of the State of Delaware, dated within 10 days of
the Closing Date, certifying that the Company is in good standing in the State of Delaware and by the Secretary of State (or equivalent
Governmental Authority) of each other jurisdiction where the Company is qualified to do business, if any;
(i) true
and complete copies of the audited consolidated balance sheets of the Company as of December 31, 2024 and 2023, and the related statements
of operations and comprehensive income, changes in stockholders’ equity and cash flows for the fiscal years ended December 31, 2024
and 2023, and the notes thereto; and
(j) such
other documents or instruments as Purchaser may reasonably request and are reasonable and necessary to consummate the transactions contemplated
by this Agreement.
Section 3.5. Deliverables
by Purchaser at Closing
At or prior to the Closing,
Purchaser shall deliver, or cause to be delivered, to the Company:
(a) a
statement issued by the Transfer Agent evidencing the issuance of the Siyata Shares constituting the Consideration in the name of the
holders of the Company Shares, as of immediately prior to the Effective Time;
(b) counterpart
signature pages to this Agreement duly executed by (i) an authorized officer of Purchaser and (ii) an authorized officer of Merger Sub;
(c) a
counterpart signature page to the Registration Rights Agreement, duly executed by an authorized officer of Purchaser;
(d) a
certificate of an officer of Purchaser, in form and substance reasonably satisfactory to the Company, attaching copies of the resolutions
of the Board of Directors of Purchaser and/or an independent committee thereof evidencing the approvals required under applicable Law
in order for Purchaser to be able to enter into this Agreement and to consummate the transactions contemplated hereby, and certifying
that each of the documents attached thereto is true and complete;
(e) certificate
of good standing for Purchaser and each operational Subsidiary of Purchaser;
(f) copies
of the written resignations of all of the directors and officers of Purchaser effective as of the Effective Time, other than those directors
and officers to remain in such positions with Purchaser after the Effective Time pursuant to Section 2.3(a) or Section 2.3(b);
and
(g) such
other documents or instruments as the Company may reasonably require and are reasonable and necessary to consummate the transactions contemplated
by this Agreement.
Section 3.6. Exchange
Procedures
(a) As
promptly as reasonably practicable following the date of this Agreement, but in no event later than 10 Business Days prior to the Closing
Date, Purchaser shall appoint the Transfer Agent (or its applicable Affiliate thereof) as the exchange agent (the “Exchange
Agent”) and enter into an exchange agent agreement with the Exchange Agent for the purpose of exchanging Certificates, if
any, representing Company Shares and each Company Share held in book-entry form on the stock transfer books of the Company immediately
prior to the Effective Time, in either case, for the portion of the Consideration, at the time and subject to the contingencies set forth
in Section 6.1, Section 6.2 and Section 6.3, issuable in respect of such Company Shares pursuant to Section 3.1(a)
and on the terms and subject to the other conditions set forth in this Agreement. Notwithstanding the foregoing or anything to the contrary
herein, in the event that the Transfer Agent is unable or unwilling to serve as the Exchange Agent, then Purchaser and the Company shall,
as promptly as reasonably practicable thereafter, but in no event later than the Closing Date, mutually agree upon an exchange agent (in
either case, such agreement not to be unreasonably withheld, conditioned or delayed), Purchaser shall appoint and enter into an exchange
agent agreement with such exchange agent, who shall for all purposes under this Agreement constitute the Exchange Agent.
(b) As
soon as practicable following the Effective Time, and in any event within two Business Days following the Effective Time, Purchaser shall
cause the Exchange Agent to deliver to each Company Stockholder, as of immediately prior to the Effective Time, a letter of transmittal
and instructions for use in exchanging such Company Stockholder’s Company Shares for such Company Stockholder’s applicable
portion of the Siyata Shares constituting the Consideration, which shall be in form and contain provisions that Purchaser may specify
prior to the Closing and that are reasonably acceptable to the Company (a “Letter of Transmittal”), and promptly
following receipt of a Company Stockholder’s properly completed and executed Letter of Transmittal, deliver such Company Stockholder’s
applicable portion of the Siyata Shares constituting the Consideration to such Company Stockholder.
(c) At
the Effective Time, Purchaser shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the Company Stockholders
and for exchange in accordance with this Section 3.6 through the Exchange Agent, evidence of Siyata Shares in book-entry form representing
the Consideration issuable pursuant to Section 3.1(a) in exchange for the Company Shares outstanding immediately prior to the Effective
Time.
(d) Each
Company Stockholder whose Company Shares have been converted into a portion of the Consideration pursuant to Section 3.1(a) shall
receive the portion of the Siyata Shares constituting the Consideration to which he, she or it is entitled on the date provided in Section
3.6(e) upon (i) in the case of Company Shares held in certificated form, surrender of a Certificate (or affidavit of loss in lieu
thereof in the form required by the Letter of Transmittal), together with the delivery of a properly completed and duly executed Letter
of Transmittal (including, for the avoidance of doubt, any documents or agreements required by the Letter of Transmittal), to the Exchange
Agent, or (ii) in the case of Company Shares held in book-entry form, delivery of a properly completed and duly executed Letter of Transmittal
(including, for the avoidance of doubt, any documents or agreements required by the Letter of Transmittal), to the Exchange Agent.
(e) If
a properly completed and duly executed Letter of Transmittal, together with any Certificates (or affidavit of loss in lieu thereof in
the form required by the Letter of Transmittal), if any, is delivered to the Exchange Agent in accordance with Section 3.6(d) (i)
at least one Business Day prior to the Closing Date, then Purchaser and the Company shall take all necessary actions to reflect the issuance
of the applicable portion of the Siyata Shares constituting the Consideration to the applicable Company Stockholder in book-entry form
on the Closing Date, or (ii) less than one Business Day prior to the Closing Date, then Purchaser and the Company (or the Surviving Corporation)
shall take all necessary actions to reflect the issuance of the applicable portion of the Siyata Shares constituting the Consideration
to the applicable Company Stockholder in book-entry form within two Business Days after such delivery.
(f) If
any portion of the Siyata Shares constituting the Consideration is to be issued to a Person other than the Company Stockholder in whose
name the surrendered Certificate or the transferred Company Share in book-entry form is registered, the issuance of the applicable portion
of the Siyata Shares constituting the Consideration shall not be reflected unless (i) either such Certificate shall be properly endorsed
or shall otherwise be in proper form for transfer or such Company Share in book-entry form shall be properly transferred, and (ii) the
Person requesting such consideration pay to the Exchange Agent any transfer Taxes required as a result of such consideration being issued
to a Person other than the registered holder of such Certificate or Company Share in book-entry form or establish to the satisfaction
of the Exchange Agent that such transfer Taxes have been paid or are not payable.
(g) No
interest will be paid or accrued on the Consideration (or any portion thereof). From and after the Effective Time, until the applicable
portion of the Siyata Shares constituting the Consideration is obtained by the applicable Company Stockholders in accordance with this
Section 3.6, each Company Share (other than, for the avoidance of doubt, the Company Shares canceled and extinguished pursuant
to Section 3.1(b)) shall solely represent the right to receive the Siyata Shares which such Company Share is entitled to receive
pursuant to this Agreement.
(h) At
the Effective Time, the stock transfer books of the Company shall be closed and there shall be no transfers of Company Shares that were
outstanding immediately prior to the Effective Time.
Section 3.7. Payment
of Expenses
(a) No
later than five Business Days prior to the Closing Date, the Company shall provide to Purchaser a written report setting forth a list
of all of the Company’s Expenses (together with written invoices and wire transfer instructions for the payment or reimbursement
to the Company thereof) incurred to date, which shall be updated by the Company as of, and provided to Purchaser on, the Closing Date.
(b) At Closing, Purchaser
shall pay or cause to be paid including, if applicable, by reimbursement of such Expenses previously paid by the Company, by wire transfer
of immediately available funds all of the Company’s Expenses as set forth in the report provided to it by the Company pursuant
to Section 3.7(a).
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
All representations and warranties
set forth herein are made subject to the exceptions noted in the schedules delivered to Purchaser concurrently herewith and identified
by the Parties as the “Company Disclosure Schedule.” No specific representation or warranty will limit
the generality or applicability of a more general representation or warranty. Each individual section of the Company Disclosure Schedule
will be numbered to correspond to the paragraph of the section of this Agreement to which it relates. All representations and warranties
with respect to the Company Subsidiary are based solely on representations made to the Company by the former parent and owner of the Company
Subsidiary (“Former Parent”) and the Company Subsidiary (i) in that certain Share Exchange Agreement dated June
7, 2024, by and among the Company, Former Parent and the Company Subsidiary, pursuant to which the Company acquired all of the outstanding
capital shares of the Company Subsidiary, and (ii) as of August 2, 2024, pursuant to a certificate delivered at closing of the transactions
contemplated by such Share Exchange Agreement (the “Company Subsidiary Acquisition Documents”).
As qualified as set forth
immediately above, the Company hereby makes the following representations and warranties to Purchaser as of the date of this Agreement
(or in the case of representations and warranties that speak as of an earlier specified date, as of such specified date):
Section 4.1. Organization,
Standing, and Corporate Power of the Company
(a) The
Company is duly organized, validly existing and in good standing as a corporation under the laws of the State of Delaware. The Company
is duly qualified or licensed as a foreign corporation or other organization to do business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good standing that would not individually or in the aggregate
be expected to have a Company Material Adverse Effect.
(b) The
Company was formed on May 10, 2024, for the purpose of acquiring all of the issued and outstanding Equity Interests of the Company Subsidiary
and consummating the transactions contemplated by this Agreement. Since inception, the Company has conducted no operations other than
through the Company Subsidiary subsequent to its acquisition of all of the issued and outstanding Equity Interests of the Company Subsidiary.
The Company owns no property or assets other than 10,000 ordinary shares of the Company Subsidiary, which ordinary shares may be repurchased
by Former Parent upon the terms and conditions, and under the circumstances, set forth in that certain Buyback Agreement, dated June 7,
2024, by and between the Company and Former Parent, as further described in Section 4.1 of the Company Disclosure Schedule (the
“Buyback Agreement”).
(c) True
and complete copies of the Organizational Documents, all equity records, and all other records of the Company have been delivered or otherwise
made available to Purchaser. All of the books and records of the Company and its Organizational Documents have been maintained in the
Ordinary Course of Business and fairly reflect, in all material respects, all transactions of the Company. The Company is not in violation,
in any material respect, of its Organizational Documents.
(d) Section
4.1 of the Company Disclosure Schedule sets forth a list of all directors and officers of the Company and the Company Subsidiary.
Section 4.2. Due
Authorization
The Company has all requisite
power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Agreement and the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company, and no other action on
the part of the Company is necessary. This Agreement has been duly and validly executed and delivered by the Company and, assuming the
due authorization, execution, and delivery by each of the other Parties, is the legal, valid, and binding obligation of the Company, enforceable
against it in accordance with its terms, except as the enforceability may be limited by (a) applicable bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance, or similar laws in effect that affect the enforcement of creditors’ rights generally or (b)
general principles of equity.
Section 4.3. No Conflict
The execution and delivery
of this Agreement by the Company, and the consummation of the transactions contemplated hereby, do not and will not violate any provision
of, or result in the breach of, any applicable Law, rule or regulation of any Governmental Authority, the Organizational Documents of
the Company or the Company Subsidiary, or any agreement, indenture or other instrument to which the Company is a party or by which the
Company may be bound, or of any Governmental Order applicable to the Company, or terminate or result in the termination of any such agreement,
indenture, or instrument, or result in the creation of any Lien upon any of the properties or assets of the Company or constitute an event
that, after notice or lapse of time or both, would result in any such violation, breach, acceleration, termination or creation of a Lien
or result in a violation or revocation of any required license, permit or approval from any Governmental Authority or other Person, except
to the extent that the occurrence of any of the foregoing would not have a material adverse effect on the ability of the Company to enter
into and perform its obligations hereunder.
Section 4.4. Governmental
Authorities; Consents
No material consent, approval
or authorization of, or designation, declaration or filing with, any Governmental Authority or other third party is required on the part
of the Company with respect to the Company’s execution, delivery, and performance of this Agreement and the consummation of the
transactions contemplated hereby.
Section 4.5. Brokers
No Person has acted directly
or indirectly as a broker, finder, or financial advisor for the Company in connection with the negotiations relating to the transactions
contemplated by this Agreement for which the Company or the Company Subsidiary will become obligated to pay a fee or commission.
Section 4.6. Legal
Proceedings; Litigation
There
are no Actions pending or, to the Knowledge of the Company, threatened, against or by the
Company, any executive officer or director of the Company or, to the Knowledge of the Company,
the Company Subsidiary, or any property or asset of the Company or, to the Knowledge
of the Company, the Company Subsidiary, that challenge
or seek to prevent, enjoin, or otherwise delay the transactions contemplated by this Agreement.
Neither the Company nor, to the Knowledge of the Company, any officer or director of the
Company nor the Company Subsidiary, nor any material property or asset of the Company or, to the
Knowledge of the Company, the Company Subsidiary, is subject to any material continuing order
of, consent decree, settlement agreement or other similar written agreement with, or, to the Knowledge of the Company, continuing investigation
by, any Governmental Authority, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority,
that would prevent, enjoin, or otherwise delay the transactions contemplated by this Agreement.
Section 4.7. Capitalization
of the Company; Subsidiaries
(a) The
authorized share capital of the Company consists of 1,000,000 Company Shares, all of which are issued and outstanding. All of the issued
and outstanding Company Shares have been duly authorized and are validly issued, fully paid and non-assessable. The issued and outstanding
Company Shares constitute all of the issued and outstanding equity of the Company.
(b) Neither
the Company nor the Company Subsidiary presently have any option or incentive plans. There are no outstanding bonds, debentures, notes
or other indebtedness of any kind or other securities of the Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters. There are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements, or undertakings of any kind to which the Company is a party or by which the Company is bound obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other equity or voting
securities of the Company or the Company Subsidiary or obligating the Company to issue, grant, extend, or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement, or undertaking. There are no outstanding contractual obligations,
commitments, understandings, or arrangements of the Company to repurchase, redeem, or otherwise acquire or make any payment in respect
of any shares of capital stock of the Company or its Subsidiaries.
(c) The
Company has no Subsidiaries other than the Company Subsidiary.
Section 4.8. Employee
Benefit Plans
Neither
the Company nor the Company Subsidiary maintains or has in the past maintained any Employee Benefit Plan.
Section 4.9. Organization
and Qualification of the Company Subsidiary
(a) The
Company Subsidiary is duly organized, validly existing and in good standing (or equivalent status) as a limited company under the laws
of Hong Kong. The Company Subsidiary has the requisite power and authority and all government licenses, authorizations, permits, consents
and approvals required to own, operate, or lease its properties and to carry on its business as currently conducted. The Company Subsidiary
is duly qualified or licensed to do business and is in good standing (or equivalent status) in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed (individually or in the aggregate) would not have a Company Material Adverse Effect.
(b) True
and complete copies of the Organizational Documents of the Company Subsidiary, and all equity records and all other records of the Company
Subsidiary that have been provided by the Company Subsidiary to the Company, have been made available to Purchaser.
Section 4.10. Capitalization
of the Company Subsidiary
The Company Subsidiary is
authorized to issue 10,000 ordinary shares representing membership in the Company Subsidiary, all of which are issued and outstanding
and held by the Company, which ordinary shares may be repurchased by Former Parent upon the terms and conditions and under the circumstances
set forth in the Buyback Agreement; no other shares or other Equity Interests of the Company Subsidiary are authorized, issued, reserved
for issuance or outstanding. All of the outstanding ordinary shares of the Company Subsidiary are duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights, unless otherwise provided in its Articles of Association, the Buyback Agreement
or any applicable laws of Hong Kong. There are no outstanding bonds, debentures, notes, or other indebtedness of any kind, or other
securities of the Company Subsidiary having the right to vote (or be convertible into, or exchangeable for, securities having the right
to vote) on any matters. Except as otherwise contemplated in the Buyback Agreement, there are presently no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements, or undertakings of any kind to which the Company Subsidiary is a party
or by which it is bound obligating the Company Subsidiary to issue, deliver, or sell, or cause to be issued, delivered, or sold, any additional
share or other equity, voting or otherwise, of the Company Subsidiary or obligating the Company Subsidiary to issue, grant, extend, or
enter into any such security, option, warrant, call, right, commitment, agreement, arrangement, or undertaking. Except as contemplated
in the Buyback Agreement, there are no outstanding contractual obligations, commitments, understandings, or arrangements of the Company
Subsidiary to repurchase, redeem, or otherwise acquire or make any payment in respect of any shares of capital stock of the Company Subsidiary.
Section 4.11. Subsidiaries
The Company Subsidiary does
not have any Subsidiaries and does not own, directly or indirectly, any equity or other ownership interest in any Person.
Section 4.12. Properties
Neither the Company nor the
Company Subsidiary own any real property. Either the Company or the Company Subsidiary has good, clear and marketable title to all the
tangible properties and tangible assets reflected in the latest balance sheet included in the Company Financial Statements as being owned
by the Company or Company Subsidiary or acquired after the date thereof that are, individually or in the aggregate, material to the Business
(except properties sold or otherwise disposed of since the date thereof in the Ordinary Course of Business), free and clear of all Liens
(other than Permitted Liens). Any real property and facilities held under lease by the Company or the Company Subsidiary are held by it
under valid, subsisting and enforceable leases with which the Company and/or the Company Subsidiary, as applicable, is in compliance,
except as would not, individually or in the aggregate, have or reasonably be expected to result in a Company Material Adverse Effect.
Section 4.13.
Reserved.
Section 4.14. Material
Agreement Defaults
Neither the Company nor the
Company Subsidiary are, nor have received any notice, nor to the Knowledge of the Company is any other Person, in default in any material
respect under any Material Agreement and, to the Knowledge of the Company, there has not occurred any event that with the lapse of time
or the giving of notice or both would constitute such a material default. For purposes of this Agreement, a “Material
Agreement” means any contract, agreement or commitment that is effective as of the date hereof to which the Company or the
Company Subsidiary is a party (i) with expected receipts or expenditures in excess of $200,000 individually or $1,000,000 in the aggregate
in any 12-month period, (ii) requiring the Company or the Company Subsidiary to indemnify any person in excess of $200,000 in a single
transaction or $1,000,000 in a series or related events, (iii) granting exclusive rights to any Person in excess of $200,000 individually,
(iv) evidencing indebtedness for borrowed or loaned money in excess of $200,000 or more in a single transaction or $1,000,000 or more
in a series or related transactions, including guarantees of such indebtedness, or (vi) that, with expected receipts or expenditures in
excess of $200,000 individually, if breached by the Company or the Company Subsidiary in such a manner would (A) permit any other party
to cancel or terminate the same (with or without notice of passage of time), (B) provide a basis for any other party to claim money damages
(either individually or in the aggregate with all other such claims under that contract) from the Company or the Company Subsidiary, or
(C) give rise to a right of acceleration of any material obligation or loss of any material benefit under any such contract, agreement
or commitment.
Section 4.15. Accounts
Receivable
To the Knowledge of the Company,
all of the accounts receivable of the Company and the Company Subsidiary reflected in the Company Financial Statements or the accounting
records of the Company and the Company Subsidiary represent or will represent valid obligations arising from sales actually made or services
actually rendered in the Ordinary Course of Business.
Section 4.16. Financial
Statements of the Company and the Company Subsidiary
(a) Section
4.16 of the Company Disclosure Schedule sets forth true and complete copies of the audited consolidated balance sheets of the Company
Subsidiary as of the fiscal years ended December 31, 2023 and 2022, and the unaudited consolidated balance sheets of the Company as of
June 30, 2024 and 2023, and the related statements of operations and comprehensive income, changes in stockholders’ equity (December
31 only) and cash flows for the fiscal years ended December 31, 2023 and 2022, and the six months ended June 30, 2024, including, with
respect to the audited financial statements, the notes thereto (collectively, the “Company Financial Statements”).
(b) The
Company Financial Statements (including the notes thereto) fairly present, in all material respects, the consolidated financial position,
results of operations, changes in stockholders’ equity, and cash flows of the Company and/or its consolidated Subsidiaries as at
the date thereof and for the period indicated therein, except as otherwise noted therein and subject to normal and recurring year-end
adjustments and the absence of notes. The Company Financial Statements are based upon and consistent with information contained in the
books and records of the Company and its Subsidiaries in all material respects.
(c) Except
as and to the extent set forth on the Company Financial Statements, the Company and its Subsidiaries do not have any liability or obligation
of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with
IFRS.
Section 4.17. Environmental
Matters
To the Knowledge of the Company,
the operation of the Business is not subject to any environmental regulation.
Section 4.18. Legal
Compliance
The conduct of the Business
by the Company complies with all Laws and Governmental Orders applicable thereto other than any such non-compliance that individually
or in the aggregate would not reasonably be likely to have a Company Material Adverse Effect.
Section 4.19. Intellectual
Property
The Company or the Company
Subsidiary own or have valid rights to use the trademarks, trade names, domain names, copyrights, patents, logos, licenses, and computer
software programs (including, without limitation, the source codes thereto) that are necessary for the operation of the Business as presently
conducted (the “Company Intellectual Property”). To the Knowledge of the Company, the Company’s and the
Company Subsidiary’s licenses to use software programs that are material to the Business are current. To the Knowledge of the Company,
none of the Company Intellectual Property or the Company License Agreements infringe upon the rights of any third party that may give
rise to a material cause of action or material claim against the Company, the Company Subsidiary, their Affiliates or their successors.
The term “Company License Agreements” means any license agreements granting any right to use or practice any
rights under any intellectual property (except for such agreements for off-the-shelf products that are generally available for less than
$100), and any written settlements relating to any intellectual property, to which the Company or the Company Subsidiary is a party or
otherwise bound.
Section 4.20. Tax
Matters
The Company has not taken
or agreed to take any action and to the Knowledge of the Company there are no facts or circumstances that could reasonably be expected
to prevent the Merger from qualifying for the Intended Tax Treatment.
Section 4.21. Insurance.
(a) Section
4.21(a) of the Company Disclosure Schedule sets forth, with respect to each material insurance policy under which the Company is an
insured, a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement (i) the names of the insurer,
the principal insured and each named insured, (ii) the policy number, (iii) the period, scope and amount of coverage and (iv) the premium
most recently charged.
(b) With
respect to each such insurance policy, except as would not be expected to result, individually or in the aggregate, in a Company Material
Adverse Effect: (i) the policy is legal, valid, binding and enforceable in accordance with its terms (subject to the Remedies Exceptions)
and, except for policies that have expired under their terms in the ordinary course, is in full force and effect; (ii) the Company is
not in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice),
and no event has occurred that, with notice or the lapse of time, would constitute such a breach or default, or permit termination or
modification, under the policy; and (iii) to the Knowledge of the Company, no insurer on the policy has been declared insolvent or placed
in receivership, conservatorship or liquidation.
Section 4.22. Exchange
Act
The Company is not currently
(nor has it previously been) subject to the requirements of Section 12 of the Exchange Act.
Section 4.23. Accredited
Investors
To the Knowledge of the Company
after reasonable inquiry, each stockholder of the Company is an “accredited investor” (as defined under Regulation D promulgated
under the Securities Act).
Section 4.24. Not
an Investment Company
The Company is not an “investment
company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.
Section 4.25. No
Additional Representations or Warranties
Except as specifically provided
in this Agreement, the Company has not made, nor is it making, any representation or warranty whatsoever to Purchaser or any of its Affiliates
and, except in the case of fraud, no such Person shall be liable in respect of the accuracy or completeness of any information or documents
(including any projections on the future performance of the Business) provided to Purchaser or any of its Affiliates.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND MERGER SUB
All representations and warranties
set forth herein are made subject to the exceptions noted in the disclosure schedules, if any, delivered to the Company by Purchaser concurrently
herewith and identified by the Parties as the “Purchaser Disclosure Schedule.” All representations and
warranties set forth herein are qualified by the Purchaser SEC Reports (as defined below) filed by Purchaser prior to the date of this
Agreement. No specific representation or warranty will limit the generality or applicability of a more general representation or warranty.
Each individual section of the Purchaser Disclosure Schedule will be numbered to correspond to the paragraph of the section of this Agreement
to which it relates. Purchaser and Merger Sub (each sometimes referred to individually as a “Purchaser Party”
and collectively as the “Purchaser Parties”) hereby represent and warrant to the Company as follows:
Section 5.1. Organization
(a) Purchaser
is a company duly organized and validly existing under the laws of British Columbia. Merger Sub is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Set
forth on Section 5.1(b) of the Purchaser Disclosure Schedule is a complete and accurate list of all of Purchaser’s Subsidiaries,
including the date and jurisdiction of formation or incorporation of each such Subsidiary.
(c) Each
of Purchaser and each Subsidiary of Purchaser has the requisite power and authority, corporate or otherwise, to own, operate, lease, or
otherwise hold and operate its properties and other assets and to carry on its business as currently conducted. Each of Purchaser and
each Subsidiary of Purchaser is duly licensed or qualified to do business and is in good standing (with respect to jurisdictions that
recognize that concept) in each jurisdiction in which the nature of its business or the ownership, leasing, or operation of its properties
or other assets makes such qualification, licensing or good standing necessary, except where the failure to be so qualified, licensed
or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Purchaser Material Adverse
Effect.
(d) Merger
Sub does not hold and has not held any material assets or incurred any material liabilities, and has not carried on any business activities
other than in connection with the Merger.
(e) Purchaser
has delivered to the Company the Organizational Documents of each Subsidiary of Purchaser.
Section 5.2. Due
Authorization
Each of Purchaser and Merger
Sub has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery by each of Purchaser and Merger Sub of this Agreement and the performance
of its obligations hereunder and the consummation by each of them of the transactions contemplated hereby have been duly and validly authorized
by each such Purchaser Party, and no other action on the part of such Purchaser Party is necessary. This Agreement has been duly and validly
executed and delivered by each Purchaser Party and, assuming the due authorization, execution, and delivery by the Company, is the legal,
valid, and binding obligation of such Purchaser Party, enforceable against such Purchaser Party in accordance with its terms, except as
the enforceability may be limited by (a) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance, or similar
laws in effect that affect the enforcement of creditors’ rights generally or (b) general principles of equity. The affirmative vote
or written consent of Purchaser as the sole stockholder of Merger Sub is the only vote of the holders of any of Merger Sub’s capital
stock necessary to adopt and approve this Agreement and the consummation of the transactions contemplated hereby, including the Merger.
Section 5.3. No Conflict
The execution and delivery
of this Agreement by each of Purchaser and Merger Sub, and the consummation of the transactions contemplated hereby, do not and will not
violate any provision of, or result in the breach of, any applicable Law, rule, or regulation of any Governmental Authority, the Organizational
Documents of such Purchaser Party, or any agreement, indenture, or other instrument to which such Purchaser Party is a party or by which
such Purchaser Party may be bound, or of any Governmental Order applicable to such Purchaser Party, or terminate or result in the termination
of any such agreement, indenture, or instrument, or result in the creation of any Lien upon any of the properties or assets of such Purchaser
Party or constitute an event that, after notice or lapse of time or both, would result in any such violation, breach, acceleration, termination,
or creation of a Lien or result in a violation or revocation of any Permit from any Governmental Authority or other Person, except to
the extent that the occurrence of any of the foregoing would not have a material adverse effect on the ability of such Purchaser Party
to enter into and perform its obligations under this Agreement.
Section 5.4. Governmental
Authorities; Consents
No material consent, approval
or authorization of, or designation, declaration or filing with, any Governmental Authority or other third party is required on the part
of either Purchaser Party with respect to such Purchaser Party’s execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated hereby.
Section 5.5. Brokers
No Person has acted directly
or indirectly as a broker, finder, or financial advisor for Purchaser or Merger Sub in connection with the negotiations relating to the
transactions contemplated by this Agreement for which Purchaser or Merger Sub will become obligated to pay a fee or commission.
Section 5.6. Legal
Proceedings
Other than as set forth in
Section 5.6 of the Purchaser Disclosure Schedule, there are no Actions pending or, to the
Knowledge of Purchaser, threatened, against or by Purchaser or any Affiliate of Purchaser that challenge or seek to prevent, enjoin, or
otherwise delay the transactions contemplated by this Agreement.
Section 5.7. Capitalization
of Purchaser Parties
(a) The
authorized share capital of Purchaser (the “Purchaser Equity”) consists of (i) the Siyata Shares, and (ii) an
unlimited number of preferred shares, no par value per share (the “Siyata Preferred Shares”). As of the Effective
Date, 983,733 Siyata Shares are issued and outstanding, and 909 Class C Preferred Shares are issued and outstanding. All of the issued
and outstanding Siyata Shares and Siyata Preferred Shares have been duly authorized and are validly issued, fully paid and non-assessable.
The 983,733 issued and outstanding Siyata Shares and the 909 issued and outstanding Siyata Preferred Shares constitute all of the issued
and outstanding equity of Purchaser.
(b) Except
as set forth on Section 5.7(b) of the Purchaser Disclosure Schedule, there are no outstanding or authorized options, warrants,
convertible securities, or other rights, agreements, arrangements, or commitments of any character relating to the Purchaser Equity or
obligating Purchaser to issue or sell any equity of, or any other interest in, Purchaser. Except as set forth on of the Purchaser Disclosure
Schedule, there are not outstanding (i) equity appreciation, phantom equity, profit participation, or similar rights with respect to Purchaser
or (ii) voting trusts, proxies, member agreements, or other agreements or understandings related to the voting or transfer of any outstanding
voting interests of Purchaser.
(c) Merger
Sub is authorized to issue 1,000 shares of common stock, par value $0.001 per share (“Merger Sub Common Stock”),
of which 100 shares are issued and outstanding. Purchaser owns all of the issued and outstanding shares of Merger Sub Common Stock and
no other shares of capital stock or other securities of Merger Sub are issued, reserved for issuance, or outstanding. All issued and outstanding
shares of Merger Sub Common Stock are duly authorized, validly issued, fully paid and nonassessable and are not subject to, and were not
issued in violation of, any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any
provision of the DGCL, Merger Sub’s Organizational Documents or any contract to which Merger Sub is a party or by which Merger Sub
is bound. There are no outstanding contractual obligations of Merger Sub to repurchase, redeem or otherwise acquire any shares of Merger
Sub Common Stock or any Equity Interests of Merger Sub. There are no outstanding contractual obligations of Merger Sub to provide funds
to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.
(d) Other
than as set forth in Section 5.7(d) of the Purchaser Disclosure Schedule, Purchaser owns 100% of the equity interests in each Subsidiary
of Purchaser, and no Person has any options, warrants, or other rights to acquire any Equity Interests in any Subsidiary of Purchaser.
(e)
All the issued and outstanding shares of capital stock of, or other equity interests in, each Subsidiary of Purchaser have been validly
issued and are fully paid and non-assessable and are owned directly or indirectly by Purchaser free and clear of all Liens. Except for
the Subsidiaries of Purchaser, Purchaser does not own, directly or indirectly, as of the date hereof, (a) any capital stock of, or other
equity interests in, any Person or (b) any other interest or participation that confers on Purchaser or any Subsidiary of Purchaser the
right to receive (i) a share of the profits and losses of, or distributions of assets of, any other Person or (ii) any economic benefit
or right similar to, or derived from, the economic benefits and rights occurring to holders of capital stock of any other Person.
Section 5.8. Financings
Section 5.8 of the
Purchaser Disclosure Schedule sets forth a complete and correct list, as of the date of this Agreement, of all of the material financing
arrangements, Indebtedness, common share equivalent (including notes, warrants, etc.) and other debt/equity obligations of Purchaser,
as amended to date, that are currently in effect.
Section 5.9. SEC Filings;
Internal Controls; Financial Statements
(a) Except
as set forth in Section 5.9 of the Purchaser Disclosure Schedules, Purchaser has timely filed or furnished all statements,
forms, reports and documents required to be filed or furnished by it prior to the date of this Agreement with the SEC pursuant to the
Securities Act and the Exchange Act since January 1, 2022 (collectively, and together with any information incorporated therein by reference,
and as they have been supplemented, modified or amended since the time of filing, the “Purchaser SEC Reports”).
Each of the Purchaser SEC Reports, as of their respective dates of filing, and as of the date of any amendment or filing that superseded
the initial filing, complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act. As
of their respective dates of filing, the Purchaser SEC Reports did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) There
are no outstanding loans or other extensions of credit made by Purchaser to any executive officer (as defined in Rule 3b-7 under the Exchange
Act) or director of Purchaser. Purchaser has not, including through any Subsidiary of Purchaser, taken any action prohibited by Section
402 of the Sarbanes-Oxley Act of 2002.
(c) Purchaser
has complied in all material respects with all applicable Nasdaq listing and corporate governance rules and regulations. The books of
account, minute books and transfer ledgers and other similar books and records of Purchaser and its Subsidiaries have been maintained
in accordance with good business practice, are complete and correct in all material respects, and there have been no material transactions
that are required to be set forth therein that have not been so set forth.
(d)
There are no outstanding or unresolved comments in any comment letters received from the SEC with respect to the Purchaser SEC Reports.
To the Knowledge of Purchaser, none of the Purchaser SEC Reports is subject to ongoing SEC review or investigation as of the date hereof.
(e)
Except as is not required in reliance on exemptions from various reporting requirements by virtue of Purchaser’s status as a “smaller
reporting company” within the meaning of the Exchange Act, since its initial public offering, (i) Purchaser has established and
maintained a system of internal control over financial reporting (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) sufficient
to provide reasonable assurance regarding the reliability of Purchaser’s financial reporting and the preparation of the Purchaser
Financial Statements for external purposes in accordance with GAAP and (ii) Purchaser has established and maintained disclosure controls
and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act) reasonably designed to ensure that all material information
concerning Purchaser and its Subsidiaries and other material information required to be disclosed by Purchaser in the reports that it
files or furnishes under the Exchange Act is made known on a timely basis to the individuals responsible for the preparation of Purchaser
SEC filings and other public disclosure documents.
(f) The
Purchaser SEC Reports contain true and complete copies of the applicable Purchaser Financial Statements. Except as disclosed in the Purchaser
SEC Reports, the Purchaser Financial Statements (i) fairly present in all material respects the financial position of Purchaser as at
the respective dates thereof, and the results of its operations, stockholders’ equity and cash flows for the respective periods
then ended (subject, in the case of any unaudited interim financial statements, to normal year-end audit adjustments (none of which is
expected to be material) and the absence of footnotes), (ii) were prepared in conformity with GAAP applied on a consistent basis during
the periods involved (except, in the case of any audited financial statements, as may be indicated in the notes thereto and subject, in
the case of any unaudited financial statements, to normal year-end audit adjustments (none of which is expected to be material) and the
absence of footnotes), (iii) in the case of the audited Purchaser Financial Statements, were audited in accordance with the standards
of the PCAOB, and (iv) comply in all material respects with the applicable accounting requirements and with the rules and regulations
of the SEC, the Exchange Act and the Securities Act in effect as of the respective dates thereof (including Regulation S-X or Regulation
S-K, as applicable).
(g)
To the Knowledge of Purchaser, Purchaser has not received any written complaint, allegation, assertion or claim that, as alleged therein,
would constitute (i) a “significant deficiency” in the internal control over financial reporting of Purchaser, (ii) a “material
weakness” in the internal control over financial reporting of Purchaser, or (iii) fraud, whether or not material, that involves
management or other employees of Purchaser who have a significant role in the internal control over financial reporting of Purchaser.
Section 5.10. Solvency
Based on the consolidated
financial condition of Purchaser, (i) fair saleable value of Purchaser’s assets exceeds the amount that will be required to be paid
on or in respect of Purchaser’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii)
Purchaser’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital requirements of the business conducted by Purchaser,
consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of Purchaser, were it
to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on
or in respect of its liabilities when such amounts are required to be paid. Purchaser does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). Purchaser
has no knowledge of any facts or circumstances that lead it to believe that it will file for reorganization or liquidation under the bankruptcy
or reorganization laws of any jurisdiction within one year from the Closing Date. Neither Purchaser nor any of its Subsidiaries is in
default with respect to any Indebtedness.
Section 5.11. Absence
of Certain Changes
From January 1, 2021 until
the date of this Agreement, except as set forth on Section 5.11 of the Purchaser Disclosure Schedule: (a) Purchaser and its Subsidiaries
have conducted their respective businesses in the Ordinary Course of Business; (b) there has not been any Purchaser Material Adverse Effect;
and (c) neither Purchaser nor any of its Subsidiaries has taken any action that, if taken after the date of this Agreement and prior to
the consummation of the Merger, would require the consent of the Company pursuant to Section 6.1, except where the Company has
given such consent.
Section 5.12. Issuance
of Siyata Shares
The Siyata Shares constituting
the Consideration, when issued in accordance with this Agreement, will be duly authorized and validly issued, and will be fully paid and
nonassessable.
Section 5.13. Corporate
Records
Since January 1, 2021, all
proceedings of the Board of Directors of Purchaser, including all committees thereof, and of the Purchaser Stockholders, and all consents
to actions taken thereby, are, in all material respects, accurately reflected in the minutes and records contained in the corporate minute
books of Purchaser and made available to the Company. The stockholder ledger of Purchaser is true, correct and complete in all material
respects.
Section 5.14. Legal
Compliance
Since January 1, 2021, each
of Purchaser and its Subsidiaries (a) has conducted its business and operations in compliance with all Laws and Governmental Orders applicable
thereto other than any such non-compliance that individually or in the aggregate could not have a Purchaser Material Adverse Effect, and
(b) has not received any written or, to the Knowledge of Purchaser, oral, communications from a Governmental Authority that alleges that
Purchaser or such Subsidiary is not in compliance with any such Law or Governmental Order.
Section 5.15. Properties;
Title to Assets
(a) Except
as set forth on Section 5.15 of the Purchaser Disclosure Schedule, all tangible personal property and interests therein, including
computers and accessories, furniture, office equipment, communications equipment, automobiles, and other equipment owned or leased by
Purchaser and its Subsidiaries (the “Tangible Personal Property”) are, to the Knowledge of Purchaser, in good
operating condition and repair and function in accordance with their intended uses (ordinary wear and tear excepted), have been properly
maintained and are suitable for their present uses and meet all specifications and warranty requirements with respect thereto, in each
case in all material respects. All of the Tangible Personal Property is located at the offices or properties of Purchaser or its Subsidiaries.
(b) Purchaser
or a Subsidiary of Purchaser has good, valid and marketable title in and to, or in the case of the leases and the assets that are leased
or licensed pursuant to Contracts, a valid leasehold interest or license in or a right to use, all of the tangible assets reflected on
Purchaser’s most recent balance sheet. Except as set forth on Section 5.15(b) of the Purchaser Disclosure Schedule, no such
tangible asset is subject to any Lien other than Permitted Liens.
Section 5.16. Material
Contracts
(a) Section
5.16(a) of the Purchaser Disclosure Schedule sets forth a complete and correct list, as of the date of this Agreement, of all of the
Material Contracts of Purchaser, as amended to date, that are currently in effect.
(b) Each
Material Contract of Purchaser is (i) valid and binding on Purchaser or the applicable Subsidiaries of Purchaser that are party thereto
and, to the Knowledge of Purchaser, the counterparties thereto, (ii) in full force and effect, and (iii) enforceable by and against Purchaser
and/or its Subsidiaries that are a party thereto and, to the Knowledge of Purchaser, each counterparty thereto, except, in the case of
this clause (iii), as the enforceability may be limited by (A) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent
conveyance, or similar laws in effect that affect the enforcement of creditors’ rights generally or (B) general principles of equity.
Neither Purchaser or its Subsidiaries party thereto nor, to the Knowledge of Purchaser, any other party to a Material Contract of Purchaser,
is in material breach or default (whether with or without the passage of time or the giving of notice or both) under the terms of any
such Material Contract. None of Purchaser or its Subsidiaries has assigned, delegated, or otherwise transferred any of its rights or obligations
under any Material Contract of Purchaser or granted any power of attorney with respect thereto (other than, in each case, to Purchaser
or one or more of its Subsidiaries).
(c) Each
of Purchaser and its Subsidiaries that are a party thereto is in compliance in all material respects with all covenants, including all
financial covenants, in all notes, indentures, bonds, and other instruments or Contracts establishing or evidencing any Indebtedness to
which it is a party. The consummation and closing of the transactions contemplated by this Agreement will not cause or result in an event
of default under any instruments or Contracts establishing or evidencing any Indebtedness, other than to the extent any such event of
default would not have a Purchaser Material Adverse Effect.
Section 5.17. Permits
Each of Purchaser and each
Subsidiary of Purchaser has all licenses, franchises, permits, orders, approvals, consents, or other similar authorizations or approvals
of a Governmental Authority required to be obtained and maintained by Purchaser or any Subsidiary thereof under applicable Law to carry
out its business as currently conducted (“Permits”), the lack of which has had or would reasonably be expected
to have, individually or in the aggregate, a Purchaser Material Adverse Effect. None of Purchaser nor any Subsidiary of Purchaser is or,
with the giving notice, the lapse of time or otherwise, would be, in default in any material respect under any of such Permits or other
similar authority.
Section 5.18. Intellectual
Property
(a) Purchaser
and each Subsidiary thereof (i) owns and possesses, free and clear of all Liens (other than Permitted Liens), all right, title and interest
in or has a valid and enforceable written license or rights to use, all Intellectual Property used by it in the operation of its business
as presently conducted and (ii) owns and possesses all right, title and interest in and to all Intellectual Property created or developed
by or on behalf of, or otherwise under the direction or supervision of, its employees or independent contractors, relating to its business.
(b) Except
as set forth in Section 5.18 of the Purchaser Disclosure Schedule, there are no claims against Purchaser or any Subsidiary of Purchaser
that were either made since January 1, 2021, or are presently pending contesting the validity, use, ownership or enforceability of any
of Intellectual Property of Purchaser or applicable Subsidiary and, to the Knowledge of Purchaser, there is no reasonable basis for any
such claim. Neither Purchaser nor any Subsidiary of Purchaser has infringed or misappropriated, and the operation of its business as currently
conducted does not infringe or misappropriate, any registered Intellectual Property rights of other Persons. Neither Purchaser nor any
of its Subsidiaries has received any written notice regarding any of the foregoing (including any demand or offer to license any Intellectual
Property rights from any other Person). To the Knowledge of Purchaser, no third party has infringed or misappropriated any of the Intellectual
Property of Purchaser or any Subsidiary of Purchaser. The transactions contemplated by this Agreement will not impair the right, title
or interest of Purchaser or any Subsidiary of Purchaser in and to the Intellectual Property of Purchaser or the applicable Subsidiary
and all of the Intellectual Property of Purchaser and its Subsidiaries will be owned or available for use by it immediately after the
Closing on terms and conditions identical to those under which Purchaser or such Subsidiary owned or used such Intellectual Property immediately
prior to the Closing. Purchaser and its Subsidiaries have taken commercially reasonable efforts to protect their Intellectual Property
from infringement, misappropriation, and unauthorized disclosure.
(c) For
the three years prior hereto, neither Purchaser nor any of its Subsidiaries has received any written notice of any actual or alleged breaches
of security (including theft and unauthorized use, access, collection, processing, storage, disposal, destruction, transfer, disclosure,
interruption or modification by any Person) of (i) the systems, hardware, software, network, or equipment of Purchaser or any such Subsidiary,
including all information stored or contained therein or transmitted thereby, or (ii) any data in the possession or control of Purchaser
or any Subsidiary of Purchaser about or from an individual that is protected by or subject to any data protection, privacy or security
Laws, including protected health information.
(d) Purchaser
and each Subsidiary of Purchaser has complied in all material respects at all times for the three years prior hereto with all relevant
requirements of any applicable data protection Law, its own data protection principles, requests from data subjects for access to data
held by it and any Law relating to the registration of data users. Neither Purchaser nor any Subsidiary thereof has received any notification
from a Governmental Authority regarding noncompliance or violation of any data protection principles or Law. No Person has claimed any
compensation from Purchaser or any Subsidiary thereof for the loss of or unauthorized disclosure or transfer of personal data and no facts
or circumstances exist that might give rise to such a claim. Neither Purchaser not any Subsidiary of Purchaser has undergone any audit
or regulatory inquiry from any Governmental Authority with respect to privacy and/or data security of personally identifiable information
and, to the Knowledge of Purchaser, neither Purchaser nor any Subsidiary of Purchaser is subject to any current inquiry from any Governmental
Authority (including complaints from any individuals provided to such Governmental Authority) regarding same. Purchaser has taken, and
has caused each of its Subsidiaries to take, reasonable commercial steps to preserve the availability, security, and integrity of the
information systems and the data and information stored on the information systems owned or exclusively controlled by Purchaser or any
such Subsidiary. During the past three years, Purchaser has maintained and has caused its Subsidiaries to maintain, and each of Purchaser
and its Subsidiaries continues to maintain, safeguards, security measures, and procedures to protect against the unauthorized access,
destruction, loss, or alteration of customer data or information (including any personally identifiable information) in their possession
or control.
Section 5.19. Insurance
Purchaser and each Subsidiary
of Purchaser maintains insurance with respect to its properties and its business against loss or damages of the kinds customarily
insured against by companies engaged in the same or similar businesses as Purchaser or such Subsidiary, in such amounts that are commercially
reasonable and customarily carried under similar circumstances by such other companies. All premiums for such insurance policies have
been paid, and no written notice of cancellation, termination, or non-renewal has been received by Purchaser or any of its Subsidiaries
with respect to any insurance policy. Neither Purchaser nor any Subsidiary thereof has received any written notice of denial or dispute
of coverage for, and to the Knowledge of Purchaser, no insurer has otherwise denied or disputed coverage for, any claim under an insurance
policy where the current actual or potential liability of or loss to Purchaser or any Subsidiary of Purchaser may exceed $150,000 in the
aggregate.
Section 5.20. Environmental
Laws
Each of Purchaser and each
Subsidiary of Purchaser is, and since January 1, 2021, has been, in compliance in all material respects with all Environmental Laws, and
there are no, and since January 1, 2021, there have not been any, Actions pending or, to the Knowledge of Purchaser, threatened, against
Purchaser or any Subsidiary of Purchaser alleging any failure to so comply. None of Purchaser nor any Subsidiary of Purchaser has: (a)
received any notice of any alleged claim, violation of, or liability under any Environmental Law or any claim of potential liability with
regard to any Hazardous Material; (b) disposed of, emitted, discharged, handled, stored, transported, used, or released any Hazardous
Material; arranged for the disposal, discharge, storage, or release of any Hazardous Material; or exposed any employee or other individual
or property to any Hazardous Material; or (c) entered into any agreement that may require it to guarantee, reimburse, pledge, defend,
hold harmless or indemnify any other Person with respect to liabilities arising out of Environmental Laws or the Hazardous Material activity.
There are no Hazardous Materials in, on, or under any properties currently or formerly owned, leased, or used at any time by Purchaser
or any Subsidiary of Purchaser.
Section 5.21. Affiliate
Transactions
Except as described in the
Purchaser SEC Reports, there are no transactions, agreements, arrangements, or understandings between Purchaser or any of its Subsidiaries,
on the one hand, and any director, officer, employee, stockholder, warrant holder, or Affiliate of Purchaser or any of its subsidiaries,
on the other hand.
Section 5.22. Tax
Matters
Purchaser has filed all material
Tax Returns as required by Law. Such Tax Returns are true, correct and complete in all material respects. Purchaser has paid all material
Taxes that are due and payable, other than Taxes being contested in good faith and for which adequate reserves have been established.
Purchaser is not currently engaged in any material audit, administrative, or judicial proceeding with respect to Taxes. Purchaser has
not received any written notice from a Governmental Authority of a proposed deficiency of any material amount of Taxes. Purchaser has
withheld or collected from each payment made to or received from its employees, independent contractors, shareholders, customers or other
parties all material Taxes required to be withheld or collected therefrom and has paid the same to the proper tax authority. There are
no encumbrances for material Taxes (other than encumbrances for Taxes not yet due and payable) upon the assets of Purchaser. Purchaser
has not taken, and has not agreed to take, any action not contemplated by this Agreement that could reasonably be expected to prevent
the Merger from qualifying for the Intended Tax Treatment. To the Knowledge of Purchaser, there are no facts or circumstances that could
reasonably be expected to prevent the Merger from qualifying for the Intended Tax Treatment.
Section 5.23. Board Approval
By resolutions duly adopted
(and not thereafter modified or rescinded) by Purchaser’s Board of Directors (including any required committee or subgroup of such
board), the Board of Directors of Purchaser has unanimously: (a) approved the execution, delivery, and performance by Purchaser and Merger
Sub of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, on the terms and subject to
the conditions set forth herein and therein; and (b) determined that this Agreement and the transactions contemplated hereby, upon the
terms and subject to the conditions set forth herein, are advisable and in the best interests of Purchaser and the Purchaser Stockholders.
Purchaser’s Board of Directors represents and warrants that it has formed a committee of independent directors meeting the requirements
of MI 61-101 to determine whether any related party of Purchaser is expected to receive in connection with this Agreement is or is not
a “collateral benefit” as defined in MI 61-101.
Based on the above, no vote
by or approval of the Purchaser Stockholders is necessary in order for Purchaser to approve and adopt this Agreement and consummate the
transactions contemplated hereby, including the Merger.
ARTICLE VI. CONDITIONS TO CLOSING
Section 6.1. Conditions
to Each Party’s Obligation to Close
The respective obligation of
each Party to effect the transactions contemplated hereby is subject to the satisfaction on or before Closing of each of the following
conditions, unless waived in writing by each of Purchaser and the Company:
(a) Company
Stockholder Approval. This Agreement and any such other matters related hereto as determined by Purchaser and the Company to be necessary
or appropriate in connection with the transactions contemplated hereby shall have been duly approved and adopted by the affirmative vote
of the holders of at least a majority of the outstanding shares of Company Common Stock entitled to vote thereon (such approval and adoption,
the “Company Stockholder Approval”).
(b) Governmental
Approvals. The Parties shall have received all approvals from any Governmental Authority necessary to consummate the transactions
contemplated hereby.
(c) No
Orders. There shall not have been enacted, promulgated, or made effective after the date of this Agreement any Law by a Governmental
Authority of competent jurisdiction that enjoins or otherwise prohibits or makes illegal, or any Governmental Order seeking to enjoin
or prohibit or make illegal, consummation of the transactions contemplated hereby and there shall not be in effect any injunction (whether
temporary, preliminary or permanent) by any Governmental Authority of competent jurisdiction that enjoins or otherwise prohibits consummation
of the transactions contemplated hereby.
Section 6.2. Conditions
to Obligations of Purchaser and Merger Sub
The obligation of Purchaser
and Merger Sub to effect the transactions contemplated hereby is also subject to the satisfaction on or before the Closing of the following
conditions, unless waived in writing by Purchaser:
(a) Representations
and Warranties. Each of the representations and warranties of the Company contained in Article IV (Representations and
Warranties of the Company) shall be true and correct, in each case as of the Closing as though made on such date (except to the extent
any such representation and warranty expressly speaks as of a specified date, in which case as of such date), except where the failure
of any such representations and warranties to be so true and correct (without regard to any materiality, in all material respects, Company
Material Adverse Effect, or similar qualifications set forth in any such representation or warranty) would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(b) Performance
of Obligations. The Company shall have performed in all material respects all obligations and covenants required to be performed by
it under this Agreement at or before the Closing.
(c) Absence
of Company Material Adverse Effect. No event, circumstance, development, change or effect shall (i) have occurred since the date of
this Agreement that, individually or in the aggregate, has caused a Company Material Adverse Effect, or (ii) continue to occur that would
reasonably be expected to cause, individually or in the aggregate, a Company Material Adverse Effect.
(d) Corporate
Approval. The Company shall have obtained the requisite approval of its Board of Directors and the Company Stockholder Approval.
(e) Closing
Documents. At or prior to the Closing, the Company shall have delivered, or caused to be delivered, to Purchaser the documents set
forth in Section 3.4.
(f) Officer’s
Certificate. Purchaser shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer of the
Company, in such Person’s capacity as an officer of the Company and not in such Person’s individual capacity, certifying the
accuracy of the provisions of the foregoing clauses (a), (b), and (c) of this Section 6.2.
Section 6.3. Conditions
to Obligations of the Company
The obligation of the Company
to effect the transactions contemplated herein is also subject to the satisfaction on or before the Closing of the following conditions,
unless waived in writing by the Company:
(a) Representations
and Warranties. Each of the representations and warranties of Purchaser and Merger Sub in Article V (Representations and
Warranties of Purchaser and Merger Sub) shall be true and correct, in each case as of the Closing as though made on such date (except
to the extent any such representation and warranty expressly speaks as of a specified date, in which case as of such date), except where
the failure of any such representations and warranties to be so true and correct (without regard to any materiality, in all material respects,
Purchaser Material Adverse Effect, or similar qualifications set forth in any such representation or warranty) would not, individually
or in the aggregate, reasonably be expected to have a Purchaser Material Adverse Effect.
(b) Performance
of Obligations. Purchaser shall have performed in all material respects all obligations and covenants required to be performed by
it under this Agreement at or before the Closing.
(c) Absence
of Purchaser Material Adverse Effect. No event, circumstance, development, change or effect shall (i) have occurred since the date
of this Agreement that, individually or in the aggregate, has caused a Purchaser Material Adverse Effect, or (ii) continue to occur that
would reasonably be expected to cause, individually or in the aggregate, a Purchaser Material Adverse Effect.
(d) Corporate
Approval. Purchaser shall have obtained the requisite approval of its Board of Directors.
(e) Purchaser
Nasdaq Listing. The existing Siyata Shares shall have been continually listed on Nasdaq as of and from the date of this Agreement
through the Closing Date, and Purchaser shall not have received any order or other correspondence indicating that the Siyata Shares may
be delisted from Nasdaq, unless the deficiencies set forth in such order or correspondence have been resolved, Purchaser has received
written confirmation of such resolution from Nasdaq, and such deficiencies have been resolved in a manner that ensures the Siyata Shares’
continued listing on Nasdaq (without impacting the Company or the Company Shareholders including the Consideration), and trading in the
Siyata Shares on Nasdaq has not been suspended as of the Closing. Additionally, Purchaser’s initial listing application with Nasdaq
in connection with the transactions contemplated by this Agreement shall have been approved by Nasdaq and the Siyata Shares shall have
been approved for listing on Nasdaq, subject only to official notice of issuance.
(f) Closing
Documents. At or prior to the Closing, Purchaser shall have delivered, or caused to be delivered, to the Company the documents set
forth in Section 3.5.
(g) Officer’s
Certificate. The Company shall have received a certificate, dated as of the Closing Date, signed by the Chief Executive Officer of
Purchaser, in such Person’s capacity as an officer of Purchaser and not in such Person’s individual capacity, certifying the
accuracy of the provisions of the foregoing clauses (a), (b), and (c) of this Section 6.3.
Section 6.4. Frustration
of Closing Conditions
Neither
the Company nor Purchaser may rely, either as a basis for not consummating the transactions contemplated herein or for terminating this
Agreement and abandoning the transactions contemplated herein, on the failure of any condition set forth in Section 6.01, Section
6.02 or Section 6.03, as the case may be, to be satisfied if such failure was principally caused by such Party’s breach
of any provision of this Agreement or failure to make the requisite effort to consummate the transactions contemplated herein, as required
by and subject to this Agreement.
ARTICLE VII. COVENANTS OF THE PARTIES PENDING
CLOSING; ADDITIONAL COVENANTS
Section 7.1. Conduct
of the Business
Each
of the Company and Purchaser covenants and agrees that:
(a) Except
as expressly contemplated by this Agreement, as required by applicable Law, as set forth on Section 7.1(a) of the Company Disclosure
Schedule or the Purchaser Disclosure Schedule, or as consented to in writing (which shall not be unreasonably conditioned, withheld or
delayed) by Purchaser, with respect to any deviation by the Company, or the Company, with respect to any deviation by Purchaser, from
the date hereof until the earlier of the Closing Date and the termination of this Agreement in accordance with its terms (the “Interim
Period”), each of Purchaser and the Company shall, and shall cause its Subsidiaries to, (i) conduct its business only in
the Ordinary Course of Business (including the payment of accounts payable and the collection of accounts receivable), (ii) duly and timely
file all Tax Returns required to be filed (or obtain a permitted extension with respect thereto) with the applicable Taxing Authorities
and pay any and all Taxes due and payable during such time period, (iii) duly observe and comply with all applicable Laws and Governmental
Orders, and (iv) use its commercially reasonable efforts to preserve intact in all material respects its business organization, assets,
permits, properties, and material business relationships with employees, clients, suppliers, and other third parties.
(b) Without
limiting the generality of the foregoing, and except as expressly contemplated by this Agreement, as required by applicable Law, or as
set forth in Section 7.1(b) of the Company Disclosure Schedule or the Purchaser Disclosure Schedule, during the Interim Period,
without the other Party’s prior written consent (which shall not be unreasonably conditioned, withheld or delayed), neither the
Company nor Purchaser shall, or shall permit its Subsidiaries to:
(i) amend,
modify, or supplement its Organizational Documents except as contemplated hereby;
(ii) other
than in the Ordinary Course of Business, amend, waive any provision of, terminate prior to its scheduled expiration date, or otherwise
compromise in any way or relinquish any material right under any Material Contract;
(iii) other
than in the Ordinary Course of Business, modify, amend, or enter into any Contract, including for capital expenditures, that extends for
a term of one year or more or obligates the payment by the Company or Purchaser, as applicable, or any Subsidiary thereof, of more than
$200,000 individually or $1,000,000 in the aggregate;
(iv) make
any capital expenditures in excess of $200,000 individually or $1,000,000 in the aggregate);
(v) sell,
lease, or otherwise dispose of any of its material assets, except pursuant to existing contracts or commitments disclosed herein or in
the Ordinary Course of Business;
(vi) sell,
abandon, permit to lapse, assign, transfer, or otherwise dispose of any Intellectual Property owned by such entity, except where such
action would not reasonably be expected to cause a Company Material Adverse Effect or a Purchaser Material Adverse Effect;
(vii) permit
any material registered owned Intellectual Property to be abandoned or expire for failure to make an annuity or maintenance fee payment,
or file any necessary paper or action to maintain such rights;
(viii) terminate
or fail to timely renew, or otherwise take any act or omission that would impair the continued maintenance or renewal of, any Permit required
for the operation of its business as it is currently conducted;
(ix) (A)
pay, declare, or set aside any dividends, distributions or other amounts with respect to its capital stock or other Equity Interests,
other than dividends or distributions declared, set aside, or paid by any wholly-owned Subsidiaries; (B) pay, declare or promise to pay
any other amount to any stockholder or other equity holder in its capacity as such; or (C) amend any term, right or obligation with respect
to any outstanding shares of its capital stock or other Equity Interests;
(x) (A)
make any loan, advance or capital contribution to, or guarantee for the benefit of, any Person; (B) incur any Indebtedness other than
intercompany Indebtedness and trade payables in the Ordinary Course of Business; or (C) repay or satisfy any Indebtedness, other than
the repayment of Indebtedness in accordance with the terms thereof;
(xi) suffer
or incur any Lien, except for Permitted Liens, on its assets;
(xii) delay,
accelerate or cancel, or waive any material right with respect to any receivables or Indebtedness owed to it, or write off or make reserves
against the same (other than in the Ordinary Course of Business);
(xiii) merge
or consolidate or enter a similar transaction with, or acquire all or substantially all of the assets or business of, any other Person,
make any material investment in any Person, or be acquired by any other Person;
(xiv) terminate
or allow to lapse any insurance policy protecting any of its assets, unless simultaneously with such termination or lapse, a replacement
policy underwritten by an insurance company of nationally recognized standing having comparable deductions and providing coverage equal
to or greater than the coverage under the terminated or lapsed policy for substantially similar premiums or less is in full force and
effect;
(xv) adopt
any severance, retention, or other employee benefit plan or fail to continue to make timely contributions to each such plan in accordance
with the terms thereof;
(xvi) waive,
release, settle, compromise, or otherwise resolve any Action, except in the Ordinary Course of Business or where such waivers, releases,
settlements or compromises involve only the payment of monetary damages in an amount less than $500,000 in the aggregate;
(xvii) except
as required by GAAP or IFRS, as applicable, or Public Company Accounting Oversight Board rules or requirements, make any material change
in its accounting principles, methods, or practices;
(xviii) change
its principal place of business or jurisdiction of organization;
(xix) (A)
make, change, or revoke any material Tax election; (B) settle or compromise any material claim, notice, audit report, or assessment in
respect of Taxes; (C) enter into any Tax allocation, Tax sharing, Tax indemnity, or other closing agreement relating to any Taxes; or
(D) surrender or forfeit any right to claim a material Tax refund;
(xx) enter
into any transaction with or distribute or advance any material assets or property to any of its Affiliates, other than the payment of
salary and benefits in the Ordinary Course of Business;
(xxi) other
than (A) as required by any Employee Benefit Plan or (B) in the Ordinary Course of Business (it being understood and agreed, for the avoidance
of doubt, that in no event shall the exception in this clause (B) be deemed or construed as permitting any Party or Subsidiary thereof
to take any action that is not permitted by any other provision of this Section 7.1(b)), (1) increase or change to a material extent
the compensation or benefits of any employee or service provider, (2) accelerate the vesting or payment of any material compensation or
benefits of any employee or service provider, (3) enter into, amend, or terminate any Employee Benefit Plan (or any plan, program, agreement,
or arrangement that would be an Employee Benefit Plan if in effect on the date hereof) or grant, amend, or terminate any material awards
thereunder, (4) fund any material payments or benefits that are payable or to be provided under any Employee Benefit Plan, (5) make any
material loan to any present or former employee or other individual service provider, other than advancement of expenses in the Ordinary
Course of Business, or (6) enter into, amend or terminate any collective bargaining agreement or other agreement with a labor union or
labor organization;
(xxii) authorize,
recommend, propose, or announce an intention to adopt, or otherwise effect, a plan of complete or partial liquidation, dissolution, restructuring,
recapitalization, reorganization, or similar transaction involving it or any Subsidiary;
(xxiii) take,
agree to take, or fail to take any action that could reasonably be expected to prevent the Merger from qualifying for the Intended Tax
Treatment; or
(xxiv) enter
into any agreement or otherwise agree or commit to take, or cause to be taken, any of the actions set forth in this Section 7.1(b).
(c) Neither
Purchaser nor the Company shall (i) take or agree to take any action with the intent to cause any representation or warranty of such party
to be inaccurate or misleading in any respect at, or as of any time prior to, the Closing Date, or (ii) omit to take, or agree to omit
to take, any action with the intent to cause any such representation or warranty to be inaccurate or misleading in any respect at any
such time.
(d) Notwithstanding
the foregoing, the Company and Purchaser and their respective Subsidiaries shall be permitted to take any and all actions required to
comply in all material respects with the quarantine, “shelter in place,” “stay at home,” workforce reduction,
social distancing, shut down, closure, sequester or another Law, directive, guidelines or recommendations by any governmental authority
(including the Centers for Disease Control and Prevention and the World Health Organization) in each case in connection with, related
to or in response to COVID-19 or any future epidemics, pandemics, or similar health emergencies.
Section 7.2. Exclusivity
(a) Subject
to Section 7.2(b), during the Interim Period, neither the Company, on the one hand, nor Purchaser, on the other hand, shall, and
such Persons shall cause each of their respective Representatives not to, without the prior written consent of the other (which consent
may be withheld in the sole and absolute discretion of the party asked to provide consent), directly or indirectly, (i) encourage, solicit,
initiate, engage, or participate in negotiations with any Person concerning any Alternative Transaction, (ii) take any other action intended
or designed to facilitate the efforts of any Person relating to a possible Alternative Transaction, or (iii) approve, recommend or enter
into any Alternative Transaction or any contract or agreement related to any Alternative Transaction. Immediately following the execution
of this Agreement, the Company, on the one hand, and Purchaser, on the other hand, shall, and shall cause each of their Representatives
to, terminate any existing discussion or negotiations with any Persons other than the Company or Purchaser, as applicable, concerning
any Alternative Transaction. Each of the Company and Purchaser shall be responsible for any acts or omissions of any of its respective
Representatives that, if they were the acts or omissions of the Company or Purchaser, as applicable, would be deemed a breach of such
Party’s obligations hereunder (it being understood that such responsibility shall be in addition to and not by way of limitation
of any right or remedy the Company or Purchaser, as applicable, may have against such Representatives with respect to any such acts or
omissions). For purposes of this Agreement, the term “Alternative Transaction” means any of the following transactions
involving the Company or Purchaser or their respective Subsidiaries (other than the transactions contemplated by this Agreement): (A)
any merger, consolidation, share exchange, business combination, or other similar transaction; (B) any sale, lease, exchange, transfer,
or other disposition of all or a material portion of the assets of such Person or any capital stock or other Equity Interests of such
party or its Subsidiaries in a single transaction or series of transactions; and (C) any purchase, lease, exchange, transfer, or other
acquisition of (1) all or a material portion of the assets of any Person by the Company or Purchaser or their respective Subsidiaries
or (2) any capital stock or other Equity Interests of any Person by the Company or Purchaser or their respective Subsidiaries, in each
case, in a single transaction or series of transactions.
(b) In
the event that there is an unsolicited proposal for, or an indication of interest in entering into, an Alternative Transaction, communicated
in writing to the Company or Purchaser or any of their respective Representatives (each, an “Alternative Proposal”),
such Party shall as promptly as practicable (and in any event within one Business Day after receipt thereof) advise the other Parties,
orally and in writing, of such Alternative Proposal and the material terms and conditions thereof (including any changes thereto) and
the identity of the Person making any such Alternative Proposal. The Company and Purchaser shall keep each other informed on a reasonably
current basis of material developments with respect to any such Alternative Proposal.
Section 7.3. Access
to Information
During the Interim Period,
each of the Company and Purchaser shall, upon reasonable advance written notice, provide, or cause to be provided, to the other and their
authorized Representatives during normal business hours reasonable access to their offices, properties, and books and records, in a manner
so as to not interfere with their normal business operations. Notwithstanding the foregoing, neither Purchaser or Merger Sub, on the one
hand, nor the Company or the Company Subsidiary, on the other hand, shall be required to provide to the other or any of its authorized
Representatives any information (a) if and to the extent doing so would (i) violate any applicable Law, (ii) result in the disclosure
of any trade secrets of third parties in breach of any Contract with such third party, (iii) violate any legally-binding obligation with
respect to confidentiality, non-disclosure, or privacy, or (iv) jeopardize protections afforded under the attorney-client privilege or
the attorney work product doctrine (provided that, in case of each of clauses (i) through (iv), the Company or Purchaser shall, and shall
cause their Subsidiaries to, use their commercially reasonable efforts to (A) provide such access as can be provided (or otherwise convey
such information regarding the applicable matter as can be conveyed) without violating such privilege, doctrine, Contract, obligation,
or Law and (B) provide such information in a manner without violating such privilege, doctrine, Contract, obligation, or Law), or (b)
if the Company or the Company Subsidiary, on the one hand, and any Purchaser Party or any of their respective Representatives, on the
other hand, are adverse parties in a litigation and such information is reasonably pertinent thereto; provided that the withholding
Party shall provide to the other prompt written notice of the withholding of access or information on any such basis.
Section 7.4. Notice
of Certain Events
During the Interim Period,
each of Purchaser and the Company shall promptly notify the other of:
(a) any
notice from any Person alleging or raising the possibility that the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement or that the transactions contemplated by this Agreement might give rise to any Action or other
rights by or on behalf of such Person or result in the loss of any rights or privileges of the Company (or Purchaser Parties, post-Closing)
to any such Person or create any Lien on any assets of the Company, Purchaser, or their Subsidiaries, as applicable;
(b) any
notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;
(c) any
Actions commenced or, to the Knowledge of Purchaser or the Company, as applicable, threatened, relating to or involving or otherwise affecting
either Party or any of their stockholders or their equity, assets, or business or that relate to the consummation of the transactions
contemplated by this Agreement;
(d) the
occurrence of any fact or circumstance that constitutes or results, or would reasonably be expected to constitute or result in, a Company
Material Adverse Effect or a Purchaser Material Adverse Effect; and
(e) any
inaccuracy of any representation or warranty of such Party contained in this Agreement, or any failure of such Party to comply with or
satisfy any covenant, condition, or agreement to be complied with or satisfied by it hereunder, that would reasonably be expected to cause
any of the conditions set forth in Article VI not to be satisfied by the Closing; provided, however, that no such notification
or failure to provide such notification pursuant to clause (d) or clause (e) of this Section 7.4 shall affect the representations,
warranties, covenants, agreements, or obligations of the Parties (or remedies with respect thereto) or the conditions to the obligations
of the Parties, and a failure to comply with clause (d) or clause (e) of this Section 7.4 shall not, of itself, cause the condition
stated in Section 6.2(b) or Section 6.3(b), as the case may be, to fail to be satisfied.
Section 7.5. Reserved
Section 7.6. Confidentiality
From and after the date hereof,
each of the Company and Purchaser shall not disclose or use, unless compelled to disclose by judicial or administrative process or by
other requirements of applicable Law (in which case such Party shall use commercially reasonable efforts to (a) consult with the other
prior to making any such disclosure to the extent permitted by applicable Law and reasonably practicable under the circumstances and (b)
cooperate in connection with the other Party’s efforts to obtain a protective order or confidential treatment at such Party’s
expense), all documents and information concerning the negotiation and execution of this Agreement or the other Party or any of its Affiliates
or their Representatives (including trade secrets, confidential information, and proprietary materials, which may include the following
categories of information and materials: methods, procedures, computer programs and architecture, databases, customer information, lists
and identities, employee lists and identities, pricing information, research, methodologies, contractual forms, and other information,
whether tangible or intangible, which is not publicly available generally) (collectively, the “Confidential Information”),
except to the extent that such Confidential Information that can be shown to have been (i) in the public domain through no fault of, or
breach of this Agreement on the part of, the disclosing Party or its Affiliates, or (ii) later lawfully acquired by the disclosing Party
on a non-confidential basis from sources other than the other Party or any of its Affiliates or their Representatives and who are not
known (after reasonable inquiry) to be under an obligation of confidentiality with respect thereto. Notwithstanding the foregoing, any
such Person may disclose such Confidential Information to his, her, or its (A) tax and financial advisors for purposes of complying with
such Person’s tax obligations or other reporting obligations under applicable Law arising out of this Agreement, and (B) legal counsel
and accountants for the purpose of evaluating the legal and financial ramifications of this Agreement.
Section 7.7. Commercially
Reasonable Efforts; Further Assurances
(a) Subject
to the terms and conditions of this Agreement, each Party shall use commercially reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things reasonably necessary or advisable, or as reasonably requested by the other Parties,
to consummate and make effective as promptly as is reasonably practicable the transactions contemplated by this Agreement, including using
commercially reasonable efforts to (i) obtain all necessary actions, nonactions, waivers, consents, approvals, authorizations, Governmental
Orders, or other actions from all applicable Governmental Authorities prior to the Effective Time, (ii) avoid an Action by any Governmental
Authority, and (iii) execute and deliver any additional instruments necessary to consummate the transactions contemplated by this Agreement.
(b) Subject
to applicable Law, each of the Company and Purchaser agrees to (i) reasonably cooperate and consult with the other regarding obtaining
and making all notifications and filings with Governmental Authorities, (ii) furnish to the other such information and assistance as the
other may reasonably request in connection with its preparation of any notifications or filings, (iii) keep the other reasonably apprised
of the status of matters relating to the completion of the transactions contemplated by this Agreement, including promptly furnishing
the other with copies of notices and other communications received by such Party from, or given by such Party to, any third party or any
Governmental Authority with respect to such transactions, (iv) permit the other Party to review and incorporate the other Party’s
reasonable comments in any communication to be given by it to any Governmental Authority with respect to any filings required to be made
with, or action or nonactions, consents, approvals, authorizations, Governmental Orders, waivers, expirations or terminations of waiting
periods, clearances, consents or orders required to be obtained from, such Governmental Authority in connection with execution and delivery
of this Agreement and the consummation of the transactions contemplated by this Agreement, and (v) to the extent reasonably practicable,
consult with the other in advance of and not participate in any meeting or discussion relating to the transactions contemplated by this
Agreement, either in person or by telephone, with any Governmental Authority in connection with the transactions contemplated hereby unless
it gives the other Party the opportunity to attend and observe; provided, however, that, in each of clauses (iii) and (iv) above, that
materials may be redacted (A) to remove references concerning the valuation of such Party and its Affiliates, (B) as necessary to comply
with Contracts or applicable Laws, and (C) as necessary to address reasonable attorney-client or other privilege or confidentiality concerns.
(c) During
the Interim Period, Purchaser, on the one hand, and the Company, on the other hand, shall each notify the other in writing promptly after
learning of any stockholder demands or other stockholder Action (including derivative claims) relating to this Agreement or any matters
relating thereto commenced against Purchaser, Merger Sub, or any of its or their respective Representatives in their capacity as a Representative
of a Purchaser Party or against the Company or the Company Subsidiary, as applicable (collectively, the “Transaction Litigation”).
Purchaser shall control the negotiation, defense, and settlement of any such Transaction Litigation brought against Purchaser, Merger
Sub, or members of the Boards of Directors of Purchaser or Merger Sub and the Company shall control the negotiation, defense, and settlement
of any such Transaction Litigation brought against the Company or the Company Subsidiary or the members of their Boards of Directors;
provided, however, that in no event shall the Company or Purchaser settle, compromise, or come to any arrangement with respect to any
Transaction Litigation, or agree to do the same, without the prior written consent of the other (not to be unreasonably withheld, conditioned,
or delayed); further provided, that it shall be deemed to be reasonable for Purchaser (if the Company is controlling the Transaction Litigation)
or the Company (if Purchaser is controlling the Transaction Litigation) to withhold, condition, or delay its consent if any such settlement
or compromise (i) does not provide for a legally binding, full, unconditional, and irrevocable release of each Purchaser Party (if the
Company is controlling the Transaction Litigation) or the Company and the Company Subsidiary and related parties (if Purchaser is controlling
the Transaction Litigation) and its respective Representative that is the subject of such Transaction Litigation, (ii) provides for any
non-monetary, injunctive, equitable, or similar relief against any Purchaser Party (if the Company is controlling the Transaction Litigation)
or the Company, the Company Subsidiary and related parties (if Purchaser is controlling the Transaction Litigation) or (iii) contains
an admission of wrongdoing or liability by a Purchaser Party (if the Company is controlling the Transaction Litigation) or the Company
and the Company Subsidiary and related parties (if Purchaser is controlling the Transaction Litigation) and its respective Representative
that is the subject of such Transaction Litigation. Purchaser and the Company shall each (A) keep the other reasonably informed regarding
any Transaction Litigation (to the extent such action would not jeopardize an attorney-client privilege or the attorney work product doctrine),
(B) give the other the opportunity to, at its own cost and expense, participate in the defense, settlement, and compromise of any such
Transaction Litigation and reasonably cooperate with the other in connection with the defense, settlement, and compromise of any such
Transaction Litigation, (C) consider in good faith the other’s advice with respect to any such Transaction Litigation, and (D) reasonably
cooperate with each other including with respect to the defense, settlement, and compromise of any such Transaction Litigation.
Section 7.8. Directors’
and Officers’ Indemnification and Liability Insurance
(a) All
rights to indemnification for acts or omissions occurring through the Closing Date, including in connection with the negotiation and execution
of this Agreement and the transactions contemplated hereby, including the Merger, now existing in favor of the current directors and officers
of the Company or the Company Subsidiary or the Purchaser Parties and Persons who served as a director, officer, member, trustee, or fiduciary
of another corporation, partnership, joint venture, trust, pension or other employee benefit plan, or enterprise at the request of the
Company or the Company Subsidiary or the Purchaser Parties, as provided in their respective Organizational Documents or in any indemnification
agreements, shall survive the Merger and shall continue in full force and effect in accordance with their terms. For a period of six years
after the Effective Time, Purchaser shall cause the Organizational Documents of Purchaser and the Surviving Corporation and their respective
Subsidiaries to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses than
are set forth as of the date of this Agreement in the Organizational Documents of, with respect to Purchaser, Purchaser, and with respect
to the Surviving Corporation and its Subsidiaries, the Company and its Subsidiaries, as applicable, to the extent permitted by applicable
Law.
(b) Prior
to the Closing, Purchaser and the Company shall reasonably cooperate in order to obtain directors’ and officers’ liability
insurance for Purchaser and the Company that shall be effective as of Closing and will cover (i) those Persons who were directors and
officers of the Company prior to the Closing and (ii) those Persons who will be the directors and officers of Purchaser and its Subsidiaries
(including the Surviving Corporation after the Effective Time) at and after the Closing on terms not less favorable than the better of
(A) the terms of the current directors’ and officers’ liability insurance in place for the Company’s and the Company
Subsidiary’s directors and officers and (B) the terms of a typical directors’ and officers’ liability insurance policy
for a company whose equity is listed on Nasdaq which policy has a scope and amount of coverage that is reasonably appropriate for a company
of similar characteristics (including the line of business and revenues) as Purchaser.
(c) The
provisions of this Section 7.8 are intended to be for the benefit of, and shall be enforceable by, each Person who will have been
a director or officer of the Company, the Company Subsidiary or Purchaser for all periods ending on or before the Closing Date and may
not be changed with respect to any officer or director without his or her written consent.
(d) Prior
to the Effective Time, the Company shall obtain and fully pay the premium for a one year prepaid “tail” policy for the extension
of the directors’ and officers’ liability coverage of the Company’s and the Company Subsidiary’s existing directors’
and officers’ liability insurance policies, for claims reporting or discovery period of one year from and after the Effective Time,
on terms and conditions providing coverage retentions, limits and other material terms (other than premiums payable) substantially equivalent
to the current policies of directors’ and officers’ liability insurance maintained by the Company and the Company Subsidiary
with respect to matters arising on or before the Effective Time, covering without limitation the transactions contemplated hereby.
Section 7.9. Non-Disparagement
Each
Party will refrain from, in any manner, directly or indirectly, all conduct, oral or otherwise, that disparages or damages or could reasonably
disparage or damage the reputation, goodwill, or standing in the community of any other Party, their respective Representatives, or their
respective Affiliates.
Section 7.10. Certain
Tax Matters
(a) Each
of Purchaser and the Company shall use commercially reasonable efforts to cause the Merger to qualify as a “reorganization”
within the meaning of Section 368(a) of the Code. Neither Purchaser nor the Company shall take any action, or fail to take any action,
that could reasonably be expected to cause the Merger to fail to qualify as a “reorganization” within the meaning of Section
368(a) of the Code. Purchaser and the Company intend to report and, except to the extent otherwise required by a change in Law, shall
report, for U.S. federal income tax purposes, the Merger as a “reorganization” within the meaning of Section 368(a) of the
Code, unless otherwise required by applicable Law.
(b) Each
of the Parties shall (and shall cause their respective Affiliates to) cooperate fully, as and to the extent reasonably requested by another
party, in connection with the filing of relevant Tax Returns, and any Tax proceeding, audit, or examination. Such cooperation shall include
the retention and (upon another Party’s request) the provision (with the right to make copies) of records and information reasonably
relevant to any Tax proceeding, audit, or examination, making employees available on a mutually convenient basis to provide additional
information, and explanation of any material provided hereunder.
Section 7.11. Purchaser’s
SEC Filings; Nasdaq
(a) During
the Interim Period, Purchaser will use commercially reasonable efforts to keep current and timely file all of its public filings with
the SEC and otherwise comply in all material respects with applicable securities Laws, and shall use commercially reasonable efforts prior
to the Closing to maintain the listing of the Siyata Shares on Nasdaq.
(b) During
the Interim Period, Purchaser shall file an initial listing application with Nasdaq in connection with the transactions contemplated by
this Agreement and shall use commercially reasonable efforts to cause: (i) such initial listing application with Nasdaq to be approved;
(ii) all applicable initial and continuing listing requirements of Nasdaq to be satisfied; and (iii) the Siyata Shares to be approved
for listing on Nasdaq, subject to official notice of issuance, in each case, as promptly as reasonably practicable after the date of this
Agreement and in any event prior to the Effective Time.
Section 7.12. Post-Closing
Directors
Each of Purchaser and Merger
Sub, as applicable, shall take all such action within its power as may be necessary or appropriate such that, effective at the Effective
Time: (i) each of Purchaser’s Board of Directors and the Surviving Corporation’s Board of Directors consist of that number
of directors determined by the Company in accordance with Section 2.3(a); (ii) the members of Purchaser’s Board of Directors
are the individuals determined in accordance with Section 2.3(a); and (iii) the members of the Surviving Corporation’s Board
of Directors are the individuals determined in accordance with Section 2.2(a).
Section 7.13. Company
Subsidiary Acquisition Documents
None of Purchaser, the Surviving
Corporation or the Company shall amend, modify, waive or terminate any provision of any of the Company Subsidiary Acquisition Documents
in any material respect without the consent of Marc Seelenfreund (for as long as he shall remain Chief Executive Officer of Purchaser)
and shall enforce the provisions of each Company Subsidiary Acquisition Document in accordance with its terms. If any party to a Company
Subsidiary Acquisition Document breaches any provision thereof, Purchaser, the Surviving Corporation and the Company shall, for so long
as Marc Seelenfreund remains Chief Executive Officer of Purchaser, promptly use their commercially reasonable efforts to seek specific
performance of the terms of such Company Subsidiary Acquisition Document, except in such cases where Mr. Seelenfreund (if then an officer
or director of Purchaser) has consented to a different course of action.
Section 7.14. Interim
Capital Raises and PTT Minimum Cash
(a) The
Parties agree that, from the date hereof until the Closing Date, Purchaser shall be allowed to raise capital by selling Siyata Shares
pursuant to (i) the Equity Purchase Agreement by and between Purchaser and Hudson Global Ventures, LLC, dated as of October 21, 2024,
as amended pursuant to the first amendment thereto dated as of October 28, 2024 and the second amendment thereto dated as of November
18, 2024, and (ii) the Equity Purchase Agreement between Purchaser and Hudson Global Ventures, LLC, dated January 14, 2025 (each, an “Interim
Capital Raise”). The net proceeds from any such Interim Capital Raise shall be transferred to the PTT Subsidiaries prior to
the Closing Date or as soon as practicable thereafter.
(b) The
PTT Subsidiaries shall have aggregate cash on hand and cash equivalents equal to at least $4,000,000 at Closing (the “PTT Minimum
Cash”). In the event that there shall be a shortfall and the PTT Minimum Cash is less than $4,000,000 at Closing, then the Surviving
Corporation shall cooperate with Purchaser following Closing in the taking of all actions as may be reasonably necessary to cause the
PTT Subsidiaries to have $4,000,000 in PTT Minimum Cash as soon as practicable after Closing. For purposes of calculating the PTT Minimum
Cash, (a) the cash on hand and cash equivalents of Purchaser and all its Subsidiaries on the Closing Date (immediately prior to the Effective
Time) shall be aggregated; (b) the net proceeds from any Interim Capital Raises shall be transferred to the PTT Subsidiaries and added
to this amount; and (c) any contributions of cash or cash equivalents made by Purchaser or the Surviving Corporation to the PTT Subsidiaries
after Closing shall be added; and (d) any expenditures or transfers of cash by Purchaser or the PTT Subsidiaries after the Effective
Date shall not be taken into consideration. For the avoidance of doubt, if Purchaser receives net proceeds from Interim Capital Raises
in excess of $4,000,000 prior to the Closing Date or the aggregate of clauses (a) and (b) in this Section 7.14 exceeds $4,000,000, then
there shall be no obligation on Purchaser or the Surviving Corporation to make any contributions described in clause (c) and no obligation
on the PTT Subsidiaries to make any payments to Purchaser or the Surviving Corporation to reduce this sum to $4,000,000.
7.15. PTT Assets
The Parties agree that any
and all assets and investments relating to the PTT Retained Business that are owned by Purchaser or its Subsidiaries (other than the PTT
Subsidiaries), including, but not limited to, the shares of common stock of Vizla Copper Corp. and Canadian Towers & Fiber Optics
Inc. (the “PTT Assets”), shall be transferred to the PTT Subsidiaries prior to Closing or as soon as practicable thereafter.
After Closing, the Surviving Corporation undertakes to transfer any PTT Assets to the PTT Subsidiaries within five days after Marc Seelenfreund’s
request.
ARTICLE VIII. SETTLEMENT OF DISPUTED MATTERS
Section 8.1. Attorneys’
Fees with Respect to Litigation
If
the Company, on the one hand, or Purchaser, on the other hand, initiate any Action against the other, involving this Agreement, the prevailing
Party (as determined by the applicable court) in such Action shall be entitled to receive reimbursement from the other Party for all reasonable
attorneys’ fees, experts’ fees, and other costs and expenses incurred by the prevailing Party in respect of that proceeding,
including any and all appeals thereof, and such reimbursement shall be included in judgment or final order issued in such proceeding.
Section 8.2. Governing
Law; Jurisdiction and Venue
(a) This
Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the Laws of the State of Delaware, excluding
its conflicts of laws provisions or rule that would cause the application of Laws of any jurisdiction other than those of the State of
Delaware.
(b) Each
Party hereby irrevocably submits to the exclusive jurisdiction of the federal courts located in the State of Delaware and the Court of
Chancery of the State of Delaware, for the purposes of any action arising out of this Agreement or the subject matter hereof brought by
any Party under this Agreement.
(c) To
the extent permitted by applicable Law, each Party hereby waives and agrees not to assert, by way of motion, as a defense or otherwise,
in any action under this Agreement, any claim (i) that it is not personally subject to the jurisdiction of the above named courts, (ii)
that such action is brought in an inconvenient forum, (iii) that it is immune from any legal process with respect to itself or its property,
(iv) that the venue of the suit, action, or proceeding is improper, or (v) that this Agreement or the subject matter hereof may not be
enforced in or by such courts.
(d) The
Parties agree that mailing of process or other papers in connection with any such Action or proceeding in the manner provided in this
Section 8.2 or in such other manner as may be permitted by applicable Law, shall be valid and sufficient service thereof.
ARTICLE IX. TERMINATION
Section 9.1. Termination
by Mutual Consent
This Agreement may be terminated
at any time before the Closing by mutual written consent of Purchaser and the Company.
Section 9.2. Termination
by Purchaser or the Company
This
Agreement may be terminated by either Purchaser or the Company at any time before the Closing:
(a) if
the transactions contemplated hereby have not been consummated by December 31, 2025 (the “Termination Date”),
except that the right to terminate this Agreement under this Section 9.2 shall not be available to any Party whose breach of this
Agreement has been a principal cause of, or principal reason for, the failure to consummate the transactions contemplated hereby by such
date; or
(b) if
any Law or Governmental Order is enacted, issued, promulgated, enforced or entered by a Governmental Authority of competent jurisdiction
(including Nasdaq) that permanently enjoins, or otherwise has the effect of making illegal or otherwise preventing or prohibiting consummation
of the transactions contemplated hereby, and, in the case of any Governmental Order, such Governmental Order has become final and non-appealable.
Section 9.3. Termination
by the Company
This
Agreement may be terminated by the Company:
(a) if
Purchaser breaches any of its representations, warranties, covenants, or agreements contained in this Agreement, which breach would give
rise to the failure of a condition set forth in Section 6.1 or Section 6.3 and cannot be cured by the Termination Date or,
if curable, has not been cured by Purchaser within the earlier of (i) 30 days after Purchaser’s receipt of written notice of such
breach from the Company and (ii) three Business Days prior to the Termination Date; provided that the Company shall not have the
right to terminate this Agreement pursuant to this Section 9.3(a) if the Company is at that time in breach of any of its representations,
warranties, covenants, or agreements contained in this Agreement that would result in the conditions to Closing set forth in Section
6.1 or Section 6.2 not being satisfied; or
(b) if
all of the conditions set forth in Section 6.1 and Section 6.2 have been satisfied (other than any condition the failure
of which to be satisfied has been principally caused by the breach of this Agreement by Purchaser or any of its Affiliates and conditions
that, by their nature, are to be satisfied at Closing and that were, at the time of termination, capable of being satisfied) and Purchaser
has failed to fulfill its obligation and agreement herein to consummate the Closing within three Business Days following written notice
of such satisfaction from the Company and that the Company is ready, willing, and able to consummate the transactions contemplated hereby.
Section 9.4. Termination
by Purchaser
This
Agreement may be terminated by Purchaser at any time before the Closing:
(a) if
the Company breaches any of its representations, warranties, covenants, or agreements contained in this Agreement, which breach would
give rise to the failure of a condition set forth in Section 6.1 or Section 6.2 and cannot be cured by the Termination Date
or, if curable, has not been cured by the Company within the earlier of (i) 30 days after the Company’s receipt of written notice
of such breach from Purchaser and (ii) three Business Days prior to the Termination Date; provided that Purchaser shall not have
the right to terminate this Agreement pursuant to this Section 9.4(a) if Purchaser is at that time in breach of any of its representations,
warranties, covenants, or agreements contained in this Agreement that would result in the conditions to Closing set forth in Section
6.1 or Section 6.3 not to be satisfied; or
(b) if
all of the conditions set forth in Section 6.1 and Section 6.3 have been satisfied (other than any condition the failure
of which to be satisfied has been principally caused by the breach of this Agreement by the Company or any of its Affiliates and conditions
that, by their nature, are to be satisfied at Closing and that were, at the time of termination, capable of being satisfied) and the Company
has failed to fulfill its obligation and agreement herein to consummate the Closing within three Business Days following written notice
of such satisfaction from Purchaser and that Purchaser is ready, willing, and able to consummate the transactions contemplated hereby.
Section 9.5. Effect
of Termination
If this Agreement is validly
terminated pursuant to this Article IX, except as set forth in this Section 9.5, it shall become void and of no further
force and effect, with no liability on the part of any Party (or any stockholder or Representative of such Party), except that if such
termination results from (i) fraud or (ii) the willful and material (A) failure of any Party to perform its covenants, obligations, or
agreements contained in this Agreement or (B) breach by any Party of its representations or warranties contained in this Agreement, then
such Party shall be liable for any damages incurred or suffered by the other Parties as a result of such failure or breach, except that
the provisions of this Section 9.5 and of Article X (Miscellaneous) shall survive any valid termination of this Agreement;
and provided that, any such liability shall be capped at $200,000.
ARTICLE X. MISCELLANEOUS
Section 10.1. Non-Survival
of Representations, Warranties, and Covenants
Except as otherwise contemplated
by Section 9.5, none of the representations, warranties, covenants, obligations, or other agreements in this Agreement or in any
certificate (including confirmations therein), statement, or instrument delivered pursuant to this Agreement, including any rights arising
out of any breach of such representations, warranties, covenants, obligations, agreements, and other provisions shall survive the Closing
and shall terminate and expire upon the occurrence of the Closing (and there shall be no liability after the Closing in respect thereof),
except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing
including, in particular, Section 7.14, and then only with respect to any breaches occurring after the Closing and (b) this Article
X.
Section 10.2. Waiver;
Extension
Any Party may, at any time
prior to the Closing, by action taken by its Board of Directors or officers or Persons thereunto duly authorized, (a) extend the time
for the performance of the obligations or acts of the other Parties, (b) waive any inaccuracies in the representations and warranties
(of another Party) that are contained in this Agreement, or (c) waive compliance by the other Parties with any obligation, covenant, agreement,
or condition contained herein, provided that any such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the Party or Parties granting such extension or waiver. No delay on the part of any Party in exercising any right, power,
or privilege hereunder shall operate as a waiver thereof.
EACH PARTY ACKNOWLEDGES
AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE,
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.3. Non-Recourse
This Agreement may be enforced
only against, and any dispute, claim, or controversy based upon, arising out of, or related to this Agreement or the transactions contemplated
hereby may be brought only against, the entities that are expressly named as Parties and then only with respect to the specific obligations
set forth in this Agreement with respect to such Party. No past, present, or future director, officer, employee, incorporator, member,
partner, shareholder, agent, attorney, advisor, lender, or Representative or Affiliate of any named Party (which Persons are intended
third party beneficiaries of this Section 10.3) shall have any liability (whether in contract or tort, at law, or in equity or
otherwise, or based upon any theory that seeks to impose liability of an entity party against its owners or Affiliates) for any one or
more of the representations, warranties, covenants, agreements, or other obligations or liabilities of such Party or for any dispute,
claim, or controversy based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
Section 10.4. Specific
Performance
Each Party acknowledges and
agrees that the other Parties would be irreparably damaged in the event that any of the terms or provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached. Therefore, notwithstanding anything to the contrary set forth
in this Agreement, each Party hereby agrees that the other Parties shall be entitled to an injunction or injunctions to prevent breaches
of any of the terms or provisions of this Agreement and/or specific performance by any other Party under this Agreement and each Party
hereby agrees to waive the defense (and not to interpose as a defense or in opposition) in any such suit that the other Parties have an
adequate remedy at law, and hereby agrees to waive any requirement to post any bond in connection with obtaining such relief. The equitable
remedies described in this Section 10.4 shall be in addition to, and not in lieu of, any other remedies at law or in equity
that the Parties may elect to pursue.
Section 10.5. Notices
Any notice, demand, instruction,
request, or other communication that may be permitted, required, or desired to be given pursuant hereto shall, unless changed by written
notice given by a Party to the others pursuant hereto, be given in writing and directed to the applicable Party as follows:
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If to the Company: |
CORE Gaming, Inc. |
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2833 Smith Avenue Ste. 333 |
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Baltimore, MD 21209 |
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Attn: Aitan Zacharin, Chief Executive Officer |
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Email: aitanzacharin@gmail.com |
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with a copy to: |
Lucosky Brookman LLP |
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101 Wood Avenue South, 5th Floor |
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Iselin, New Jersey 08830 |
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Attn: Victoria Baylin, Esq. |
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Email: vbaylin@lucbro.com |
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If to Purchaser or Merger Sub: |
Siyata Mobile Inc. |
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2200 – 885 West Georgia Street |
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Vancouver, BC V6C 3E8 |
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Attn: Marc Seelenfreund, Chief Executive Officer |
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Email: marc@siyata.net |
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with a copy to: |
Sichenzia Ross Ference Carmel LLP |
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1185 Avenue of the Americas, 31st Floor |
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New York, New York 10036 |
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Attn: Ross Carmel, Esq. |
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Email: rcarmel@srfc.law |
Except as otherwise expressly permitted herein,
all notices, demands, instructions, requests, or communications required, desired, or permitted to be given hereunder shall be deemed
given: (a) if by hand or nationally recognized overnight courier service (i) if delivered by 5:00 PM Eastern Time on a Business Day, on
the date of delivery, and (ii) if delivered after 5:00 PM Eastern Time, on the first Business Day after such delivery; (b) if by electronic
mail or facsimile, on the date of transmission with affirmative confirmation of receipt; or (c) seven Business Days after mailing by prepaid
certified or registered mail, return receipt requested.
Section 10.6 Assignment
No Party shall assign this
Agreement or any part hereof without the prior written consent of the other Parties, and any such transfer without prior written consent
shall be void; provided, however, that Purchaser may assign its rights hereunder to any Affiliate, but shall remain liable for
all of Purchaser’s obligations hereunder. Except as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the Parties and their respective permitted successors and assigns.
Section 10.7. Press
Release and Announcements
Any press release, public
announcement, or similar publicity with respect to this Agreement or the transactions contemplated hereby will be issued, if at all, at
such time and in such manner as Purchaser and the Company shall mutually determine in their reasonable discretion; provided that
nothing in this Section 10.7 will preclude any Party from making any disclosures necessary and proper in conjunction with the filing
of any Tax Return or other document required to be filed in connection with making or obtaining (as the case may be) consents from any
Governmental Authority.
Section 10.8. Rights
of Third Parties
Except as provided in Section
10.6, nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than
the Parties, any right or remedies under or by reason of this Agreement.
Section 10.9. Reliance
Each of the Parties shall
be deemed to have relied upon the accuracy of the written representations and warranties made to such Party in or pursuant to this Agreement,
notwithstanding any investigations conducted by or on such Party’s behalf or notice, knowledge, or belief to the contrary.
Section 10.10. Expenses
Upon Closing, Purchaser’s
and the Company’s Expenses (including fees and expenses of legal counsel, investment bankers, brokers, finders, and other representatives
or consultants) in connection with this Agreement and the transactions contemplated hereby (“Expenses”) will
be paid by Purchaser as contemplated by Section 3.7(b). Otherwise, in the event that the transactions contemplated hereby are not
consummated and the Closing does not occur, each Party shall bear its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, whether or not such transactions shall be consummated, including, without limitation, all broker’s
fees and the fees of his or its legal counsel, financial advisers, and accountants.
Section 10.11. Counterparts
This Agreement may be executed
in one or more counterparts, all of which shall constitute one agreement. A signed copy of this Agreement shall have the same force and
effect as an original. Copies of executed counterparts of this Agreement transmitted by electronic transmission (including by email or
in .pdf format) as well as electronically or digitally executed counterparts (such as DocuSign) shall have the same legal effect as original
signatures and shall be considered original executed counterparts of this Agreement.
Section 10.12. Entire
Agreement
This Agreement constitutes
the entire agreement among the Parties and supersede any other agreements, whether written or oral, that may have been made or entered
into by or among any of the Parties hereto or any of their respective Affiliates relating to the transactions contemplated hereby. No
representations, warranties, covenants, understandings, or agreements, oral or otherwise, relating to the transactions contemplated by
this Agreement exist between the Parties except as expressly set forth in this Agreement.
Section 10.13. Severability
Whenever possible, each provision
of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any provision of this
Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any person of circumstance shall
be held invalid, illegal, or unenforceable in any respect by a court of competent jurisdiction, all other provisions of this Agreement
shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any Party. Upon such determination that any term or other provision of this Agreement is invalid,
illegal, or unenforceable under applicable Law, the Parties shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated
as originally contemplated to the greatest extent possible.
Section 10.14. Governing
Law; Jurisdiction
This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable
principles of conflicts of Laws thereof. In any action or proceeding arising out of, relating to, in connection with or to enforce this
Agreement or any of the transactions contemplated hereby: (i) each of the Parties irrevocably and unconditionally consents and submits
to the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware and any state appellate court therefrom or,
if such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in the State of Delaware,
or, if such United States District Court lacks subject matter jurisdiction, the Superior Court of the State of Delaware (it being agreed
that the consents to jurisdiction and venue set forth in this section shall not constitute general consents to service of process in the
State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights
on any Person other than the Parties); and (ii) each of the Parties irrevocably consents to service of process by first class certified
mail, return receipt requested, postage prepaid, to the address at which such Party is to receive notice in accordance with Section
10.5. Each of the Parties hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the Transactions in the Court of Chancery of the State of Delaware and any state appellate
court therefrom or, if such court lacks subject matter jurisdiction, the United States District Court sitting in New Castle County in
the State of Delaware, or, if such United States District Court lacks subject matter jurisdiction, the Superior Court of the State of
Delaware, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an inconvenient forum (including, any claim based on the doctrine of
forum non conveniens or any similar doctrine). The Parties agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Laws; provided,
however, that nothing in the foregoing shall restrict any Party’s rights to seek any post-judgment relief regarding, or any
appeal from, such final trial court judgment.
Section 10.15. Amendments
This terms and provisions
of this Agreement may be amended only by a written instrument signed by all Parties.
[Signature Page(s) Follow(s)]
IN WITNESS WHEREOF,
this Agreement has been duly executed and delivered by the undersigned as of the date first written above.
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PURCHASER: |
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SIYATA MOBILE INC. |
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By: |
/s/ Marc Seelenfreund |
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Marc Seelenfreund, Chief Executive Officer |
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MERGER SUB: |
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SIYATA CORE ACQUISITION U.S., INC. |
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By: |
/s/ Marc Seelenfreund |
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Marc Seelenfreund, Chief Executive Officer |
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THE COMPANY: |
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CORE GAMING, INC. |
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By: |
/s/ Aitan Zacharin |
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Aitan Zacharin, Chief Executive Officer |
[Signature Page to Siyata – CORE Merger
Agreement]
Exhibit 99.1
INFORMATION ABOUT CORE
GAMING AND THE BUSINESS COMBINATION
Business of Core Gaming
The
below is an overview of Core Gaming’s business and certain other information about Core Gaming that may be relevant to investors.
For purposes of this section the words “we,” “our,” “us,” “Core Gaming” and the “Company”
refers to Core Gaming, Inc. and its subsidiaries.
References herein to “¥”
are to the Chinese yuan renminbi and references to “$” are to United States dollars. Capitalized terms not defined
in this Exhibit 99.1 have the meanings assigned to such terms in the Form 6-K of to which this discussion is an exhibit.
Overview
Core
Gaming, Inc. is a mobile gaming developer and publisher incorporated under the laws of the State of Delaware. Our registered and principal
executive offices are located at 25 SE 2nd Avenue Ste. 550 Miami, Florida 33131. We create entertaining games for millions of players
worldwide, while empowering developers to deliver player-focused games to enthusiasts in over 140 countries. Powered by artificial intelligence
(“AI”) tools and algorithms, the Company is focused on the development, distribution, and monetization of casual games, which
are delivered as apps for mobile phones, and generates revenue through the display of ads in the games.
Founded
in 2024, Core Gaming acquired Newbyera Technology Limited, a limited company incorporated under the laws of Hong Kong (“Newbyera”),
pursuant to a share exchange agreement in June 2024. Through this operating subsidiary, Core Gaming reaches over 40 million active users
worldwide every month and continues to fuel its growth through creativity and innovation. Core Gaming’s apps have over 600 million
downloads.
Our
mission is to become a leading casual mobile game developer and publisher. Our software, coupled with our deep industry knowledge and
expertise and our focus on efficiency, has enabled us to rapidly scale a diversified portfolio of mobile games that we have developed
and co-developed. To date we have launched more than 2,000 games into the market. We have created proprietary analytical software, in
the form of our BI platform, that provides deep insight into the effectiveness of various marketing efforts for each title, enabling us
to focus on those channels that are the most successful in reaching our target audience, in terms of both the distribution of games and
the serving of ads. We believe that our algorithm-driven approach affords us a competitive advantage that has helped fuel our rapid growth.
Industry and Market
Opportunity
Over the last 15 years,
mobile apps have become a major part of consumers’ lives. Consumers today have access to a diverse range of mobile applications,
allowing users to seamlessly access entertainment, shopping, healthcare, and other services. The rapid growth of mobile gaming, as one
category of entertainment apps, has created opportunities for mobile game developers, as well as challenges for them in reaching consumers
and monetizing their games in an increasingly crowded marketplace. Most developers lack access to the marketing and monetization tools
required to stand out among countless competing mobile games. According to Statistica, the mobile gaming industry is projected to reach
$126 billion in 2025, with a compound annual growth rate (CAGR) of 5.6% from 2025 to 2029, leading to a projected market value of $157
billion by 2029.1 The number of users worldwide is anticipated to reach 2.4 billion by 2029.2 Estimates show that
gamers spend in excess of seven hours per week gaming, a figure that continues to grow.3
Gaming
on mobile devices has seen the greatest growth among the various gaming platforms, such as consoles and computers, largely driven by affordability
of the devices and availability of content. According to Statistica, mobile gaming has its largest footprint in Southeast Asia, where
mobile devices have seen substantial proliferation over the last decade, whereas console gaming has its largest footprints in North America
and Europe, where disposable income is higher than in other regions. Within mobile gaming, the fastest growth has been among free-to-play
games, where app developers earn revenue from advertising displayed within the game.
| 1 | https://www.statista.com/outlook/amo/media/games/mobile-games/worldwide |
| 3 | Janice Fernandes, Global:
A quarter of consumers now playing in excess of 7 hours of mobile phone games a week, YouGov (July 6, 2022), at https://business.yougov.com/content/43077-global-quarter-consumers-now-playing-excess-7-hour |
Competition
The
mobile gaming industry is extremely competitive globally, with many companies offering products and services similar to ours. The industry
is highly fragmented and composed of companies ranging from small independent developers with limited resources to very large development
companies with longer operating histories, greater financial, technical and marketing resources, and larger user bases than we have. Our
primary competitors are other game developers, as well as companies that provide competing services to their customers, in particular,
game publishing, including promotional activities. In addition, while the industry is experiencing significant growth, it continues to
evolve and create new markets, which could lead to additional competition in the future. Successful execution of our strategy depends,
in part, on our continued ability to attract and retain players in the markets where we are established and to expand the market for our
games. Our continued success also depends on our ability to maintain our technological edge by continually refining our BI platform and
offering new capabilities to developers and players.
Competitive Advantages
We
believe that Core Gaming has a number of competitive advantages, first among them our track record of successfully launching and monetizing
mobile games, which helps us to stand apart from competitors. Contributing to this track record are our high level of expertise in the
mobile games ecosystem, our extensive relationships with third parties in the mobile game industry, and our proven ability to quickly
expand into new markets and offerings. And underlying this success is our proprietary BI platform, with its unique algorithms and AI technologies
that enable us to reach, with exceptional efficiency, a large number of target customers in diverse cultures and geographies for the many
games we publish.
Our
BI platform is a suite of AI marketing solutions that enables our marketing team to automate, optimize and manage our marketing efforts
across different ad platforms and channels to increase the effectiveness of our efforts and the efficiency of our team, resulting in higher
levels of monetization with lower levels of expenditure. Our marketing team leverages extensive data collected globally from our wide-ranging
marketing activities to identify the types of users who are most likely to download and engage with particular types of games. Using the
AI tools provided by the platform, the system enables our marketing team to generate content tailored to connect with users in different
regions around the world. The team can set targeted returns, and the platform will monitor the data from different ad platforms to enable
the team to run the marketing campaigns efficiently by assessing the campaigns’ effectiveness in real time, tweaking the approach
automatically, and reaching the stated goals. In sum, AI is integral to our BI platform both in the analysis of our marketing campaigns
in the generation of thousands of pictures and videos daily for ads, using less labor and producing faster and higher quality results.
Core
Gaming helps its partners achieve user acquisition, cross-promotion, monetization and scalability. Core Gaming’s teams continue
to innovate and develop cutting edge technology to keep our customers engaged through increased gamification and interactivity. In 2024,
Core Gaming began rolling out AI tools that employ state of the art language, image and video models. Core Gaming’s AI-driven content
generation streamlines mobile game production, reducing production time by over 40% compared to standard, non-AI driven production, and
significantly enhances the final product. The technology has been well-received by content creators and influencers, as has been demonstrated
by thousands of creators sharing AI-generated videos on various social media platforms like TikTok. We work with major mainstream distribution
channels, advertising platforms, and data providers.
Business Model
We
develop, co-develop and publish mobile gaming apps, distribute the games through our highly effective marketing efforts, and generate
revenue by serving ads in the games.
Third-party
game developers partner with us because of our expertise in marketing and monetizing apps. The advertisers who work with us seek to target
the highly relevant users of apps in our diverse portfolio of apps. We display ads in the games in our portfolio and collect the related
revenue, in the form of advertisement publishing fees, from various advertisement platforms, such as Applovin and Google. We serve advertisements
from these platforms by integrating the platforms into our games and earn fees based on various metrics, such as impressions (the number
of times an ad is displayed), clicks, and user downloads. Where a game was co-developed or was developed entirely by another developer,
we share revenue from advertisements served in the game with such other party.
Employees
Through our operating subsidiary, we have a staff of 42 managing our
operations by publishing apps, leveraging our BI platform, and coordinating with co-developers, among other things. Seven of these individuals
are full time employees and 35 are independent contractors provided by Moremo Network Limited (“Moremo”), the former holding
company of Newbyera, to which we pay a fee for those contractors and for the use of more than 100 others on an ad hoc basis pursuant to
a Labor Service Contract on Dispatch and Employment between Moremo and Newbyera. Pursuant to this contract, Moremo provides labor dispatch
services to Newbyera with respect to Chinese contract employees and in that regard (i) manages such employees’ recruitment, contracts,
social insurance, housing provident funds, and payroll and (ii) pays the total employment costs (salaries, benefits, management fees)
of such contract employees and ensures that the terms of their employment complies with local labor laws. The agreement provides that
Moremo has the right to collect from Newbyera such contract employees’ compensation and related payments due to government entities
and all employment-related fees. The contract has an initial five-year term ending on April 30, 2026, and will be automatically renewed
for successive five-year periods unless either party objects to such renewal 30 days prior to the termination date, unless terminated
earlier pursuant to its terms. We paid Moremo ¥1,516,340.68 (approximately $210,602.77) and ¥2,111,755.00 (approximately $293,299.31),
respectively, during the years ended December 31, 2024 and 2023 for salaries, benefits and other payments, and management fees pursuant
to the labor service contract.
We
rely on our highly skilled, technically trained and creative service providers with desirable skill sets, including game designers, engineers
and project managers, to develop new technologies and create innovative games. Our goal is to attract and retain highly qualified and
motivated providers directly or through Moremo.
Research and Development
Our
research and design team has extensive expertise in creating new content and gameplay features, as well as proprietary tools and systems
to enable the efficient design, development and implementation of new content and features. Continued investment in research and development
is important to attaining our strategic objectives and meeting the evolving needs of our customers. To maintain our competitive edge,
we focus on innovating new technologies, which we apply to new and existing games. We also develop and integrate into our products both
open source and internal AI technologies as follows:
Text and Language Models
| 1. | Model Technology: We use state-of-the-art Transformer-based pre-trained language models (such as GPT-4)
and domain-specific fine-tuned models. |
| 2. | Applications and Features: These models excel at understanding user requirements and generating high-quality,
diverse, multilingual content. Capabilities include creative copywriting, precise multilingual translations, asset ideation, and risk
analysis. Our technology supports multilingual generation with outstanding performance in logical coherence, semantic depth, and stylistic
control. |
| 3. | Impact: Our AI-driven content generation streamlines asset production, reducing production time by over
40% and significantly enhancing creative output and efficiency. |
Voice Models
| 1. | Model Technology: Our advanced in-house voice cloning and Text-to-Speech (“TTS”) models accurately
replicate human voice characteristics, including tone, timbre, and emotion. Using high-fidelity voice cloning models like Cosy Voice and
SoVits, we can transform any text into speech that matches any individual’s voice. |
| 2. | Applications and Features: We offer personalized voice cloning services that require only minimal voice
samples to generate high-quality, natural-sounding cloned voices. Our TTS models support multiple languages and voice options, catering
to a variety of use cases. |
| 3. | Impact: Our high-fidelity voice cloning preserves both vocal tone and emotional nuances, facilitating
multilingual adaptations for film and media projects. For example, our partner LuckyShort utilizes our voice cloning and TTS technology
for automated multilingual dubbing of short dramas, achieving a 50% boost in content production efficiency while significantly reducing
labor costs. |
Image Models
| 1. | Model Technology: We utilize Generative Adversarial Networks (GANs) and diffusion-based models (such as
Stable Diffusion and Flux) to optimize artistic stylization and image generation. |
| 2. | Applications and Features: Our models support various image transformation and generation styles, including
artistic style transfer, anime conversion, and vintage filters. These models can generate high-resolution, high-quality images and offer
customizable AI-generated portraits, memes, and more. Our technology is known for precise style control and attention to detail, supporting
user-specific customization. |
| 3. | Impact: The generated images achieve a high standard of artistic and visual authenticity, widely used
in game design, social media content, and advertising. Our models provide users with innovative ways to create visual assets, sparking
new creative ideas. |
Video Models
| 1. | Model Technology: Our video generation technology is built on diffusion models optimized for temporal
consistency and neural rendering techniques (such as Video Diffusion and Deforum). By integrating cutting-edge models like Vidu and Kling,
we enable video style transfer and text/image-to-video generation. |
| 2. | Applications and Features: We support transforming video content into animated, stylized versions and
generating dynamic video content from text or images. Our models address challenges related to temporal consistency and smooth detail
transitions, making them ideal for film production and creative short videos. |
| 3. | Impact: The generated videos are diverse in style, fluid in motion, and rich in detail. This technology
has been well-received by content creators and influencers, with thousands of creators sharing AI-generated videos on platforms like TikTok. |
Advantages of Internal AI Technology:
| 1. | High-Quality and Stable Video/Audio Conversion with User-Friendly Operation: |
| ○ | Our AI technology delivers exceptional video conversion results, maintaining high-definition quality throughout
the process and ensuring smooth playback across various video types. |
| ○ | Compared to other technologies, our AI demonstrates superior stability in sound processing. Whether in
noisy environments or handling complex audio signals, it can accurately distinguish and restore audio details, ensuring clear and natural
sound output. |
| ○ | Our digital human generation technology is extremely easy to use. Users don’t need a technical background
or programming knowledge; high-quality digital human characters can be created with just a few simple steps. |
| 2. | Robust Backend Data Management: |
| ○ | The AI computing resource management platform offers global, multi-cloud resource management capabilities.
It dynamically adjusts computing resources, scaling up or down as needed, to maximize efficiency and minimize costs. It supports multi-task
management and monitors real-time price changes to ensure cost optimization. |
| ○ | The BigP Management Console provides monitoring, analysis, and management functions for AI tasks and user
data, enabling businesses to effectively oversee AI computing activities. |
| ○ | The BigP Server Platform efficiently processes user-uploaded images, videos, and AI tasks. It optimizes
task flows through precise management, ensuring stability and flexibility in services |
Overall Advantages Compared to Market Products:
| 1. | High Level of Technology Integration:
From image and video processing to voice handling, our solutions cover a wide range of scenarios with comprehensive functionality and user-friendly operation. |
| 2. | Optimized Resource Utilization:
With the AI computing resource management platform, resources are dynamically allocated and optimized, ensuring strong cost-control capabilities. |
| 3. | Excellent User Experience: |
| ○ | For Consumer Products: Simple and intuitive interfaces make it easy for everyday users to get started. |
| ○ | For Enterprise Platforms: Professional and efficient features cater to businesses, with the flexibility
to support customized requirements for different enterprises. |
Compliance with Government
Regulation
We
are subject to various federal, state, and overseas laws and regulations that affect companies conducting business on mobile platforms,
including those relating to the internet, behavioral advertising, mobile apps, content, advertising and marketing activities, sweepstakes
and giveaways, and anti-corruption (as well as those relating to privacy and data protection if we begin collecting such data in the future).
Additional laws and regulations relating to these areas likely will be passed in the future, and these or existing laws and regulations
may be interpreted or enforced in new or expanded manners, each of which could result in significant limitations on ways we can communicate
with users and operate our business. New and evolving laws and regulations, and changes in their enforcement and interpretation, may require
changes to our technologies, software, or business practices, and may significantly increase our compliance costs or otherwise adversely
affect our business and results of operations. As our business expands in scale and our operations expand into additional jurisdictions,
our compliance requirements and costs may increase and we may be subject to increased regulatory scrutiny.
Risk Factors Relating
to Core Gaming and the Merger
Our
business operations are subject to numerous risks and uncertainties, including those discussed below, many of which are outside of our
control, that could materially and adversely affect our business, financial condition, and results of operations. The risks and uncertainties
described below are not the only ones that may affect us; additional risks that we currently consider immaterial, or of which we may currently
be unaware, may also materially and adversely affect us.
Risks Related
to Our Company, Business and Industry
We have a limited
operating history, especially with respect to our Core Gaming apps, which makes it difficult to evaluate our current business and future
performance and the risks we may encounter.
Our
limited operating history, especially with respect to our Core Gaming apps, may make it difficult to evaluate our current business and
our future performance. We have encountered and will continue to encounter risks and difficulties frequently experienced by growing companies
in rapidly changing industries, such as the mobile app industry, including our ability to:
| ● | accurately forecast our revenue and plan our operating expenses; |
| ● | attract new and retain existing users of our apps; |
| | | |
| ● | successfully compete with current and future competitors, some of whom are also our clients; |
| | | |
| ● | successfully expand our business in existing markets and enter new markets and geographies; |
| | | |
| ● | successfully expand partnerships; |
| | | |
| ● | develop a scalable, high-performance technology infrastructure that can efficiently and reliably handle
increased usage of our apps by consumers, as well as the deployment of new features and services; |
| | | |
| ● | comply with existing and new laws and regulations applicable to our business; |
| | | |
| ● | anticipate and respond to macroeconomic changes and changes in the markets in which we operate; |
| | | |
| ● | establish and maintain our brand and reputation; |
| ● | adapt to rapidly evolving trends in the ways businesses and consumers interact with technology; |
| | | |
| ● | effectively manage our rapid growth; |
| | | |
| ● | avoid interruptions or disruptions in our Core Gaming technologies or apps; and |
| | | |
| ● | hire, integrate, and retain key personnel. |
Further,
because we have limited historical financial data and operate in a rapidly evolving market, any financial planning and forecasting, including
predictions about our future revenue and expenses, may not be as accurate as they would be if we had a longer operating history or operated
in a more predictable market. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business,
are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our
expectations. If we fail to address the risks and uncertainties that we face, including those described elsewhere in this “Risk
Factors” section, our business, financial condition, and results of operations could be adversely affected.
Our
results of operations have fluctuated in the past and are likely to fluctuate significantly from quarter-to-quarter and year-to-year in
the future for a variety of reasons, many of which are outside of our control and difficult to predict. As a result, you should not rely
upon our historical results of operations as indicators of future performance. Numerous factors can influence our results of operations,
including:
| ● | our ability to maintain and grow our business client and user bases; |
| | | |
| ● | changes to our technologies, apps, or other offerings, or the development and introduction of new software
or development of new mobile apps by our studios or our competitors; |
| | | |
| ● | changes to the policies or practices of companies or governmental agencies that determine access to third-party
platforms, such as the Apple App Store and the Google Play Store, apps, website, or the internet generally; |
| | | |
| ● | changes to the policies or practices of third-party platforms, such as the Apple App Store and the Google
Play Store, including with respect to Apple’s Identifier for Advertisers (“IDFA”), which helps advertisers assess the
effectiveness of their advertising efforts, and with respect to transparency regarding data processing; |
| | | |
| ● | our ability to achieve the anticipated synergies from our strategic acquisitions and effectively integrate
new assets and businesses acquired by us; |
| | | |
| ● | the actions of our competitors, both with respect to their own offerings and, to the extent such competitors
are also our clients, with respect to their use of our services; |
| | | |
| ● | costs and expenses related to the strategic acquisitions and partnerships, including costs related to
integrating mobile gaming studios or other companies that we acquire, as well as costs and expenses related to the development of our
technologies, BI platform, or apps; |
| | | |
| ● | our ability to maintain and increase profitability; |
| | | |
| ● | increases in and timing of operating expenses that we may incur to expand our operations and to remain
competitive; |
| | | |
| ● | changes in the legislative or regulatory environment, including with respect to privacy and data protection,
or actions by governments or regulators, including fines, orders, or consent decrees; |
| | | |
| ● | charges associated with impairment of any assets on our balance sheet; |
| | | |
| ● | adverse litigation judgments, settlements, or other litigation-related costs and the fees associated with
investigating and defending claims; |
| | | |
| ● | the overall tax rate for our business, which may be affected by the mix of income we earn in the United
States and in jurisdictions with comparatively lower tax rates; |
| | | |
| ● | the impact of changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded
in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; |
| | | |
| ● | the application of new or changing financial accounting standards or practices; and |
| | | |
| ● | changes in regional or global business or macroeconomic conditions, which may impact the other factors
described above. |
In
particular, it is difficult to predict if, when, or how quickly newly-launched apps may begin to generate revenue or decline in popularity.
Further, we cannot be certain if a new app will become popular amongst users and generate revenue. The success of our business depends
in part on our ability to develop and enhance our technologies and consistently and timely launch new apps. It is difficult for us to
predict with certainty when we will launch a new app as we may require longer development schedules or soft launch periods to meet our
quality standards and expectations. If we are unable to successfully launch or acquire new apps or maintain or improve existing apps,
our business and results of operations could be adversely affected.
The failure to
attract new users, the loss of users, or a reduction in playing by these users could adversely affect our business, financial condition,
and results of operations.
A
significant portion of our revenue is advertising revenue. We collect revenue from advertisers spending on our apps. Revenue generated
from our apps comes from advertisers that purchase ad inventory from our diverse portfolio of mobile games. As is common in the mobile
app industry our advertisers do not have long-term advertising commitments with us. Our success depends in part on our ability to satisfy
our advertising clients.
Our revenue
could also be impacted by a number of other factors, including:
| ● | our ability to attract and retain users; |
| ● | our ability to maintain or increase advertiser demand and third-party publisher supply, the quantity,
or quality of advertisements shown to users, or our pricing of advertisements; |
| ● | our ability to continue to increase user engagement with our apps; |
| ● | mobile app changes or inventory management decisions we may make that change the size, format, frequency,
or relative prominence of advertisements displayed on our apps; |
| ● | our ability to recruit, train, and retain personnel to support our continued growth; |
| ● | our ability to establish and maintain our brand and reputation; |
| ● | government actions or legislative, regulatory, or other legal developments relating to advertising, including
developments that may impact our ability to deliver, target, or measure the effectiveness of advertising; |
| ● | changes that limit our ability to deliver, target, or measure the effectiveness of advertising, including
changes to policies by mobile operating system and third-party platform providers, and the degree to which users opt out of certain types
of ad targeting as a result of changes and controls implemented in connection with such policy changes and with the E.U. General Data
Protection Regulation (the “GDPR”), ePrivacy Directive, the California Consumer Privacy Act (the “CCPA”), and
the Children’s Online Privacy Protection Act (“COPPA”); |
| ● | decisions by clients to reduce their advertising due to concerns about legal liability or uncertainty
regarding their own legal and compliance obligations, or due to negative publicity, regardless of its accuracy, involving us, our user
data practices, advertising metrics or tools, our apps, or other companies in our industry; and |
| ● | the impact of macroeconomic conditions, whether in the advertising industry in general, or among specific
types of clients within particular geographies. |
The
occurrence of any of these or other factors in the future could result in a reduction in demand for our services and use of our apps,
which may reduce the prices we receive for our advertisements or cause clients to stop advertising with us altogether, either of which
would adversely affect our business and results of operations. The failure to attract new advertising clients, loss of clients, or reduction
in spending by our clients could adversely affect our business, financial condition, and results of operations.
Security breaches,
improper access to or disclosure of our data or user data, other hacking and phishing attacks on our systems, or other cyber incidents
could harm our reputation and adversely affect our business.
Like
companies in the mobile app industry in general, we are prone to cyberattacks by third parties seeking unauthorized access to our data
or the data of our clients or users or to disrupt our ability to provide app marketing services. Our technologies and apps involve the
collection, storage, processing, and transmission of a large amount of data, including personal information, and we and our third-party
service providers otherwise store and process information, including our confidential and proprietary business information, and personal
information and other information relating to our employees and clients or other third parties. Any failure to prevent or mitigate security
breaches or incidents impacting our systems or other systems used in our business, or improper access to or disclosure of our data, including
source code, or user data, including personal information, content, or payment information from users, or information from clients or
other third parties, that we store or otherwise process, could result in the unauthorized loss, modification, disclosure, destruction,
or other misuse of such data, or unavailability of data. Any such event, or the perception that it has occurred, could adversely affect
our business and reputation, damage our operations, result in claims, litigation or regulatory investigations or enforcement actions,
fines, penalties, or other liability or obligations, and diminish our competitive position. In particular, a breach or incident, whether
electronic, or otherwise, impacting systems on which source code or other sensitive data are stored could lead to loss, disruption, unavailability,
or piracy of, or damage to, our offerings, lost or reduced ability to protect our intellectual property, and diminished competitive position.
Computer
malware (including ransomware), viruses, social engineering (predominantly spear phishing attacks or credential stuffing), and general
hacking have become more prevalent in the mobile app industry. Any actual or attempted breaches, incidents, or attacks may cause disruptions
or interruptions to our technologies, apps, or other offerings, degrade the user experience, impair, disrupt, or interrupt our internal
systems and other systems and networks used in our business, or adversely affect our reputation, business, financial condition, and results
of operations. Our efforts to protect our data, user data, and information from clients, partners, and other third parties, and to disable
or otherwise respond to undesirable activities on our technologies or apps, may also be unsuccessful due to: software bugs or other technical
defects, errors, or malfunctions; employee, contractor, vendor, or partner error or malfeasance, including defects or vulnerabilities
in information technology systems or offerings; cyberattacks, attacks designed to disrupt systems or facilities, or breaches of physical
security of our facilities or technical infrastructure; or other threats that evolve. Additionally, any such breach, incident, attack,
malfunction, defect, or vulnerability, or the perception that any of these has occurred, may cause clients or users to lose confidence
and trust in our apps and otherwise harm our reputation and market position.
In
addition, some developers or other business partners may receive or store information provided by us or by our users through mobile or
web apps or other means. These third parties may misappropriate our information and engage in unauthorized use of it. If these third parties
fail to adopt or adhere to adequate data security practices, or experience a breach of, or other security incident impacting, their networks
or systems, our data or our users’ data may be lost, destroyed, or improperly accessed, modified, disclosed, or otherwise misused.
In such an event, or if such an event is perceived to have occurred, we may suffer damage to our reputation, may have increased costs
arising from the restoration or implementation of additional security measures, and we may face claims, demands, investigations and other
proceedings by private parties or governmental actors, and fines, penalties, and other liability or obligations, any of which could adversely
affect our business, financial condition, and results of operations. Any theft or unauthorized use or publication of our confidential
business information as a result of such an event could also adversely affect our business, competitive position, and results of operations.
Cyberattacks
continue to evolve in sophistication and volume, and inherently may be difficult to detect for long periods of time. Although we have
developed systems and processes that are designed to protect our data, user data, and information from our partners, to prevent data loss,
disable undesirable accounts and activities on our technologies or apps, and to prevent and detect security breaches, we cannot assure
you that such measures will provide comprehensive security, that we will be able to identify breaches or other incidents or to react to
them in a timely manner or that our remediation efforts will be successful. We experience cyberattacks and other security incidents of
varying degrees from time to time, and we may incur significant costs in investigating, protecting against, litigating, or remediating
such incidents.
Additionally,
our offerings operate in conjunction with, and we are in some cases dependent upon, third-party products, services, and components. Our
ability to monitor our third-party service providers’ data security is limited, and in any event, attackers may be able to circumvent
our third-party service providers’ data security measures. There have been and may continue to be significant attacks on certain
third-party providers, and we cannot guarantee that our or our third-party providers’ systems and networks have not been breached
or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our systems and networks or
the systems and networks of third parties that support us. If there is a security vulnerability, error, or other bug in one of these third-party
products, services, and components and if there is a security exploit targeting them, we could face increased costs, claims, liability,
and additional or new obligations, reduced revenue, and harm to our reputation or competitive position. We and our service providers may
be unable to anticipate these techniques, react, remediate or otherwise address any security vulnerability, breach or other security incident
in a timely manner, or implement adequate preventative measures.
In
addition to our efforts to mitigate cybersecurity risks, we are making significant investments in privacy, safety, security, and content
review efforts. As a result of these efforts, we anticipate that we will discover incidents of misuse of user data or other undesirable
activity by third parties. We may not discover all such incidents or activity, whether as a result of our data limitations, the reallocation
of resources to other projects, or other factors, and we may be notified of such incidents or activity by users, the media, or other third
parties. Such incidents and activities have in the past, and may in the future, include the use or other processing of user data or our
systems in a manner inconsistent with our terms, contracts or policies, the existence of false or undesirable user accounts, improper
advertising practices, activities that threaten people’s safety on- or offline or instances of spamming, scraping, data harvesting,
or unsecured datasets. We may also be unsuccessful in our efforts to enforce our policies or otherwise remediate or respond to any such
incidents effectively or in a timely manner. Any of the foregoing developments, or any reports of them occurring or the perception that
any of them has occurred, could adversely affect user trust and engagement, harm our brand and reputation, require us to change our business
practices, result in claims, demands, investigations and other proceedings by private parties or governmental actors, and fines, penalties,
and other liability or obligations, and adversely affect our business, financial condition, and results of operations.
We
are subject to a variety of laws and regulations in the United States and abroad relating to cybersecurity and data protection, a number
of which also provide a private right of action. Affected users or government authorities could initiate legal or regulatory actions against
us in connection with any actual or perceived security breaches or improper access to or disclosure of data, which has occurred in the
past and which could cause us to incur significant expense and liability, distract management and technical personnel, and result in orders
or consent decrees forcing us to modify our business practices. Such actual or perceived incidents or our efforts to remediate such incidents
may also result in a decline in our active user base or engagement levels. Any of these events could adversely affect our reputation,
business, financial condition, or results of operations.
Our
insurance coverage may not extend to all types of privacy and data security breaches or other incidents, and it may be insufficient to
cover all costs and expenses associated with such incidents. Further, such insurance may not continue to be available to us in the future
on economically reasonable terms, or at all, and insurers may deny us coverage as to any future claim. The successful assertion of one
or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including
premium increases or the imposition of large deductible or coinsurance requirements, could have a material adverse effect on our business,
including our reputation, financial condition, or results of operations.
The mobile app
industry is intensely competitive. If clients or users prefer our competitors’ products or services over our own, our business,
financial condition, and results of operations could be adversely affected.
We
face significant competition. We offer services for developers to get their mobile apps discovered and downloaded by the users. We collect
revenue from advertising fees paid by mobile app advertisers from the sale of advertising in our apps and sale of advertising in co-developed
or third-party apps. We also face competition from providers of developer tools that enable developers to reach their audiences or manage
or optimize their advertising campaigns. These companies vary in size and include Facebook, Google, and Unity Software as well as various
private companies. Several of these companies are also our clients. Clients who are also competitors may decide to invest in their own
offerings rather than continue to use our technology or advertise on our apps.
Additionally,
we also compete with businesses that develop online and mobile games and other mobile apps, which vary in size and include companies such
as Activision Blizzard (expected to be acquired by Microsoft), Tencent, and Zynga (expected to be acquired by Take-Two Interactive), as
well as other public and private companies. Many of these companies are also our partners and clients. As we expand our global operations
and mobile app offerings, we increasingly face competition from high-profile companies with significant online presences that may introduce
new or expanded offerings, such as Apple, Facebook, Google, Microsoft, and Snap. In addition, other large companies that to date have
not actively focused on mobile apps or gaming may decide to develop mobile apps or gaming offerings, such as Amazon’s recently introduced
games platform, or work with other developers. Some of these current and potential competitors have significantly greater resources than
we do that they can use to develop, acquire, or brand additional mobile apps or gaming alternatives, and may have more diversified revenue
sources than we do and therefore may be less severely affected by changes in consumer preferences, regulations, or other developments
that may impact our business or industry.
Further,
as there are relatively low barriers to entry to develop and publish a mobile app, we expect new competitors to enter the market and existing
competitors to allocate more resources towards developing and marketing competing games and apps. As our mobile games are free to play,
our apps compete primarily on the basis of user experience rather than price. The proliferation of apps makes it difficult for us to differentiate
ourselves from our competitors and compete for users.
We
also face competition for advertising spending and for the discretionary spending, leisure time, and attention of our users from game
platforms such as personal computer and console games, and other leisure time activities, such as television, movies, music, sports, and
the internet. In addition, non-game applications for mobile devices, such as social media and messaging, television, movies, music, dating,
and sports, have become increasingly popular, making the overall mobile app industry highly fragmented and making it more difficult for
any mobile app to differentiate itself. Our future growth depends in part on the overall health of the mobile app ecosystem and in particular,
mobile gaming. Increasing competition could result in decreases in the number of users of our apps, increased user acquisition costs,
lower engagement with our apps, and loss of key personnel, all of which could adversely affect our business, financial condition, or results
of operations.
Some
of our current and potential competitors may be domiciled in different countries and subject to political, legal, and regulatory regimes
that enable them to compete more effectively than us, particularly those located outside of the United States. Some of our current and
potential competitors may have greater resources, more diversified revenue streams, better technological or data analytics capabilities,
or stronger brands or competitive positions in certain product segments, geographic regions, or user demographics than we do. If clients
or users prefer our competitors’ products or services over our own, or if our competitors are better able to adapt to changes in
the preferences of publishers or users, regulations, or other developments, our business, financial condition, and results of operations
could be adversely affected.
The mobile app
industry is subject to rapid technological change, and if we do not adapt to, and appropriately allocate our resources among, emerging
technologies and business models, our business, financial condition, and results of operations could be adversely affected.
Technology
changes rapidly in the mobile app industry. Our future success depends in part on our ability to adapt to trends and to innovate. To attract
new clients and users and increase revenue from our current clients and users, we will need to enhance and improve our technologies and
apps. We may not introduce enhancements of our existing technology and offerings, and new offerings, in a timely or cost-effective manner
and any such enhancements may contain errors or defects.
Our
business also currently depends in part on the growth and evolution of the internet, especially mobile internet-enabled devices. The number
of people using mobile internet-enabled devices has increased rapidly over time, and we expect that this trend will continue. The mobile
app industry, however, may not grow in the way that we anticipate. We must continually anticipate and adapt to emerging technologies to
stay competitive. As the technological infrastructure for internet access continues to improve and evolve, consumers will be presented
with more opportunities to access apps and play games on a variety of devices and platforms and to experience other leisure activities
that may compete with mobile apps. Forecasting the financial impact of these emerging technologies and business models is inherently uncertain
and volatile. If we decide to support a new technology or business model in the future, it may require entering into business arrangements
with new platforms or other third parties, which may be on terms that are less favorable to us than those for traditional technologies
or business models.
To
invest in a new technology or expand our offerings, we must invest financial resources and management attention. We may invest significant
resources in a new offering or in a strategic acquisition or partnership, which could prove unsuccessful or prevent us from directing
these resources towards other opportunities. We may never recover the often-substantial up-front costs of developing and marketing emerging
technologies or business models, or recover the opportunity cost of diverting management and financial resources. Further, our competitors
may adopt an emerging technology or business model more quickly or effectively than we do, creating products that are technologically
superior to ours or attract more users than ours.
If,
on the other hand, we do not continue to enhance our technologies or apps, or do not appropriately allocate our resources amongst opportunities,
or we otherwise elect not to pursue new business models that achieve significant commercial success, we may face adverse consequences.
For example, we do not currently offer our apps on all devices or all gaming platforms. If the devices on which our apps are available
decline in popularity or become obsolete faster than anticipated, or if new platforms emerge other than those on which our games are offered,
we could experience a decline in revenue and in our number of app users, and we may not achieve the anticipated return on our development
efforts. It may take significant time and expenditures to shift product development resources to new technologies, and it may be more
difficult to compete against existing products incorporating such technologies. If new technologies render mobile devices obsolete or
we are unable to successfully adapt to and appropriately allocate our resources amongst current and new technologies, our business, financial
condition, and results of operations could be adversely affected.
Our technologies,
apps, and internal systems rely on software and hardware that is highly technical, and any errors, bugs, or vulnerabilities in these systems,
or failures to address or mitigate technical limitations in our systems, could adversely affect our business, financial condition, and
results of operations.
Our
technologies, apps and internal systems rely on software and hardware that is highly technical and complex. In addition, our technologies,
apps and internal systems depend in part on the ability of such software and hardware to store, retrieve, process, and manage large amounts
of data. The software and hardware on which we rely has contained, and will in the future contain, errors, bugs, or vulnerabilities and
our systems are subject to certain technical limitations that may compromise our ability to meet our objectives. Some errors, bugs, or
vulnerabilities inherently may be difficult to detect. Errors, bugs, vulnerabilities, design defects, or technical limitations within
the software and hardware on which we rely have in the past led to, and may in the future lead to, outcomes including a negative experience
for clients and users who use our offerings, compromised ability of our offerings to perform in a manner consistent with our terms, contracts,
or policies, delayed app launches or enhancements, targeting, measurement, or billing errors, compromised ability to protect the data
of our users and/or our intellectual property, or reductions in our ability to provide some or all of our services. To the extent that
any such errors, bugs, vulnerabilities, or defects impact our apps or services, our clients may become dissatisfied with our offerings,
our brand and reputation may be harmed, and we may make operational decisions, such as with respect to our apps, that are based on inaccurate
data. Any errors, bugs, vulnerabilities, or defects in our systems or the software and hardware on which we rely, failures to properly
address or mitigate the technical limitations in our systems, or associated degradations or interruptions of service may lead to outcomes
including damage to our reputation, increased product engineering expenses, regulatory inquiries, litigation, or liability for fines,
damages, or other remedies, any of which could adversely affect our business, financial condition, and results of operations.
Our business depends
in part on our ability to maintain and scale our apps, and any significant disruption to our technologies or apps could damage our reputation,
result in a potential loss of engagement, and adversely affect our business, financial condition, and results of operations.
Our
reputation and ability to attract and retain our clients and users depends in part on the reliable performance of our technologies and
apps. We have in the past experienced, and may in the future experience, interruptions in the availability or performance of our offerings
from time to time. Our systems may not be adequately designed or may not operate with the reliability and redundancy necessary to avoid
performance delays or outages that could be harmful to our business. If our apps are unavailable when users attempt to access them, or
if they do not load as quickly as expected, users may not use our offerings as often in the future, or at all, which could adversely affect
our business and results of operations. As we continue to grow, we will need an increasing amount of technical infrastructure, including
network capacity and computing power, to continue to satisfy our needs and the needs of our clients and users. We may fail to continue
to effectively scale and grow our technical infrastructure to accommodate these increased demands, which may adversely affect our user
engagement and revenue growth. Additionally, we rely in part on third-party data centers and cloud hosting infrastructure. Our business
may be subject to interruptions, delays, or failures resulting from natural disasters and other events outside of our control that impact
us or these third-party providers. If such an event were to occur, users may be subject to service disruptions or outages and we may not
be able to recover our technical infrastructure and user data in a timely manner to restart or provide our services. If we fail to efficiently
scale and manage our infrastructure, or if events disrupt our infrastructure or those of our third-party providers, our business, financial
condition, and results of operations could be adversely affected.
If we are unable
to launch new apps and successfully monetize them, or continue to improve the experience and monetization of our existing apps, our business,
financial condition, and results of operations could be adversely affected.
Our
business depends in part on launching or acquiring, and continuing to service, mobile apps. We have devoted and we expect to continue
to devote substantial resources to the research, development, and marketing of our apps. Our development and marketing efforts are focused
on improving the experience of our existing apps, developing new apps, and successfully monetizing our apps. Our apps generate revenue
primarily through the sale of advertising. For apps distributed through third-party platforms, we are required to share a portion of the
proceeds from in-game sales with the platform providers, which share may be subject to changes or increases over time. In order to maintain
and increase our profitability, we need to generate sufficient revenue from our existing and new apps to offset our ongoing development,
marketing, and other operating expenses.
The
success of our apps depends in part on unpredictable and volatile factors beyond our control including user preferences, competing apps,
new third-party platforms, and the availability of other entertainment experiences. If our apps do not meet user expectations or if they
are not brought to market in a timely and effective manner, our business and results of operations could be adversely affected.
In
addition, our ability to successfully launch apps and their ability to achieve commercial success will depend in part on our ability to:
| ● | effectively market our apps to existing and new users; |
| ● | achieve a positive return on investment from our marketing and user acquisition costs or achieve organic,
non-paid user growth; |
| ● | adapt to changing trends, user preferences, new technologies, and new feature sets for mobile and other
devices, including determining whether to invest in development for any new technologies, and achieve a positive return on the costs associated
with such adaptation; |
| ● | continue to adapt mobile app feature sets for an increasingly diverse set of mobile devices, including
various operating systems and specifications, limited bandwidth, and varying processing power and screen sizes; |
| ● | achieve and maintain successful user engagement and effectively monetize our apps; |
| ● | develop mobile games that can build upon or become franchise games and expand and enhance our mobile games
after their initial releases; |
| ● | continue to attract publishers to advertise on our apps; |
| ● | work with third-party platforms and obtain opportunities to feature our apps to their audience; |
| ● | compete successfully against a large and growing number of competitors; |
| ● | accurately forecast the timing and expense of our operations, including mobile app and feature development,
marketing, and user acquisition; |
| ● | minimize and quickly resolve bugs or outages; and |
| ● | retain and motivate talented and experienced developers and other key personnel |
These
and other uncertainties make it difficult to know whether we will succeed in continuing to develop and launch new apps. Further, casual
games, which is the part of the mobile app market we focus on, has a relatively short lifespan, which means we need to be constantly innovating
and updating our gaming apps and/or introducing new ones
If we fail to retain
existing users or add new users cost-effectively, or if our users decrease their level of engagement with our apps, our business, financial
condition, and results of operations could be adversely affected.
The
size of our user base and the level of user engagement with our apps are critical to our success. Our results of operations have been
and will continue to be significantly determined by our success in acquiring and engaging app users, which drives the amount of advertising
we can place and the rates that advertising clients will pay for such ad placements. We expect that the number of our app users may fluctuate
or decline in one or more markets from time to time, particularly in markets where we have achieved higher penetration rates. In addition,
if people do not perceive our apps as useful or entertaining, we may not be able to attract or retain users or otherwise maintain or increase
the frequency and duration of their engagement, which could harm our revenue. A number of mobile apps that achieved early popularity have
since seen their user bases or user engagement levels decline. There is no guarantee that we will not experience a similar erosion of
our app users or user engagement levels. Any number of factors can adversely affect user growth and engagement, including if:
| ● | users increasingly engage with mobile apps offered by competitors or mobile apps in categories other than
those of our apps; |
| ● | we fail to introduce new apps or features that users find engaging or that achieve a high level of market
acceptance or we introduce new apps, or make changes to existing apps, that are not favorably received; |
| ● | users feel that their experience is diminished as a result of the decisions we make with respect to the
frequency, prominence, format, size, and quality of advertisements that we display; |
| ● | users have difficulty installing, updating, or otherwise accessing our apps as a result of actions by
us or third parties; |
| ● | we are unable to continue to develop apps that work with a variety of mobile operating systems and networks;
and |
| ● | concerns emerge among our user and potential user base about the quality of our apps, our data practices
or concerns related to privacy and sharing of personal information and other user data, safety, security, or other factors. |
Additionally,
we expect that it will become increasingly difficult and more expensive for us to acquire users for our apps for a variety of reasons,
including the increasingly competitive nature of the mobile app industry and the significant amount of time and attention users are dedicating
to competing entertainment options. If our competitors increase their user acquisition spending, we could experience higher costs per
an install for our apps, which would adversely affect our margins and profit. Furthermore, our spending on user acquisition is based on
certain assumptions about their projected behavior, particularly for new apps for which we do not have similar apps in our portfolio to
aid us in our modeling efforts. If we are unable to grow our user base and increase our user engagement levels, or unable to do so cost
effectively, our business, financial condition, and results of operations could be adversely affected.
We are highly dependent
on Newbyera’s former parent company to provide us with labor and back-office operations, and any disruption to the provision of
such outsourced services could materially and adversely affect our business, financial condition, and results of operations.
Pursuant to a Labor Service
Contract on Dispatch and Employment between Moremo and Newbyera, we rely on contractors provided through Moremo to conduct much of our
operations. We also rely on Moremo for administrative services pursuant to an Outsourcing Service Contract between Newbyera and Moremo.
Our dependence on Moremo presents a number of risks that could materially and adversely affect our business, financial condition, and
results of operations.
While our agreements
with Moremo provide Moremo only limited termination rights, primarily for non-payment, this does not guarantee that we will continue to
receive services from Moremo, nor from the contractors that we have retained both on an ongoing and ad-hoc basis through our arrangement
with Moremo. We primarily rely on highly skilled, technically trained and creative contractors retained through Moremo to run our business
and develop new technologies and create innovative games. Such employees, particularly game designers, engineers and project managers
with desirable skill sets, are in high demand and would be difficult to replace if we lost a significant number of them due to the termination
of our agreement with Moremo or otherwise (such as if Moremo was no longer able to retain a sufficient number of contractors on our behalf).
The loss of such contract personnel could cause us to experience material interruptions in product development, delays in bringing new
games to market, difficulties in our relationships with customers, and the inability to successfully serve ads and to increase or maintain
our revenue as a result, and could otherwise adversely affect our business and prospects.
In addition, while we
might be able to retain other service providers to replace Moremo should our agreements with them be terminated or they otherwise cease
providing services to us under these agreements, there is no guarantee that we could do so, or that we could do so on terms equally favorable
to us as those in our agreements with Moremo. Further, our business operations would be disrupted, potentially materially, while we were
in the process of retaining new service providers, which could have a material adverse impact on our business, reputation, prospects,
results of operation and financial condition.
While Newbyera has a
contractual right to supervise the personnel contracted through Moremo, we have less control over and oversight of the work performed
by contractors than we would if the work were performed by our own employees. There could be instances where these independent contractors
fail to comply with applicable law or with our policies and procedures. For example, new mobile games may not be developed on time, or
there could be a delay in us learning of problems or errors and thus a delay in our response to those issues. If any such delays, problems
or errors were to occur, or any of these independent contractors violated applicable law with respect to the work they do for us, it could
materially and adversely affect our business, reputation and prospects as well as our revenue, financial condition and cash flow. In addition,
it is possible that we could be held civilly or criminally accountable based on vicarious liability because of the actions of our independent
contractors or if Moremo does not comply with applicable law, particularly applicable employment laws, in connection with its provision
of services to us even though Moremo has indemnified us for losses we incur on account of its actions or inactions.
Finally, laws and regulations
relating to the use of contractors may vary in the jurisdictions in which we operate. These contractors could be deemed employees of Newbyera
despite our outsourcing arrangements, or changes in legal and regulatory restrictions could impact our ability to use contractors in the
future.
We have entered
into strategic partnerships with mobile gaming developers, and a failure to maintain such relationships may harm our ability to launch
new apps as well as our brand and reputation.
From
time to time, we have entered into strategic partnerships with mobile gaming studios. We have historically allowed these studios to continue
their operations with a degree of autonomy. In certain of these transactions, we have bought games from such studios and entered into
development agreements whereby such studios provide us support in developing and improving games and grant us a right of first refusal
with respect to future games. These agreements typically have a fixed term, after which the studios may choose not to continue working
with us. Any deterioration in our relationship with these studios may harm our ability to monetize the games we co-develop and launch
and future mobile games that we co-develop with these studios and may lead to such studios choosing not to renew their agreements with
us. Further, if such a studio becomes dissatisfied with us, our brand and reputation may be harmed and we may have more difficulty entering
into similar agreements in the future. Additionally, international studios with whom we enter into such partnerships may be located in
areas with less certain legal and regulatory regimes or more potential risks, which may increase our costs to maintain such strategic
partnership. If we are unable to maintain any of these partnerships, we may be required to invest significant resources in expanding our
development program or entering into agreements with additional mobile gaming studios in order to continue producing the same volume and
quality of apps, and our business, financial condition, and results of operations could be adversely affected.
We rely on third-party
platforms to distribute our apps and collect revenue, and if our ability to do so is harmed, or such third-party platforms change their
policies in such a way that restricts our business, increases our expenses, or limits the information we derive from our apps, our business,
financial condition, and results of operations could be adversely affected.
The
mobile app industry depends in part on a relatively small number of third-party distribution platforms, such as the Apple App Store, the
Google Play Store, and Meta, some of which are direct competitors. We derive significant revenue from the distribution of our apps through
these third- party platforms. We are subject to the standard policies and terms of service of such third-party platforms, which generally
govern the promotion, distribution, content, and operation of applications on such platforms. Each platform provider has broad discretion
to change and interpret its terms of service and other policies with respect to us and other mobile app companies, and those changes may
be unfavorable to us. A platform provider may also change its fee structure, add fees associated with access to and use of its platform,
alter how mobile apps are labeled or are able to advertise on its platform, change how the personal information of its users is made available
to developers on its platform, limit the use of personal information for advertising purposes, restrict how users can share information
on its platform or across platforms, or significantly increase the level of compliance or requirements necessary to use its platform.
We rely in part on IDFA to provide us with data that helps us better market and monetize apps.
If
we violate, or a distribution platform provider believes that we have violated, a distribution platform’s terms of service, or if
there is any change or deterioration in our relationship with such a distribution provider, that platform provider could limit or discontinue
our access to its platform. If one of our distribution platform partners were to limit or discontinue the distribution of our apps on
their platform, it could adversely affect our business, financial condition, and results of operations.
We
also rely on the continued popularity, user adoption, and functionality of third-party platforms. In the past, some of these platform
providers have been unavailable for short periods of time. In addition, third-party platforms also impose certain file size limitations,
which may limit the ability of users to download some of our larger apps in over-the-air updates. Aside from these over-the-air file size
limitations, a larger game file size could cause users to delete our mobile games once the file size grows beyond the capacity of their
devices’ storage limitations or could reduce the number of downloads of these mobile games.
If
issues arise with third-party platforms that impact the visibility or availability of our apps, our users’ ability to access our
apps or our ability to monetize our apps, or otherwise impact the design or effectiveness of our business, financial condition, and results
of operations could be adversely affected.
Our revenue has
been concentrated in various ways and the loss of, or a significant reduction in, any such revenue source, or our failure to successfully
expand and diversify our revenue sources could adversely affect our business, financial condition, and results of operations.
We
have historically experienced revenue concentration with respect to certain apps and the in-app advertising portion of our business. Our
future success depends, in part, on launching and successfully monetizing additional apps and on establishing and maintaining successful
relationships with a diverse set of clients. While our apps consist of hundreds of mobile games, currently a limited number of those are
responsible for a significant portion of our revenue. The loss or failure to continuously monetize one of these apps could have a significant
impact on our results of operations. Similarly, our future success depends, in part, on our ability to successfully develop and monetize
additional mobile games and other mobile apps. If we are unable to successfully launch new apps, our reliance on a limited number of apps
may increase.
More
generally, we face concentration risk in that our apps operate primarily in the mobile app industry and specifically mobile gaming. As
such, our business depends, in part, on the continued health and growth of these industries. Further, a significant amount of our total
revenue is derived through a limited number of third-party distribution platforms, such as the Apple App Store, the Google Play Store,
and Facebook.
We have experienced
recent rapid growth, which may not be indicative of our future growth. We may be unable to effectively manage the growth of our business,
which could adversely affect our business, financial condition, and results of operations.
Our
growth until now should not be relied upon as an indication of our future performance, as we may not be able to sustain our growth rate
in the future. Even if our revenue continues to increase, we expect that our revenue growth rate may decline in the future as a result
of a variety of factors, including because of more difficult comparisons to prior periods and the saturation of the market. The overall
growth of our revenue depends in part on our ability to execute on our business plans.
Additionally,
the growth and expansion of our business has placed and continues to place a significant strain on our management, operations, financial
infrastructure, and corporate culture. Our future success depends in part on our ability to manage this expanded business. If not managed
effectively, this growth could result in the over-extension of our management systems and information technology systems and our internal
controls and procedures may not be adequate to support this growth. Failure to adequately manage our growth in any of these ways may cause
damage to our brand and reputation and adversely
Our international
operations are subject to increased challenges and risks.
We
expect to continue to expand our international operations in the future by opening new offices, entering into strategic partnerships with
new international game studios, acquiring companies that may have international operations, and providing our apps in additional countries
and languages. Expanding our international operations may subject us to risks associated with:
| ● | recruiting and retaining talented and capable management and employees in foreign countries; |
| ● | the diversion of senior management attention; |
| ● | challenges caused by distance, language, and cultural differences; |
| ● | developing and customizing apps that appeal to the tastes and preferences of users in international markets; |
| ● | the inability to offer certain services or apps in certain foreign countries; |
| ● | competition from local mobile app developers with intellectual property rights and significant market
share in those markets and with a better understanding of user preferences; |
| ● | utilizing, protecting, defending, and enforcing our intellectual property rights; |
| ● | negotiating agreements with local distribution platforms that are sufficiently economically beneficial
to us and protective of our rights; |
| ● | the inability to extend proprietary rights in our brand, content, or technology into new jurisdictions; |
| ● | implementing alternative payment methods for features and virtual goods in a manner that complies with
local laws and practices and protects us from fraud; |
| ● | compliance with applicable foreign laws and regulations, including anti-bribery laws, privacy laws, and
laws relating to content and consumer protection; |
| ● | credit risk and higher levels of payment fraud; |
| ● | currency exchange rate fluctuations; |
| ● | protectionist laws and business practices that favor local businesses in certain countries; |
| ● | double taxation of our international earnings and potentially adverse tax consequences due to changes
in the tax laws in the United States or the foreign jurisdictions in which we operate; |
| ● | political, economic, and social instability, such as the conflict in Ukraine and its impacts on the region
and the regional and global economy; |
| ● | public health crises, such as the COVID-19 pandemic, that can result in varying impacts to our employees,
clients, users, app developers, and business partners internationally; |
| ● | higher costs associated with doing business internationally, including costs related to local advisors; |
| ● | export or import regulations; and |
| ● | trade and tariff restrictions. |
Our
ability to successfully gain market acceptance in any particular international market is uncertain and, in the past, we have experienced
difficulties and have not been successful in all the countries we have entered. If we are unable to continue to expand internationally
or manage the complexity of our global operations successfully, our business, financial condition, and results of operations could be
adversely affected.
Our business is
subject to economic, market, public health, and geopolitical conditions as well as to natural disasters beyond our control.
Our
revenue is driven in part by discretionary consumer spending habits and preferences, and by advertising spending patterns. Historically,
consumer purchasing and advertising spending have each declined during economic downturns and periods of uncertainty regarding future
economic prospects or when disposable income or consumer lending is lower. General macroeconomic conditions, such as a recession or economic
slowdown in the United States or internationally, including those resulting from public health crises and geopolitical issues, could create
uncertainty and adversely affect discretionary consumer spending habits and preferences as well as advertising spending. Uncertain economic
conditions may also adversely affect our clients. As a result, we may be unable to continue to grow in the event of future economic slowdowns.
We are particularly susceptible to market conditions and risks associated with the mobile app industry, which also include the popularity,
price, and timing of our apps, changes in user demographics, the availability and popularity of other forms of entertainment, and critical
reviews and public tastes and preferences, which may change rapidly and cannot necessarily be predicted.
We anticipate incurring
higher operating expenses in the future, and we may not be able to achieve or maintain our profitability in any given period. If we cannot
achieve or maintain our profitability, our business could be adversely affected.
Although
we have been profitable on an IFRS basis and had positive cash flow from operations in certain prior periods, we may not always achieve
sufficient revenue or manage our expenses in order to achieve positive cash flow from operations or profitability in any given period.
Our operating expenses may continue to rise as we implement additional initiatives designed to increase revenue, potentially including:
developing our technologies and BI platform; launching apps; strategic acquisitions and partnerships; client and user acquisition spending;
international expansion; hiring employees or entering into additional contractor arrangements; and taking other steps to strengthen and
grow our company. We are likely to recognize costs associated with these investments earlier than some of the anticipated benefits, and
the return on these investments may be lower, or may develop more slowly, than we expect. We also anticipate that the costs of acquiring
new clients and mobile app users, and otherwise marketing our offerings and apps, will continue to rise. Further, we may continue to incur
significant costs in connection with strategic acquisitions and partnerships, which costs may increase or become more concentrated to
the extent that we enter into larger transactions. If we are not able to maintain positive cash flow in the long term, we may require
additional financing, which may not be available on favorable terms or at all, and that may be dilutive to our stockholders. If we are
unable to generate adequate revenue growth and manage our expenses, we may incur significant losses in the future and may not be able
to maintain positive cash flow from operations or profitability.
We generally do
not have long-term agreements with our clients.
Our
clients are not required to enter into long-term agreements with us and may choose to stop using our advertising publishing services at
any time. For example, our advertising agreements can be executed in as little as one day and can be terminated for convenience on two
days’ notice. In order to continue to grow this part of our business, we must consistently provide offerings that clients see as
valuable and choose to use. If we fail to maintain our relationships with our clients, or if the terms of these relationships become less
favorable to us, our results of operations would be harmed. Additionally, as certain of our clients are also our competitors, these clients
may choose to invest in their own offerings rather than continue to use our offerings. Any failure to maintain our relationships with
our clients could adversely affect our business, financial condition, and results of operations.
If our apps do
not meet user expectations, or contain objectionable content, our reputation, business, financial condition, and results of operations
could be adversely affected.
Expectations
regarding the quality, performance, and integrity of our apps are high. We must continually adapt to changing user preferences including
the popularity of various game categories and styles of play. Users may be critical of our apps, business models, or business practices
for a wide variety of reasons, including perceptions about gameplay, fairness, game content, features, or services. Independent industry
analysts may publish reviews of our apps from time to time, as well as those of our competitors, and perception of our apps in the marketplace
may be significantly influenced by these reviews. We have no control over what users or these industry analysts report. If users and industry
analysts negatively respond to our apps or changes that we make to our apps, or provide negative reviews of our apps, our reputation,
business, financial condition, and results of operations could be adversely affected.
Further,
despite reasonable precautions, some users may be offended by certain mobile app content, advertisements displayed in our apps or by the
treatment of other users. For example, if users believe that an advertisement displayed in one of our apps contains objectionable content,
we could experience damage to our brand and reputation and users could refuse to continue to engage with such app and pressure platform
providers to remove the app from their platforms. While such content may violate our terms and we may subsequently remove it, our brand
and reputation may nonetheless be harmed and our clients may become dissatisfied with our services. Furthermore, steps that we may take
in response to such instances, such as temporarily or permanently shutting off access of a user to our apps, could adversely affect our
business and results of operations. Any failure to meet user expectations or provide our apps without objectionable content could adversely
affect our reputation, business, financial condition, and results of operations.
The proliferation
of “cheating” programs and scam offers that seek to exploit our mobile games and users may adversely affect game-playing experiences
and lead users to stop playing our mobile games. Our failure to maintain adequate customer support may enhance these risks.
Our
users rely on our customer support organization to resolve any issues relating to our mobile games. Customer support is important for
satisfying user expectations regarding the quality, performance, and integrity of our mobile games. We currently have limited customer
support operations. If we do not effectively train, supplement, and manage our customer support organization to assist our users, and
if that support organization does not succeed in helping users quickly resolve issues or provide effective ongoing support, we could experience
decreased user engagement and harm to our reputation with potential new users.
Additionally,
unrelated third parties have developed, and may continue to develop, “cheating” programs that enable users to exploit vulnerabilities
in our mobile games, play them in an automated way, collude to alter the intended game play, or obtain unfair advantages over other users
who do play fairly. These programs harm the experience of users who play fairly and may disrupt the virtual economies of our mobile games.
In addition, unrelated third parties have attempted to scam our users with fake offers for virtual goods or other game benefits. These
unauthorized or fraudulent transactions are usually arranged on third-party websites and the virtual goods offered may have been obtained
through unauthorized means, such as exploiting vulnerabilities in our mobile games, or may be fraudulent offers. We do not generate any
revenue from these transactions. These unauthorized purchases and sales from third-party sellers could impede our revenue and profit growth.
There
can be no assurance that our customer support and other efforts to detect, prevent, or minimize these unauthorized or fraudulent transactions
will be successful, that these actions will not increase over time or that our customer support efforts will be successful in resolving
user issues. Any failure to maintain adequate customer support or success of third-party cheating programs or scams may negatively affect
game-playing experiences and lead users to stop playing our mobile games, which could adversely affect our business, financial condition,
and results of operations.
We are highly dependent
on Newbyera’s former parent company to provide us with labor and back-office operations, and any disruption to the provision of
such outsourced services could materially and adversely affect our business, financial condition, and results of operations.
Pursuant
to a Labor Service Contract on Dispatch and Employment between Moremo and Newbyera, we rely on contractors provided through Moremo to
conduct much of our operations. We also rely on Moremo for administrative services pursuant to an Outsourcing Service Contract between
Newbyera and Moremo. Our dependence on Moremo presents a number of risks that could materially and adversely affect our business, financial
condition, and results of operations.
While
our agreements with Moremo provide Moremo only limited termination rights, primarily for non-payment, this does not guarantee that we
will continue to receive services from Moremo, nor from the contractors that we have retained both on an ongoing and ad-hoc basis through
our arrangement with Moremo. We primarily rely on highly skilled, technically trained and creative contractors retained through Moremo
to run our business and develop new technologies and create innovative games. Such employees, particularly game designers, engineers and
project managers with desirable skill sets, are in high demand and would be difficult to replace if we lost a significant number of them
due to the termination of our agreement with Moremo or otherwise (such as if Moremo was no longer able to retain a sufficient number of
contractors on our behalf). The loss of such contract personnel could cause us to experience material interruptions in product development,
delays in bringing new games to market, difficulties in our relationships with customers, and the inability to successfully serve ads
and to increase or maintain our revenue as a result, and could otherwise adversely affect our business and prospects.
In
addition, while we might be able to retain other service providers to replace Moremo should our agreements with them be terminated or
they otherwise cease providing services to us under these agreements, there is no guarantee that we could do so, or that we could do so
on terms equally favorable to us as those in our agreements with Moremo. Further, our business operations would be disrupted, potentially
materially, while we were in the process of retaining new service providers, which could have a material adverse impact on our business,
reputation, prospects, results of operation and financial condition.
While
Newbyera has a contractual right to supervise the personnel contracted through Moremo, we have less control over and oversight of the
work performed by contactors than we would if the work were performed by our own employees. There could be instances where these independent
contractors fail to comply with applicable law or with our policies and procedures. For example, new mobile games may not be developed
on time, or there could be a delay in us learning of problems or errors and thus a delay in our response to those issues. If any such
delays, problems or errors were to occur, or any of these independent contractors violated applicable law with respect to the work they
do for us, it could materially and adversely affect our business, reputation and prospects as well as our revenue, financial condition
and cash flow. In addition, it is possible that we could be held civilly or criminally accountable based on vicarious liability because
of the actions of our independent contractors or if Moremo does not comply with applicable law, particularly applicable employment laws,
in connection with its provision of services to us even though Moremo has indemnified us for losses we incur on account of its actions
or inactions.
Finally,
laws and regulations relating to the use of contractors may vary in the jurisdictions in which we operate. These contractors could be
deemed employees of Newbyera despite our outsourcing arrangements, or changes in legal and regulatory restrictions could impact our ability
to use contractors in the future.
Risks Related
to Legal and Regulatory Matters
We are subject
to laws and regulations concerning privacy, information security, data protection, consumer protection, advertising, tracking, targeting,
and protection of minors, and these laws and regulations are continually evolving. Our actual or perceived failure to comply with these
laws and regulations could adversely affect our business, financial condition, and results of operations.
We
receive, store, and process personal information and other data and we enable our users to share their personal information with each
other and with third parties, including within our apps. There are numerous federal, state, and local laws around the world regarding
privacy and the collection, storing, sharing, use, processing, disclosure, deletion, and protection of personal information and other
data, the scope of which are changing, subject to differing interpretations, and may be inconsistent between countries or conflict with
other rules.
Various
government and consumer agencies have called for new regulation and changes in industry practices and are continuing to review the need
for greater regulation for the collection of information concerning consumer behavior on the internet, including regulation aimed at restricting
certain targeted advertising practices. For example, the GDPR, which became effective in May 2018, created new individual privacy rights
and imposed worldwide obligations on companies processing personal data of European Union (“EU”) users, which created a greater
compliance burden for companies with European users, and subjects violators to substantial monetary penalties. The United Kingdom has
implemented legislation that substantially implements the GDPR and which also provides for substantial monetary penalties. In June 2021,
the European Commission announced a decision of “adequacy” concluding that the United Kingdom ensures an equivalent level
of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the European Economic
Area to the United Kingdom. Such adequacy decision must, however, be renewed after four years and may be modified or revoked in the interim.
We cannot fully predict how United Kingdom data protection laws or regulations may develop in the medium to longer term, nor the effects
of divergent laws and guidance regarding how data transfers to and from the United Kingdom will be regulated,
Another
example is the State of California’s passage of the CCPA, which went into effect in 2020 and created new privacy rights for users
residing in the state, including a private right of action for data breaches. The California Privacy Rights Act (“CPRA”) went
into effect on January 1, 2023, and significantly modified the CCPA, resulting in further uncertainty and requiring us to incur additional
costs and expenses in an effort to comply. Additionally, other states are considering, and in some cases have enacted, comprehensive privacy
legislation, some of which provide for private rights of action, which may increase the likelihood of class action litigation that could
also adversely affect our reputation, business, financial condition, and results of operations. For example, several states in the U.S.
have proposed or enacted laws that contain obligations similar to the CCPA and CPRA that have taken effect or will take effect in coming
years. The U.S. federal government is also contemplating federal privacy legislation. Our efforts to comply with existing and future legal
requirements has required us and will continue to require us to devote significant operational resources and incur significant expenses.
Our privacy and data protection compliance and oversight efforts will require significant time and attention from our management and board
of directors.
Further,
children’s privacy has been a focus of recent enforcement activities and subjects our business to potential liability that could
adversely affect our business, financial condition, or operating results. Enforcement of COPPA, which requires companies to obtain parental
consent before collecting personal information from children known to be under the age of 13or from child-directed websites or online
services, has increased in recent years. In addition, the GDPR prohibits certain processing of the personal information of children under
the age of 13 to 16 (depending on jurisdiction) without parental consent where consent is used as the lawful basis for processing that
personal information. The CCPA, as amended and supplemented by the CPRA, requires companies to obtain the consent of children in California
under the age of 16 (or parental consent for children under the age of 13) before selling their personal information. There also may be
various laws, regulations, industry standards, codes of conduct, or other actual or asserted obligations relating to children’s
privacy to which we may be, or be asserted to be, subject, or that may otherwise impact our business and operations. For example, the
United Kingdom’s Age Appropriate Design Code (“AADC”) is one such regulatory framework that has been adopted in the
United Kingdom that focuses on online safety and protection of children’s privacy online, and similar frameworks are being considered
for adoption in other jurisdictions. California also has enacted the California Age-Appropriate Design Code Act (“ADCA”),
which will take effect on July 1, 2024. The ADCA implements into law certain principles taken from the AADC, among other things, and imposes
substantial new obligations upon companies that offer online services, products, or features “likely to be accessed” by children,
defined under the ADCA as anyone under 18 years of age. Although we take reasonable efforts to comply with these laws and regulations,
we may in the future face claims under COPPA, the GDPR, the CCPA, the CRPA, or other laws, regulations, or other actual or asserted obligations
relating to children’s privacy.
All
of our mobile games are subject to privacy policies and terms of service located in application storefronts, within our mobile games,
and on our respective websites. We endeavor to comply with industry standards and are subject to the terms of our privacy-related obligations
and commitments to users and third parties. We strive to comply with all applicable laws, policies, legal obligations, and certain industry
codes of conduct relating to privacy and data protection, to the extent reasonably possible. It is possible, however, that these obligations
may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or
our practices. It is also possible that new laws, policies, legal obligations, or industry codes of conduct may be passed, or existing
laws, policies, legal obligations, or industry codes of conduct may be interpreted in such a way that could prevent us from being able
to offer services to citizens of a certain jurisdiction or may make it costlier or more difficult for us to do so. Any failure or perceived
failure by us to comply with our terms of service or privacy policy, or with applicable laws, regulations, or legal, contractual, or other
actual or asserted obligations to users or third parties, concerning privacy, information security, data protection, consumer protection,
or protection of minors, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release
or transfer of personally identifiable information or other user data, may result in governmental enforcement actions or other proceedings,
claims, demands, and litigation by private parties, or public statements against us by consumer advocacy groups or others and could cause
our users to lose trust in us, which could adversely affect our business, financial condition, or results of operations. Additionally,
if third parties we work with, such as users, co-developers, vendors, or service providers, violate applicable laws or our policies, such
violations may also put our users’ information at risk and could in turn adversely affect our reputation, business, financial condition,
and results of operations.
Our business is
subject to a variety of U.S. and foreign laws, many of which are unsettled and still developing, which could subject us to claims or otherwise
adversely affect our business, financial condition, and results of operations.
We
are subject to a variety of laws in the United States and abroad that affect our business, including state and federal laws regarding
consumer protection, electronic marketing, protection of minors, data protection, and privacy, competition, taxation, intellectual property,
money transmission, money laundering, investment screening, export, and national security, which are continuously evolving and developing.
The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, particularly
laws outside the United States. There is a risk that existing or future laws may be interpreted in a manner that is not consistent with
our current practices and which could adversely affect our business. As our business and service offerings grow and evolve and our apps
are used in a greater number of countries, we may also become subject to laws and regulations in additional jurisdictions or other jurisdictions
may claim that we are required to comply with their laws and regulations. The regulation of AI technologies is a relatively new and evolving
area of law which we may be subject to as some of the tools we use to develop and co-develop our apps incorporate AI technologies, and
as we continue to explore the use of AI in our future offerings, including our apps. For example, in the EU, the EU Artificial Intelligence
Act, once enacted, will impose a regulatory framework for companies’ development and use of AI systems. Beyond the EU and U.S.,
more than 37 countries have proposed AI-related legal frameworks. There is a risk that existing or future laws may be interpreted in a
manner that is not consistent with our current practices and that could adversely affect our business.
With
respect to our apps, we are potentially subject to a number of foreign and domestic laws and regulations that affect the offering of certain
types of content, many of which are ambiguous or still evolving and could be interpreted in ways that could adversely affect our business
or expose us to liability. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative
proposals could harm our reputation or otherwise impact the growth of our business. It is difficult to predict how existing or new laws
may be applied to these or similar game mechanics or genres. Further, laws or regulations may vary significantly across jurisdictions.
Furthermore,
the growth and development of electronic commerce and virtual goods may prompt calls for more stringent consumer protection laws that
may impose additional burdens on companies such as Core Gaming that conduct business through the internet and mobile devices. For example,
China implemented a policy in September 2021 that restricts online gaming for those under age 18 to one hour in the evening on Fridays,
weekends, and public holidays. We anticipate that scrutiny and regulation of our industry will increase and we will be required to devote
legal and other resources to addressing such regulation. For example, existing laws or new laws regarding the labeling of free-to-play
mobile games, or the regulation of currency, banking institutions, unclaimed property or money transmission, may be interpreted to cover
our mobile games and the virtual currency, goods, or payments that we receive. We may also expand into new business opportunities that
subject us to additional laws and regulations. As such, we may be required to seek licenses, authorizations, or approvals from relevant
regulators, the granting of which may be dependent on us meeting certain capital and other requirements and we may be subject to additional
regulation and oversight, all of which could significantly increase our operating costs. Changes in current laws or regulations or the
imposition of new laws and regulations in the United States or elsewhere regarding these activities may lessen the growth of the mobile
app industry. Any costs that we incur as a result of adapting to laws and regulations, or as a result of liability in connection therewith,
could adversely affect our business, financial condition, and results of operations.
The development
and use of AI in our business, combined with an uncertain regulatory environment, may adversely affect our business, reputation, financial
condition or results of operations.
We
use AI technologies in our business, and we are investing in the expansion of our AI capabilities, including possibly generative AI. These
technologies are complex and rapidly evolving. The introduction of AI technologies into new or existing products may result in new or
enhanced governmental or regulatory scrutiny, litigation, confidentiality, privacy, data protection, or security risks, ethical concerns,
or other complications that could adversely affect our business, reputation, financial condition or results of operations. The impact
of AI technology on intellectual property ownership and licensing rights, including copyright, has not been fully addressed by U.S. courts
or other federal or state laws or regulations, and the use of third-party AI technologies in connection with our products and services
may result in exposure to claims of copyright infringement or other intellectual property misappropriation. AI technologies, including
generative AI, may create content that appears correct but is factually inaccurate or flawed. Our customers or others may rely on or use
this flawed content to their detriment, which may expose us to brand or reputational harm, competitive harm, and/or legal liability.
We are subject
to the Foreign Corrupt Practices Act, and similar anti-corruption and anti- bribery laws, and non-compliance with such laws could subject
us to criminal penalties or significant fines and adversely affect our business and reputation.
We
are subject to the Foreign Corrupt Practices Act (the “FCPA”) and similar anti-corruption and anti-bribery laws applicable
in the jurisdictions in which we conduct business. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years,
are interpreted broadly and prohibit companies, their employees, and third party business partners, representatives, and agents from promising,
authorizing, making or offering improper payments or other benefits, directly or indirectly, to government officials and others in the
private sector in order to influence official action, direct business to any person, gain any improper advantage, or obtain or retain
business. As we continue to expand our business internationally, our risks under these laws increase.
We
and our third-party business partners, representatives, and agents may have direct or indirect interactions with officials and employees
of government agencies or state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of
our employees, third-party business partners, representatives, and agents, even if we do not explicitly authorize such activities. These
laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent
any such actions. While we have policies and procedures to address compliance with such laws, we cannot assure you that our employees,
third-party business partners, representatives, and agents will not take actions in violation of our policies or applicable law, for which
we may be ultimately held responsible and our exposure for violating these laws increases as our international presence expands and as
we increase sales and operations in foreign jurisdictions.
Any
violation of the FCPA or other applicable anti-corruption laws could result in whistleblower complaints, adverse media coverage, investigations,
loss of export privileges, severe criminal or civil sanctions, suspension or disbarment from U.S. government contracts, substantial diversion
of management’s attention, significant legal fees and fines, severe criminal or civil sanctions against us, our officers, or our
employees, disgorgement of profits, other sanctions and remedial measures, and prohibitions on the conduct of our business, any of which
could adversely affect our reputation, business, financial condition, and results of operations.
We are subject
to governmental export controls and economic sanctions laws that could impair our ability to compete in global markets or subject
us to liability if we violate the controls.
Our
apps may be subject to U.S. export controls. Exports of our products and the underlying technology may require export authorizations,
including by license, a license exception, or other appropriate government authorizations, including the filing of an encryption classification
request or self-classification report, as applicable.
Furthermore,
our activities are subject to U.S. economic sanctions laws and regulations administered by the U.S. Department of Treasury’s Office
of Foreign Assets Control that prohibit the shipment of most technologies to embargoed jurisdictions or sanctioned parties without the
required export authorizations. If we need to obtain any necessary export license or other authorization for a particular sale, the process
may be time-consuming and may result in the delay or loss of opportunities to sell our products.
We
take precautions to prevent our products and the underlying technology from being provided, deployed or used in violation of export control
and sanctions laws, including implementation of IP address blocking and sanctioned person screening, and are in the process of further
enhancing our policies and procedures relating to export control and sanctions compliance. We cannot assure you, however, that our policies
and procedures relating to export control and sanctions compliance will prevent violations in the future by us or our partners or agents.
If we are found to be in violation of U.S. sanctions or export control regulations, including failure to obtain appropriate import, export,
or re-export licenses or permits, it can result in significant penalties and government investigations, as well as reputational harm and
loss of business. Knowing and willful violations can result in possible incarceration for responsible employees and managers.
In
addition to the United States, various other countries regulate the import and export of certain encryption and other technology, including
import and export licensing requirements, and have enacted laws that could limit our ability to distribute our apps. Changes in our apps
or future changes in export and import regulations may create delays in the introduction of new apps and the underlying technology in
international markets, prevent our clients with global operations from deploying our products globally, or, in some cases, prevent the
export or import of our apps to certain countries, governments, or persons altogether. From time to time, various governmental agencies
have proposed additional regulation of encryption technology.
Our
growth strategy includes further expanding our operations and client and user base in international markets and acquiring companies that
may operate in countries where we do not already do business. Such acquisitions may subject us to additional or expanded export regulations.
Further, any change in export or import regulations or controls, economic sanctions or related legislation, or change in the countries,
governments, persons, or technologies targeted by such regulations, could result in decreased use of our products by, or in our decreased
ability to export or offer our services to, existing or potential clients with global operations. Any decreased use of our apps or services
or limitation on our ability to export or sell our apps and services in major international markets could adversely affect our business,
financial condition, and results of operations.
We may require
additional capital to meet our financial obligations and support business growth, and this capital may not be available on acceptable
terms or at all.
We
intend to continue to make significant investments to support our business growth and may require additional funds to respond to business
challenges, including the need to continue to develop our technologies and BI platform, enhance our existing apps and develop new apps
and features, improve our operating infrastructure, or enter into strategic acquisitions and other business relationships. Accordingly,
we may need to engage in equity, equity-linked, or debt financings to secure additional funds. If we raise additional funds through future
issuances of equity or convertible debt securities, our existing stockholders could experience significant dilution, and any new equity
securities we issue could have rights, preferences, and privileges superior to those of holders of our common shares. Any debt financing
that we secure in the future could involve offering additional security interests and undertaking restrictive covenants relating to our
capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital
and to pursue business opportunities. We may not be able to obtain additional financing on terms favorable to us, if at all. Additionally,
if we seek to access additional capital or increase our borrowing, there can be no assurance that financing and credit may be available
on favorable terms, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require
it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and
our business, financial condition, or results of operations could be adversely affected.
Changes in tax
laws or tax rulings could adversely affect our effective tax rates, business, financial condition, and results of operations.
The
tax regimes we are subject to or operate under are unsettled and may be subject to significant change. Changes in tax laws or tax rulings,
or changes in interpretations of existing laws, could cause us to be subject to additional income-based taxes and non-income taxes (such
as payroll, sales, use, value added, digital, net worth, property, and goods and services taxes), which in turn could adversely affect
our financial condition and results of operations. For example, in December 2017, the U.S. federal government enacted the tax reform legislation
known as the Tax Cuts and Jobs Act (the 2017 Tax Act). The 2017 Tax Act significantly changed the existing U.S. corporate income tax laws
by, among other things, lowering the U.S. corporate tax rate, implementing a partially territorial tax system, and imposing a one-time
deemed repatriation tax on certain post-1986 foreign earnings. In addition, beginning in 2022, the Tax Act will require U.S. research
and experimental expenditures to be capitalized and amortized ratably over a five-year period. Any such expenditures attributable to research
conducted outside the U.S. must be capitalized and amortized over a 15-year period. Furthermore, many countries in the EU, as well as
a number of other countries and organizations such as the Organisation for Economic Cooperation and Development, have recently proposed
or recommended changes to existing tax laws or have enacted new laws that could impact our tax obligations. Some of these or other new
rules could result in double taxation of our international earnings. Any significant changes to our future effective tax rate could adversely
affect our business, financial condition, and results of operations.
We may have exposure
to greater than anticipated tax liabilities.
Our
income tax obligations are based in part on our corporate operating structure and intercompany arrangements, including the manner in which
we develop, value, manage, and use our intellectual property and the valuation of our intercompany transactions. The tax laws applicable
to our business, including the laws of the United States and other jurisdictions, are subject to interpretation and certain jurisdictions
are aggressively interpreting their laws in new ways in an effort to raise additional tax revenue. Our existing corporate structure and
intercompany arrangements have been implemented in a manner we believe is in compliance with current prevailing tax laws. The taxing authorities
of the jurisdictions in which we operate, however, may challenge our methodologies for valuing developed technology or intercompany arrangements,
which could impact our worldwide effective tax rate and adversely affect our financial condition and results of operations. Moreover,
changes to our corporate structure, including through acquisitions, could impact our worldwide effective tax rate and adversely affect
our business, financial condition, and results of operations.
Significant
judgment is required in evaluating our tax positions and our worldwide provision for (benefit from) taxes. During the ordinary course
of business, there are many activities and transactions for which the ultimate tax determination is uncertain. Our tax obligations and
effective tax rates could be adversely affected by changes in the relevant tax, accounting, and other laws, regulations, principles, and
interpretations, including those relating to income tax nexus, by our earnings being lower than anticipated in jurisdictions where we
have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, by challenges to our intercompany
relationships and transfer pricing arrangements. The relevant taxing authorities may disagree with our determinations as to the income
and expenses attributable to specific jurisdictions. If such a disagreement were to occur, and our position were not sustained, we could
be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates,
reduced cash flows and lower overall profitability of our business, with some changes possibly affecting our tax obligations in future
or past years. We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances
in that regard.
If we are found
liable for content that is distributed through or advertising that is served through our apps, our business could be adversely affected.
As
a distributor of content, we face potential liability for negligence, copyright, patent or trademark infringement, public performance
royalties, or other claims based on the nature and content of materials that we distribute. The Digital Millennium Copyright Act (the
“DMCA”) is intended, in part, to limit the liability of eligible service providers for caching, hosting, or linking to user
content that includes materials that infringe copyrights or other rights. We rely on the protections provided by the DMCA in conducting
our business.
However,
the DMCA and similar statutes and doctrines that we may rely on in the future are subject to uncertain judicial interpretation and regulatory
and legislative amendments. Future regulatory or legislative changes may ultimately require us to take a more active approach towards
content moderation, which could diminish the depth, breadth, and variety of content we offer and, in so doing, reduce our revenue. Moreover,
the DMCA provides protections primarily in the United States. If the rules around these statutes and doctrines change, if international
jurisdictions refuse to apply similar protections, or if a court were to disagree with our application of those rules to our business,
we could incur liability and our business could be adversely affected. If we become liable for these types of claims as a result of the
content that is included in our apps or the advertisements that are served in our apps, then our business may be adversely affected. Litigation
to defend these claims could be costly and the expenses and damages arising from any liability could adversely affect our business. Our
insurance may not be adequate to cover these types of claims or any liability that may be imposed on us.
Legal or regulatory
proceedings and settlements could cause us to incur additional expenses or otherwise adversely affect our business, financial condition,
and results of operations.
We
are involved in or may become involved in claims, suits, government investigations, including formal and informal inquiries from government
authorities and regulators, and proceedings arising in the ordinary course of our business, including actions with respect to intellectual
property claims, securities claims, privacy, data protection, or law enforcement matters, tax matters, labor and employment claims, commercial
and acquisition-related claims, and other matters. We may become the subject of investigations, inquiries, data requests, requests for
information, actions, and audits in the United States and around the world, particularly in the areas of privacy, data protection, law
enforcement, consumer protection, and competition, as we continue to grow and expand our operations.
Any
such claims, suits, government investigations, and proceedings are inherently uncertain and their results cannot be predicted with certainty.
Regardless of their outcomes, such legal or regulatory proceedings can have an adverse impact on us because of legal costs, diversion
of management and other personnel attention, and other factors. In addition, it is possible that a resolution of one or more such proceedings
could result in substantial costs, civil and criminal liability, penalties, or sanctions, as well as judgments, consent decrees, or orders
preventing us from offering certain features, functionalities, products or services, or requiring a change in our business practices,
products or technologies, which could adversely affect our reputation, business, financial condition, and results of operations.
Risks Related
to Our Intellectual Property
Failure to protect
or enforce our proprietary and intellectual property rights or the costs involved in such enforcement could adversely affect our business,
financial condition, and results of operations.
We
regard our technologies, BI platform, and apps and related source code as proprietary and rely on a variety of methods, including a combination
of copyright, patent, trademark, and trade secret laws and non-disclosure agreements, to protect our proprietary rights. We view the protection
of our trade secrets, copyrights, trademarks, service marks, trade dress, domain names, patents, and other product rights as critical
to our success. We strive to protect our intellectual property rights by relying on federal, state, and common law rights, as well as
contractual restrictions and business practices. We also enter into confidentiality and invention assignment agreements with our contractors
and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our
proprietary information. These contractual arrangements and business practices, however, may not prevent the misappropriation of our proprietary
information or deter independent development of similar technologies by others.
We
own or license, and pursue the registration of, copyrights, trademarks, service marks, domain names, and patents in the United States
and in certain locations outside the United States. This process can be expensive and time-consuming, may not always be successful depending
on local laws or other circumstances, and we also may choose not to pursue registrations in every location depending on the nature of
the project to which the intellectual property rights pertain. We may, over time, increase our investments in protecting our creative
works.
We
are aware that some unauthorized copying of our apps occurs, and if a significantly greater amount of unauthorized copying of our apps
were to occur, it could adversely affect our business. In addition, even if authorized copying of our apps occurs, third-party platforms
may not remove infringing material. We also cannot be certain that existing intellectual property laws will provide adequate protection
for our products in connection with emerging technologies. As a result, our ability to fully protect our products, technologies and solutions
under current and future legal regimes may be limited or impacted by future laws, regulations, interpretations or other legislative or
judicial actions. Litigation may be necessary to enforce our intellectual property rights, protect our trade secrets, or determine the
validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result
in substantial costs, adverse publicity, and diversion of management and technical resources. If we fail to maintain, protect, and enhance
our intellectual property rights, our business, financial condition, and results of operations could be adversely affected.
We are, and may
in the future be, subject to intellectual property disputes, which are costly to defend and could require us to pay significant damages
and could limit our ability to use certain technologies in the future.
From
time to time, we have faced, and we may face in the future, allegations that we have infringed the trademarks, copyrights, patents, and
other intellectual property rights of third parties. Intellectual property litigation may be protracted and expensive, and the results
are difficult to predict. As the result of any court judgment or settlement, we may be obligated to alter our technologies or apps, in
a particular geographic region or worldwide, pay royalties or significant settlement costs, purchase licenses, or develop substitutes.
Some of our development
tools contain open source software, and we license some of our software through open source projects, which may pose particular risks
to our proprietary software, products, and services in a manner that could adversely affect our business, financial condition, and results
of operations.
We
use open source software in our app creation tools and apps and expect to continue to use open source software in the future. In addition,
we contribute software source code to open source projects under open source licenses or release internal software projects under open
source licenses, and anticipate continuing to do so in the future. The terms of many open source licenses to which we are subject have
not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner
that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally,
under some open source licenses, if we combine our proprietary software with open source software in a certain manner, third parties may
claim ownership of, a license to, or demand release of, the open source software or derivative works that we developed using such software,
which could include our proprietary source code. Such third parties may also seek to enforce the terms of the applicable open source license
through litigation which, if successful, could require us to make our proprietary software source code freely available, purchase a costly
license, or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering
process could require significant additional research and development resources, and we may not be able to complete it successfully. In
addition to risks related to open source license requirements, use of certain open source software may pose greater risks than use of
third-party commercial software, since open source licensors generally do not provide warranties or controls on the origin of software.
Any of these risks could be difficult to eliminate or manage, and, if not addressed, could adversely affect our business, financial condition,
and results of operations.
Our ability to
acquire and maintain licenses to intellectual property may affect our business, financial condition, and results of operations. Competition
for these licenses may make them more expensive and increase our costs.
From
time to time, we also acquire rights to third-party intellectual property. Proprietary licenses may limit our use of intellectual property
to specific uses and for specific time periods, require time and attention of licensors in providing guidance and related approvals, and
include other contractual obligations with which we must comply. Additionally, competition for these licenses is intense and often results
in increased advances, minimum payment guarantees, and royalties to the licensor, and as such we may be unable to identify suitable licensing
targets or complete licensing arrangements. If we are unable to obtain and remain in compliance with the terms of these licenses or obtain
additional licenses on reasonable economic terms, our business and results of operations could be adversely affected. Further, if the
mix of the games we publish shifts toward mobile games in which we use licensed intellectual property, or if we develop additional apps
that require licensing of third-party intellectual property, our overall margins may be reduced due to royalty obligations.
In
addition, many of our apps are built on proprietary source code of third parties, such as Unity Software. Unity Software offers certain
solutions that may compete with our offerings. If we are unable to renew licenses to proprietary source code underlying our mobile games,
or the terms and conditions of these licenses change at the time of renewal, our business, financial condition, and results of operations
could be adversely affected. We rely on third parties, including Unity Software, to maintain versions of their proprietary engines that
allow us to distribute our mobile games on multiple platforms. If a third party from whom we license source code discontinues support
for one or more of these platforms, our business, financial condition, and results of operations could be adversely affected.
Risks Related to the Pending Merger with Siyata Mobile Inc.
The consummation
of the Merger is subject to the closing conditions contained in the Merger Agreement and the Merger could be delayed or may never occur.
The consummation of the
Merger is subject to the closing conditions contained in the Merger Agreement and the Merger could be delayed or may never occur. Accordingly,
any common shares of the Company (“Siyata Mobile Common Shares”) offered and purchased (including newly issued Siyata Mobile
Common Shares sold under Siyata Mobile’s equity line of credit program or through other capital raising activities) following the
announcement of the Merger but prior to the closing of the Merger is an investment in the Company. The closing conditions that must be
satisfied or waived before the closing of the Merger can occur are specified in the Merger Agreement and include: (i) the representations
and warranties of Siyata Mobile and Core Gaming being true and correct subject to the materiality standards contained in the Merger Agreement;
(ii) material compliance by the parties of their respective pre-closing covenants and agreements, subject to the standards contained in
the Merger Agreement; (iii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) with respect to Core
Gaming since the effective date of the Merger Agreement that is continuing; (iv) the absence of any Purchaser Material Adverse Effect
(as defined in the Merger Agreement) with respect to Siyata Mobile since the effective date of the Merger Agreement that is continuing;
(v) the receipt of all approvals from any governmental authority necessary to consummate the Merger; (vi) that no governmental authority
of competent jurisdiction shall have enacted any law or order in effect at the time of the closing that has the effect of making illegal
or otherwise prohibiting consummation of the transactions contemplated by the Merger Agreement; (vii) the entry into certain ancillary
agreements as of the closing; (viii) the approval of the Company’s initial listing application in connection with the transactions
contemplated by the Merger Agreement and the Siyata Mobile Common Shares being approved for listing on Nasdaq; and (ix) the receipt of
certain closing deliverables. Siyata Mobile and Core Gaming may not satisfy all of the closing conditions in the Merger Agreement. If
the closing conditions are not satisfied or waived, the Merger will not occur, or will be delayed pending later satisfaction or waiver,
which could have a material adverse effect on the Company’s business, results of operations, cash flows and financial position.
Further,
the issuance of new Siyata Mobile Common Shares following announcement of the Merger Agreement, including through the Company’s
equity line of credit program or other capital raises, will not increase the aggregate ownership percentage of the current shareholders
of Siyata Mobile (“Siyata Mobile Shareholders”), and will dilute the ownership percentage that each Siyata Mobile Shareholder
currently holds/owns in Siyata Mobile.
Siyata Mobile and
Core Gaming will incur significant transaction and transition costs in connection with the Merger.
Siyata
Mobile and Core Gaming have both incurred and expect to incur significant, non-recurring costs in connection with consummating the Merger,
including legal, accounting, consulting, investment banking and other fees, expenses and costs. In addition, Siyata Mobile will continue
to incur significant costs operating as a public company following the consummation of the Merger and may also incur additional costs
to retain key employees. Generally, transaction expenses incurred in connection with the Merger will be paid by the party incurring those
expenses (unless the Merger is consummated, in which case Siyata Mobile will pay all such expenses), and many of those expenses might
not be paid until after the closing of the Merger. Accordingly, these expenses could result in Siyata Mobile having less money following
the closing to spend on other aspects of its business, particularly if the actual expenses turn out to be higher than anticipated.
Legal proceedings
in connection with the Merger, the outcomes of which are uncertain, could delay or prevent the completion of the business combination.
In
connection with transactions like the Merger, it is not uncommon for lawsuits to be filed against the parties and/or their respective
directors and officers alleging, among other things, that their disclosures related to the transaction contain false and misleading statements
and/or omits material information concerning the transaction. Although no such lawsuits have yet been filed in connection with the Merger,
it is possible that such actions may arise and, if they do arise, to seek, among other things, injunctive relief and an award of attorneys’
fees and expenses. Defending such lawsuits could require Siyata Mobile and Core Gaming to incur significant costs and draw the attention
of Siyata Mobile’s and Core Gaming’s management teams away from the consummation of the Merger and the management of their
respective businesses. Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Merger is consummated
may adversely affect Siyata Mobile’s business, financial condition, results of operations and cash flows. Such legal proceedings
could delay or prevent the Merger from being consummated within the expected timeframe.
The announcement
of the Merger could disrupt Core Gaming’s relationships with its customers, suppliers, business partners and others, as
well as its operating results and business generally.
Risks relating to the announcement of the Merger
on Core Gaming’s business include the following:
| |
● |
its employees may experience uncertainty about their future roles, which might adversely affect Core Gaming’s ability to retain and hire key personnel and other employees; |
| |
|
|
| |
● |
customers, suppliers, business partners and other parties with which Core Gaming maintains business relationships may experience uncertainty about its future and seek alternative relationships with third parties, seek to alter their business relationships with Core Gaming or fail to extend an existing relationship with Core Gaming; and |
| |
|
|
| |
● |
Core Gaming has expended and will continue to expend significant costs, fees and expenses for professional services and transaction costs in connection with the Merger. |
If any of the aforementioned risks were to materialize,
they could lead to significant costs which may impact Siyata Mobile’s results of operations and cash available to fund its business.
After the Merger,
Siyata Mobile may be exposed to unknown or contingent liabilities and may be required to take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and share
price.
It is possible that the due diligence conducted
in relation to Core Gaming and Siyata Mobile and their respective businesses has not identified all of the material issues or risks associated
with Core Gaming and Siyata Mobile or the industries in which they compete.
Furthermore, factors outside of the parties’
control could arise later. As a result of these factors, Siyata Mobile may be exposed to liabilities and incur additional costs and expenses
and be forced to later write-down or write-off assets, restructure operations, or incur impairment or other charges that could result
in losses. Even if the due diligence has identified certain risks, unexpected risks may arise and previously known risks may materialize
in a manner not consistent with the parties’ preliminary risk analysis. If any of these risks materialize, this could have a material
adverse effect on the Siyata Mobile’s financial condition and results of operations and could contribute to negative market perceptions
about Siyata Mobile’s securities.
Due to potential
fluctuations in the market value of Siyata Mobile Common Shares Core Gaming Shareholders cannot be sure of the market value of the consideration
that they will receive in the Merger.
The current shareholders of Core Gaming (the “Core
Gaming Shareholders”) and the Siyata Mobile Shareholders are expected to own, immediately following consummation of the Merger,
approximately 90% and 10%, respectively, of Siyata Mobile.
Changes
in the price of the Siyata Mobile Common Shares may result from a variety of factors, including, among others, changes in Siyata Mobile’s
business, operations or prospects, regulatory considerations, governmental actions, legal proceedings and general business, market, industry,
political or economic conditions. Many of these factors are beyond Siyata Mobile’s control. As a result, the aggregate market value
of the Siyata Mobile Common Shares that a Core Gaming Shareholder is entitled to receive at the closing of the Merger could vary significantly
from the value of the equivalent Siyata Mobile Common Shares on the date of the Merger Agreement, the date of this report or at other
times, and Core Gaming Shareholders will neither know nor be able to calculate the value of the Siyata Mobile Common Shares that they
would receive upon the closing.
If the Merger is
not completed by December 31, 2025, either Siyata Mobile or Core Gaming may have the right to terminate the Merger Agreement.
If the conditions to the obligations of Core Gaming
and Siyata Mobile to consummate the Merger Agreement are not satisfied or waived (if applicable) by December 31, 2025, either Siyata Mobile
or Core Gaming may have the right to terminate the Merger Agreement. Siyata Mobile or Core Gaming may elect to terminate the Merger in
certain other circumstances, and Siyata Mobile and Core Gaming can mutually decide to terminate the Merger Agreement at any time prior
to the Merger Effective Time.
The Merger Agreement
contains restrictions on the ability of Core Gaming and Siyata Mobile to pursue alternatives to the Merger.
The Merger Agreement contains
provisions that may discourage a third party from submitting a competing business combination proposal that might result in greater value
to the Core Gaming Shareholders or the Siyata Mobile Shareholders than the Merger. These provisions include, among others, a general
prohibition on Core Gaming and Siyata Mobile from soliciting or entering into discussions with any third party regarding, among other
things, any business combination proposal, during the period between the signing of the Merger Agreement and the closing of the Merger.
It is unlikely that Siyata Mobile Shareholders
will be afforded any opportunity to evaluate or approve the Merger.
It is unlikely that Siyata Mobile Shareholders
will be afforded the opportunity to evaluate and approve the Merger. In most cases, business combinations like the Merger do not require
shareholder approval under applicable law, and Siyata Mobile’s articles of incorporation and bylaws do not afford its shareholders
with the right to approve such a transaction. Accordingly, Siyata Mobile Shareholders will be relying almost exclusively on the judgement
of Siyata Mobile’s board of directors and management and any persons on whom they may rely with respect to the Merger.
Siyata Mobile may experience difficulties
in integrating the operations of Core Gaming into its current business and in realizing the expected benefits of the Merger.
The success of the Merger depends in part on Siyata
Mobile’s ability to realize the anticipated business opportunities from combining the operations of Core Gaming with its business
in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees,
the disruption of each company’s ongoing businesses, tax costs or inefficiencies, or inconsistencies in standards, controls, information
technology systems, procedures and policies, any of which could adversely affect its ability to maintain relationships with customers,
employees or other third parties, or its ability to achieve the anticipated benefits of the Core Gaming acquisition, and could harm its
financial performance. If Siyata Mobile is unable to successfully or timely integrate the operations of Core Gaming with its business,
it may incur unanticipated liabilities and be unable to realize the anticipated benefits resulting from the Core Gaming acquisition, and
its business, results of operations and financial condition could be materially and adversely affected.
Siyata Mobile could face a variety of risks
as it expands into Core Gaming’s new businesses and/or makes certain investments or acquisitions.
Siyata Mobile is entering into a new businesses
as it enters into the Merger with Core Gaming. Given that Siyata Mobile is entering into a new industry and business in which it has not
had any prior experience, risks of this expansion may include, among other risks: unanticipated liabilities or contingencies including
counter-party risks such as inadvertent breaches or collection difficulties; potential diversion of management’s attention and other
resources, including available cash, from our existing businesses; loss on investments due to poor performance by the Core Gaming’s
business; inability to integrate the new business successfully; revaluations of debt and equity investments as well as market, credit
and interest-rate risks (any of which could result in impairment charges and other costs); competition from other companies with more
experience in such business; loss of current business and projections; and possible additional regulatory requirements and compliance
costs, all of which could affect Siyata Mobile’s business, financial condition and operating results.
If we complete an enter into the Merger,
it may disrupt or have a negative impact on Siyata Mobile’s current business.
If
Siyata Mobile completes the Merger, it could have difficulty integrating Core Gaming’s assets, personnel and operations with its
own. Additionally, the Merger is and will result in a change of control of the Company, and a change in the board of directors and
key officers of the Company. In addition, the key personnel of the Core Gaming and Siyata Mobile itself may/may not be willing to
work for Siyata Mobile. Further, Siyata Mobile cannot predict the effect that the expansion may have on its current business. Regardless
of whether Siyata Mobile and Core Gaming are successful in completing the Merger, preparing for its completion and the integration of
their companies could disrupt their ongoing business, distract their management and employees and increase their expenses.
Siyata Mobile’s business could be severely
impaired if and to the extent that it is unable to succeed in addressing any of these risks or other problems encountered in connection
with the Merger, many of which cannot be presently identified.
Termination of
the Merger Agreement could negatively impact Siyata Mobile and Core Gaming.
If the Merger is not completed for any reason,
including as a result of the Core Gaming Shareholders declining to approve the Merger Agreement or any other matters required to effect
the Merger, the ongoing businesses of Siyata Mobile and Core Gaming may be adversely impacted and, without realizing any of the anticipated
benefits of completing the Merger, Siyata Mobile and Core Gaming would be subject to a number of risks, including the following:
| |
● |
Siyata Mobile may experience negative reactions from the financial markets, including negative impacts on Siyata Mobile’s share price (including to the extent that the current market price reflects a market assumption that the Merger will be completed); |
| |
|
|
| |
● |
Core Gaming may experience negative reactions from its customers, vendors and employees; |
| |
|
|
| |
● |
Siyata Mobile and Core Gaming will have incurred substantial expenses and will be required to pay certain costs relating to the Merger whether or not the Business Combination is completed, with respect to Siyata Mobile, and if the Merger is not completed, with respect to Core Gaming; and |
| |
|
|
| |
● |
since the Merger Agreement restricts the conduct of Siyata Mobile’s and Core Gaming’s businesses prior to completion of the Merger, each of Siyata Mobile and Core Gaming may not have been able to take certain actions during the pendency of the Merger that would have benefitted it as an independent company, and the opportunity to take such actions may no longer be available. |
If the Merger is
consummated, Siyata Mobile Shareholders will experience immediate and material dilution.
Following
consummation of the Merger, the Siyata Mobile Shareholders will own approximately 10% of the outstanding Siyata Mobile Common Shares and
the Core Gaming Shareholders will own approximately 90% (inclusive of shares to be distributed to advisors) of the outstanding Siyata
Mobile Common Shares immediately following the effective time of the Merger. As such, the Siyata Mobile Shareholders will experience immediate
and material dilution upon closing of the Merger.
Siyata Mobile’s
ability to be successful following the Merger will depend upon the efforts of Core Gaming’s officers and the loss of such persons
could negatively impact the operations and profitability of the post-Merger business.
Siyata
Mobile’s ability to be successful following the Merger will be dependent upon the efforts of the certain key personnel of Core Gaming.
Although the parties expect key personnel to remain with Siyata Mobile following the Merger, there can be no assurance that they will
do so. It is possible that Core Gaming will lose some key personnel, the loss of which could negatively impact Siyata Mobile’s operations
and profitability. Furthermore, following the closing of the Merger, certain of the key personnel of Core Gaming may be unfamiliar with
the requirements of operating a company regulated by the SEC, which could cause Siyata Mobile to have to expend time and resources helping
them become familiar with such requirements.
Risks Related to U.S. Federal Income Taxation
of the Merger
If Siyata Mobile
is a passive foreign investment company for United States federal income tax purposes for any taxable year, U.S. holders of Siyata Mobile
Common Shares could be subject to adverse United States federal income tax consequences.
If Siyata Mobile is or becomes a “passive
foreign investment company,” or a PFIC, within the meaning of Section 1297 of the Code for any taxable year during which a U.S.
holder holds Siyata Mobile Common Shares, certain adverse U.S. federal income tax consequences may apply to such U.S. holders. A non-U.S.
corporation, such as Siyata Mobile, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year in which, after
applying certain look-through rules, either (i) 75% or more of its gross income for such year consists of certain types of “passive”
income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year produce or are
held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains
from the sale or exchange of property producing such income and net foreign currency gains. Core Gaming does not believe that Siyata Mobile
will be treated as a PFIC for its current taxable year and does not expect to become one in the near future. However, PFIC status depends
on the composition of a company’s income and assets and the fair market value of its assets from time to time, as well as on the
application of complex statutory and regulatory rules that are subject to potentially varying or changing interpretations.
If Siyata Mobile determines that it is a PFIC
for any taxable year, Siyata Mobile will endeavor to provide, and will endeavor to cause its non-U.S. subsidiaries that are PFICs, to
provide, U.S. holders with tax information necessary to enable a U.S. holder to make a qualified electing fund (QEF) election with respect
to Siyata Mobile and its non-U.S. subsidiaries.
If Siyata Mobile is treated as a PFIC, a U.S.
holder of Siyata Mobile Common Shares may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest
marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions, interest charges on certain taxes treated
as deferred, and additional reporting requirements. U.S. holders of Siyata Mobile Common Shares should consult with their tax advisors
regarding the potential application of these rules.
Management’s Discussion and Analysis of
Core Gaming’s Financial Condition and Results of Operation
You should read the following discussion of
Core Gaming’s financial condition and results of operations in conjunction with the financial statements and the notes included
elsewhere in this Exhibit 99.1. The following discussion contains forward-looking statements that involve certain developments, risks
and uncertainties. Actual outcomes could differ materially from those expressed in or anticipated by such forward-looking statements.
Factors that could contribute to these differences include those discussed below and elsewhere in this Exhibit 99.1, particularly under
“Risk Factors.” This discussion should be read in conjunction with Newbyera’s audited consolidated financial statements
for the years ended December 31, 2023 and 2022 and the related notes thereto, included below. All dollar amounts referred to in this discussion
and analysis are expressed in United States dollars except where indicated otherwise. References in this section to “we,”
“our,” “us,” “Core Gaming” and the “Company” generally refer to Core Gaming, Inc. and
its consolidated subsidiary, Newbyera.
Business Overview
Core Gaming is a U.S. domiciled
mobile gaming developer and publisher. Core Gaming was formed and acquired its sole operating subsidiary, Newbyera, in 2024. This discussion
is based primarily on Newbyera’s operations for the years ended December 31, 2023 and 2022.
Core Gaming publishes mobile
games that it develops itself, that it co-develops with others, or that are developed by third parties. In all three cases, it earns revenue
primarily from serving ads in those games, which it shares with the other parties in the case of games that are co-developed or developed
by third parties. Core Gaming’s expertise in publishing (including promotion) and monetization (through the serving of ads) attracts
developers to partner with us and helps us scale our business more quickly.
Through its operating subsidiary,
Core Gaming reaches over 40 million active users worldwide every month. Core Gaming’s apps have over 600 million downloads.
Key Components of Results of Operations
We collect and analyze operating
and financial data to evaluate the health of our business, allocate our resources, and assess our performance. We believe that the following
metrics and measures, which are considered in additional detail in our Results of Operations discussion, are useful to facilitate period-to-period
comparisons of our business and to facilitate comparisons of our performance to that of similar companies.
Revenue
During the years ended December
1, 2023 and 2022, and the six months ended June 30, 2024 and 2023, our revenue consisted entirely of advertisement publishing fees from
various advertisement platforms, such as Applovin and Google. We display advertisements from these platforms by integrating the platforms
into our games and earn fees based on various metrics, such as impressions (the number of times an ad is displayed), clicks, and user
downloads.
Cost of Providing Services
Cost of providing services
consists of the costs directly related to the delivery of our services, primarily advertisement promotion fees paid to various platforms
and agencies to promote our mobile games to end users, and technology service costs, which consists of the amounts that we pay to game
developers as part of our fee and revenue-sharing arrangements when we co-develop games with them.
Other Operating Expenses
Expenses that are not directly
related to delivering our product and service offerings and therefore are not included in “cost of providing services” include
general and administrative expenses, net impairment losses on financial and contract assets, other income and expenses, and net foreign
gain or loss.
General and administrative expenses consist primarily of the administrative
service fees paid to Moremo for back office services such as bookkeeping and rent, as well as certain technology services, pursuant to
an Outsourcing Service Contract dated as of April 30, 2021, between Newbyera and Moremo, pursuant to which Moremo provides integrated
services including financial management (general ledger, accounts payable, payroll), legal support, procurement, human resources administration,
and technical assistance to Moremo. The Outsourcing Services Contact has a term of five years ending on April 30, 2026, unless terminated
earlier in accordance with its provisions, and may be extended by the parties mutual written consent. We paid Moremo ¥2,032,500.29
(approximately $282,291.71) and ¥2,360,245.00 (approximately $327,811.81), respectively, during the years ended December 31, 2024
and 2023 for financial, legal, human resources, and technical services under the outsourcing service contact.
Net impairment losses on financial
and contract assets is provision for doubtful accounts receivable. The Company considers the probability of default upon initial recognition
of assets, and whether there has been a significant increase in credit risk, on an ongoing basis throughout each reporting period.
Other income (expenses) consists
of investment income from short-term investments and other miscellaneous income.
We do not consider other income
(expenses), or foreign/gain loss, which relates to gains or losses resulting from changes in foreign currency exchange rates, to be indicative
of the state of our business or operations and do not consider either of these items material to an evaluation of our overall financial
condition.
Results of Operations for the Years Ended December
31, 2023 and 2022
The following table sets forth
the Company’s consolidated statements of operations for the years ended December 31, 2023 and 2022:
| | |
2023 | | |
2022 | | |
$ Change | | |
% Change | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 57,001,647 | | |
| 38,948,277 | | |
| 18,053,370 | | |
| 46 | % |
| Cost of providing services | |
| (55,748,651 | ) | |
| (37,759,845 | ) | |
| 17,988,806 | | |
| 48 | % |
| Gross profit | |
| 1,252,996 | | |
| 1,188,432 | | |
| 64,564 | | |
| 5 | % |
| | |
| | | |
| | | |
| | | |
| | |
| General and administrative expenses | |
| (931,882 | ) | |
| (932,087 | ) | |
| 205 | | |
| 0 | % |
| Net impairment losses on financial and contract assets | |
| (329,525 | ) | |
| (398,598 | ) | |
| (69,073 | ) | |
| -17 | % |
| Other income | |
| 215,906 | | |
| 2 | | |
| 215,904 | | |
| –% | |
| Foreign gain/(loss) - net | |
| 43,111 | | |
| 183,840 | | |
| (140,729 | ) | |
| -77 | % |
| Operating (loss)/profit | |
| 250,606 | | |
| 41,589 | | |
| 209,017 | | |
| 503 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| 13,543 | | |
| 2,587 | | |
| 10,956 | | |
| 424 | % |
| Finance cost | |
| (9,994 | ) | |
| (23,339 | ) | |
| (13,345 | ) | |
| -57 | % |
| Finance cost - net | |
| 3,549 | | |
| (20,752 | ) | |
| (24,301 | ) | |
| -117 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Profit before income tax | |
| 254,155 | | |
| 20,837 | | |
| 233,318 | | |
| 1,120 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Income tax expenses | |
| (20,968 | ) | |
| (1,993 | ) | |
| 18,975 | | |
| 952 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Profit for the period | |
| 233,187 | | |
| 18,844 | | |
| 214,343 | | |
| 1,137 | % |
Revenue
Revenue increased $18.1 million,
or 46.4%, to $57.0 million for the year ended December 31, 2023 compared to $38.9 million for the year ended December 31, 2022. This increase
was primarily a result of higher advertisement fees earned from the greater number of games that we published in 2023. In 2023, we leveraged
more co-developed games which helped us to publish more games more quickly, providing additional vehicles for the display of ads.
Cost of Providing Services
The following table sets forth
the components of our cost of providing services for each of the years ended December 31, 2023 and 2022:
| | |
Year Ended December 31, | |
| | |
2023 | | |
2022 | | |
$ Change | | |
% Change | |
| Advertisement promotion cost | |
| 42,547.343 | | |
| 32,299,464 | | |
| 10,247,879 | | |
| 31.7 | % |
| Technology service cost | |
| 12,808,908 | | |
| 5,141,115 | | |
| 7,667,793 | | |
| 149.1 | % |
| Others | |
| 361,400 | | |
| 319,266 | | |
| 42,134 | | |
| 13.2 | % |
| Total cost of providing services | |
$ | 55,748,651 | | |
| 37,759,845 | | |
| 17,988,806 | | |
| 47.6 | % |
Cost of providing services
increased $18.0 million, or 47.6%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The primary driver
for this increase was the growth in revenue year-over-year, although cost as a percentage
of revenue rose slightly, from 96.9% to 97.8%, primarily due to the greater proportion of co-developed games as we scaled up our operations.
This led to a significant increase in technology service cost, which was partially offset by lower advertisement promotion cost as we
leveraged our BI platform to improve the efficiency and effectiveness of our promotional activities.
General and Administrative Expenses
General and administrative
expenses were steady, at $932 thousand, for each of the years ended December 31, 2023 and 2022. Our focus on efficiency avoided a material
rise in the administrative support service fees we paid to Moremo, even as we scaled up our operations and increased our revenue.
Other Income (Expenses)
The following table sets forth
the components of our other income for the years ended December 31, 2023 and 2022:
| | |
Year Ended December 31, | |
| | |
2023 | | |
2022 | | |
$ Change | | |
% Change | |
| Investment income | |
| 200,920 | | |
| - | | |
| 200,920 | | |
| – | % |
| Others | |
| 14,986 | | |
| 2 | | |
| 14,984 | | |
| – | % |
| Total other income | |
$ | 215,906 | | |
| 2 | | |
| 215,904 | | |
| – | % |
We had other income of $216
thousand for the year ended December 31, 2023 compared to $2 for the year ended December 31, 2022, primarily as a result of investment
income in 2023 from the Company’s cash management activities, with the Company deciding to hold cash in more productive short-term
investments such as short-term fixed deposits. There were no such investment needs in 2022, given our lower cash balances.
Income Tax Expense
Income tax expense was $21
thousand and $2 thousand, respectively, for the years ended December 31, 2023 and 2022. This increase was primarily due to our higher
profit before income tax, which was $254 thousand for the year ended December 31, 2023, compared to $21 thousand for the year ended December
31, 2022, with the higher profit largely driven by the higher amount of other income for 2023 compared to 2022, as discussed above.
Cash Flows
The following tables summarize
our cash flows for the years ended December 31, 2023 and 2022:
| | |
Year Ended
December 31, | |
| | |
2023 | | |
2022 | |
| Net cash provided by operating activities | |
$ | 1,832,101 | | |
| 253,796 | |
| Net cash provided by/used in investing activities | |
| -- | | |
| -- | |
| Net cash provided by financing activities | |
| 2,833,697 | | |
| -- | |
| Net increase in cash | |
$ | 4,665,798 | | |
| 253,796 | |
Cash Flows from Operating Activities
Net cash provided by operating
activities was $1.8 million and $254 thousand, respectively, for the years ended December 31, 2023 and 2022. The primary reasons for the
cash provided by operations during 2023 was a $3.9 million decrease in accounts receivable, offset by a $4.7 million increase in accounts
payable and accrued liabilities. The primary reasons for the cash provided from operations during 2022 was a $1.4 million decrease in
accounts receivable, offset by a $1.2 million increase in accounts payable and accrued liabilities.
Cash Flows from Financing Activities
Net cash provided by financing
activities for the year ended December 31, 2023, consisted entirely of a capital contribution from our shareholder, with the shareholder
paying up the capital for its original investment made in 2022. We had no cash provided by financing activities in 2022.
Results of Operations for the Six Months Ended
June 30, 2024 and 2023
The following table sets forth
the Company’s consolidated statements of operations for the six months ended June 30, 2024 and 2023:
| | |
For the Six Months Ended | | |
| | |
| |
| | |
June 30,
2024 | | |
June 30,
2023 | | |
$ Change | | |
% Change | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 35,016,410 | | |
| 25,290,443 | | |
| 9,725,967 | | |
| 38 | % |
| Cost of providing services | |
| (34,511,302 | ) | |
| (24,363,831 | ) | |
| 10,147,471 | | |
| 42 | % |
| Gross profit | |
| 505,108 | | |
| 926,612 | | |
| (421,504 | ) | |
| -45 | % |
| | |
| | | |
| | | |
| | | |
| | |
| General and administrative expenses | |
| (528,654 | ) | |
| (432,866 | ) | |
| 95,788 | | |
| 22 | % |
| Net impairment losses on financial and contract assets | |
| (86,066 | ) | |
| (163,390 | ) | |
| (77,324 | ) | |
| -47 | % |
| Other income | |
| 299,291 | | |
| 7,611 | | |
| 291,680 | | |
| 3832 | % |
| Foreign exchange gain - net | |
| 32,552 | | |
| 257,681 | | |
| (225,129 | ) | |
| -87 | % |
| Operating (loss)/profit | |
| 222,231 | | |
| 595,648 | | |
| (373,417 | ) | |
| -63 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| 4,248 | | |
| 10,314 | | |
| (6,066 | ) | |
| -59 | % |
| Finance cost | |
| (9,108 | ) | |
| (4,530 | ) | |
| 4,578 | | |
| 101 | % |
| Finance cost - net | |
| (4,860 | ) | |
| 5,784 | | |
| (10,644 | ) | |
| -184 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Profit before income tax | |
| 217,371 | | |
| 601,432 | | |
| (384,061 | ) | |
| -64 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Income tax expenses | |
| (17,933 | ) | |
| (77,938 | ) | |
| (60,005 | ) | |
| -77 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Profit for the period | |
| 199,438 | | |
| 523,494 | | |
| (324,056 | ) | |
| -62 | % |
Revenue
Revenue increased $9.7 million,
or 38%, to $35.0 million for the six months ended June 30, 2024 compared to $25.3 million for the six months ended June 30, 2023. This
increase was primarily a result of higher advertisement fees earned from the greater number of games that we published in 2024. Starting
in 2023, we leveraged more co-developed games which helped us to publish more games more quickly, providing additional vehicles for the
display of ads.
Cost of Providing Services
The following table sets forth
the components of our cost of providing services for each of the six months ended June 30, 2024 and 2023:
| | |
Six Months Ended June 30, | |
| | |
2024 | | |
2023 | | |
$ Change | | |
% Change | |
| Advertisement promotion cost | |
| 24,083,693 | | |
| 19,898,084 | | |
| 4,185,609 | | |
| 21.0 | % |
| Technology service cost | |
| 10,226,588 | | |
| 4,267,049 | | |
| 5,959,539 | | |
| 139.7 | % |
| Others | |
| 201,021 | | |
| 198,698 | | |
| 2,323 | | |
| 1.2 | % |
| Total cost of providing services | |
| 34,511,302 | | |
| 24,363,831 | | |
| 10,147,471 | | |
| 41.6 | % |
Cost of providing services
increased $10.1 million, or 41.6%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The primary
driver for this increase was the growth in revenue period-over-period, although cost as a
percentage of revenue rose slightly, from 96.3% to 98.6%, primarily due to the greater proportion of co-developed games as we scaled up
our operations. This led to a significant increase in technology service cost, which was partially offset by lower advertisement
promotion cost as we leveraged our BI platform to improve the efficiency and effectiveness of our promotional activities.
General and Administrative Expenses
General and administrative
expenses increased $95 thousand, or 22.1%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, because
alongside slightly higher administrative staff costs as we increased our revenue, we incurred legal and other professional consulting
service fees in relation to the acquisition of Newbyera by Core Gaming and the Merger.
Other Income (Expenses)
We had other income of $299
thousand for the six months ended June 30, 2024 compared to $8 thousand for the six months ended June 30, 2022, in each case consisting
solely of investment income from the Company’s cash management activities. The increase during the six months ended June 30, 2024
compared to the same period of 2024 resulted from the Company deciding to hold cash in more productive short-term investments such as
short-term fixed deposits. We had fewer such investment needs during the six months ended June 30, 2024 than in the first half of 2023,
given our lower cash balances.
Income Tax Expense
Income tax expense was $18
thousand and $78 thousand, respectively, for the six months ended June 30, 2024 and 2023. This decrease was primarily due to our lower
profit before income tax during the 2024 period, which was $217 thousand for the six months ended June 30, 2024, compared to $601 thousand
for the six months ended June 30, 2023, with the lower profit largely caused by lower gross profit and lower foreign currency exchange
gain.
Liquidity and Capital Resources
As of June 30, 2024, we had
cash and cash equivalents of $14.5 million, which consisted of cash in banks and highly liquid investments with original maturities of
three months or less. Historically, we have funded our operations, including capital expenditures, primarily through cash flow from operating
activities and borrowings from related parties. We believe that our existing cash and cash equivalents, the cash generated from operations,
and the continuing availability of loans from related parties will be sufficient to fund our operations and capital expenditure requirements
for at least the next 12 months. We intend, however, to continue to make significant investments to support our business growth and may
require additional funds to respond to business challenges, including the need to develop new games and features or enhance our existing
games, improve our operating infrastructure, or acquire complementary businesses, personnel or technologies. Accordingly, we may need
to engage in equity or debt financings to secure additional funds or we may decide to do so opportunistically.
Critical Accounting Estimates
In preparing the financial statements, the Company
makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. The key area requiring
the use of judgment and estimates is the assessment of credit risk and the determination of expected credit losses (“ECL”)
on financial assets.
The Company applies the expected credit loss model
under IFRS 9 to measure impairment losses on financial assets measured at amortized cost, including accounts receivable and other receivables.
The ECL model incorporates forward-looking information, historical credit loss experience, and management’s assessment of the current
and expected future economic environment. The provision for expected credit losses is recognized as an expense in the statement of operations
and comprehensive income and reduces the carrying amount of financial assets. Changes in estimates may result in volatility in reported
earnings and financial position.
Management believes that the methodologies and
assumptions applied in determining the ECL are reasonable and reflect the best available information. However, actual credit losses may
differ from estimates due to unforeseen economic developments or counterparty-specific factors.
Index to financial statements
Newbyera Technology Limited
Financial Statements
Index to audited financial statements
December 31, 2023 and 2022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and the Board of Directors
of
Newbyera Technology Limited
OPINION ON THE FINANCIAL STATEMENTS
We have audited the accompanying consolidated
balance sheets of Newbyera Technology Limited (the “Company”) as of December 31, 2023 and 2022, and the related statements of
operations and comprehensive loss, changes in equity and cash flows for the years then ended, and the related notes (collectively referred
to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended
in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
BASIS FOR OPINION
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB and International Standards on Auditing (ISAs). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,
and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable
basis for our opinion.
SUBSTANTIAL DOUBT ABOUT THE COMPANY’S
ABILITY TO CONTINUE AS A GOING CONCERN
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s
operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
CRITICAL AUDIT MATTERS
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there are no critical audit matters.
/s/ Bush & Associates CPA LLC
We have served as the Company’s auditor
since 2024.
Henderson, Nevada
January 1, 2025
PCAOB ID Number 6797
Newbyera Technology Limited
Financial Statements
Preparation of the Financial Statements of Newbyera
Technology Limited
These are the audited financial statements of
Newbyera Technology Limited. The management of Newbyera Technology have prepared these financial statements in good faith and believe
them to be in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. They do
not include all of the information and footnotes required by IFRS for complete financial statements. Newbyera Technology’s management
believes that these financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for
a fair statement of Newbyera Technology’s financial position and the results of its operations for the periods presented.
Newbyera Technology Limited
Balance Sheets
As of December 31, 2023 and 2022
(Expressed
in United States Dollars, except number of shares)
| | |
December 31, | |
| | |
2023 | | |
2022 | |
| ASSETS | |
| | |
| |
| Current assets | |
| | |
| |
| Prepayments, net | |
| 76,499 | | |
| 374,440 | |
| Other receivables, net | |
| 94,821 | | |
| 3,692 | |
| Accounts receivable, net | |
| 9,278,318 | | |
| 5,398,893 | |
| Cash and cash equivalents | |
| 5,457,860 | | |
| 792,062 | |
| Total current assets | |
| 14,907,498 | | |
| 6,569,087 | |
| | |
| | | |
| | |
| Total assets | |
| 14,907,498 | | |
| 6,569,087 | |
| | |
| | | |
| | |
| LIABILITIES AND EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Account and other payables | |
| 9,005,281 | | |
| 4,329,740 | |
| Taxes Payable | |
| 22,754 | | |
| 1,925 | |
| Amounts due to related parties | |
| 2,916,642 | | |
| 2,217,098 | |
| Total current liabilities | |
| 11,944,677 | | |
| 6,548,763 | |
| | |
| | | |
| | |
| Total liabilities | |
| 11,944,677 | | |
| 6,548,763 | |
| | |
| | | |
| | |
| Equity | |
| | | |
| | |
| Share capital | |
| 2,833,697 | | |
| - | |
| Other reserves | |
| (125,213 | ) | |
| (826 | ) |
| Retained earnings | |
| 254,337 | | |
| 21,150 | |
| Total Equity | |
| 2,962,821 | | |
| 20,324 | |
| | |
| | | |
| | |
| Total liabilities and equity | |
| 14,907,498 | | |
| 6,569,087 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Statements of Operation and Comprehensive Income
For the Years Ended December 31, 2023 and 2022
(Expressed
in United States Dollars)
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Revenue | |
| 57,001,647 | | |
| 38,948,277 | |
| Cost of providing services | |
| (55,748,651 | ) | |
| (37,759,845 | ) |
| Gross profit | |
| 1,252,996 | | |
| 1,188,432 | |
| | |
| | | |
| | |
| General and administrative expenses | |
| (931,882 | ) | |
| (932,087 | ) |
| Net impairment losses on financial and contract assets | |
| (329,525 | ) | |
| (398,598 | ) |
| Other income | |
| 215,906 | | |
| 2 | |
| Foreign gain - net | |
| 43,111 | | |
| 183,840 | |
| Operating profit | |
| 250,606 | | |
| 41,589 | |
| | |
| | | |
| | |
| Interest income | |
| 13,543 | | |
| 2,587 | |
| Finance cost | |
| (9,994 | ) | |
| (23,339 | ) |
| Finance cost - net | |
| 3,549 | | |
| (20,752 | ) |
| | |
| | | |
| | |
| Profit before income tax | |
| 254,155 | | |
| 20,837 | |
| | |
| | | |
| | |
| Income tax expenses | |
| (20,968 | ) | |
| (1,993 | ) |
| | |
| | | |
| | |
| Profit for the period | |
| 233,187 | | |
| 18,844 | |
| | |
| | | |
| | |
| Other comprehensive losses | |
| (124,387 | ) | |
| (845 | ) |
| | |
| | | |
| | |
| Total comprehensive income | |
| 108,800 | | |
| 17,999 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Statements of Changes in Equity
For the Years Ended December 31, 2023 and 2022
(Expressed
in United States Dollars)
| | |
Share
capital | | |
Retained
Earnings | | |
Other Reserves
Foreign currency translation | | |
Total
Equity | |
| Balance as of January 1, 2022 | |
| - | | |
| 2,306 | | |
| 19 | | |
| 2,325 | |
| Net income | |
| - | | |
| 18,844 | | |
| - | | |
| 18,844 | |
| Foreign currency translation loss | |
| - | | |
| - | | |
| (845 | ) | |
| (845 | ) |
| Balance as of December 31, 2022 | |
| - | | |
| 21,150 | | |
| (826 | ) | |
| 20,324 | |
| | |
| | | |
| | | |
| | | |
| | |
| Capital contribution | |
| 2,833,697 | | |
| - | | |
| - | | |
| 2,833,697 | |
| Net income | |
| - | | |
| 233,187 | | |
| - | | |
| 233,187 | |
| Foreign currency translation loss | |
| - | | |
| - | | |
| (124,387 | ) | |
| (124,387 | ) |
| Balance as of December 31, 2023 | |
| 2,833,697 | | |
| 254,337 | | |
| -125,213 | | |
| 2,962,821 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2023 and 2022
(Expressed
in United States Dollars)
| | |
2023 | | |
2022 | |
| Profit before tax | |
| 254,155 | | |
| 20,837 | |
| Adjustments for | |
| | | |
| | |
| Interest income - net | |
| (229,449 | ) | |
| (2,589 | ) |
| Net exchange difference | |
| (124,526 | ) | |
| (913 | ) |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (3,879,425 | ) | |
| (1,449,341 | ) |
| Prepayment | |
| 297,941 | | |
| (326,442 | ) |
| Other receivables | |
| (91,129 | ) | |
| (1,283 | ) |
| Accounts payable and accrued liabilities | |
| 4,675,541 | | |
| 1,179,654 | |
| Amounts due to related parties | |
| 699,544 | | |
| 831,284 | |
| Cash flow from operation | |
| 1,602,652 | | |
| 251,207 | |
| Interest received | |
| 229,449 | | |
| 2,589 | |
| NET CASH INFLOW FROM OPERATING ACTIVITIES | |
| 1,832,101 | | |
| 253,796 | |
| | |
| | | |
| | |
| CASH USED FOR INVESTING ACTIVITIES | |
| - | | |
| - | |
| | |
| | | |
| | |
| CASH FLOW FROM FINANCING ACTIVITIES | |
| | | |
| | |
| Capital contribution from shareholders | |
| 2,833,697 | | |
| - | |
| NET CASH INFLOW FROM FINANCING ACTIVITIES | |
| 2,833,697 | | |
| - | |
| | |
| | | |
| | |
| NET INCREASE IN CASH | |
| 4,665,798 | | |
| 253,796 | |
| Cash and Cash Equivalent at beginning of the period | |
| 792,062 | | |
| 538,266 | |
| Cash and Cash Equivalent at end of the period | |
| 5,457,860 | | |
| 792,062 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Notes to the Financial Statements
(Expressed in United States Dollars)
Newbyera Technology Limited (“Newbyera”
or the “Company”) was formed in Hong Kong and began operations on April 28, 2021. The Company provides comprehensive performance-based
marketing technology services. The Company’s business includes developing hyper-casual mobile games and publishing via various advertising
platforms and agencies as advertising intermedia for customers.
| 2. |
Basis of Presentation and Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying audited financial statements
have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.
The financial statements have been prepared on
a historical cost basis.
New and amended standards adopted by the
group
The Company has applied the following standards
and amendments for the first time for its annual reporting period commencing 1 January 2023:
| ● | Definition of Accounting Estimates – amendments
to IAS 8 |
| ● | Disclosure of Accounting Policies – Amendments to
IAS 1 and IFRS Practice Statement 2 |
The amendments listed above did not have any material
impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future periods.
New standards and interpretations not yet
adopted
Certain amendments to accounting standards have
been published that are not mandatory for December 31, 2023 reporting periods and have not been early adopted by the company. These amendments
are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
Summary of Significant Accounting Policies
Segment reporting: The Company reports
financial information and evaluates its operations by total revenues and not by type of business activity. The Company does not use discrete
financial information to evaluate the operating results for each such business activity. Although revenue can be identified for each business
activity, management cannot and does not identify expenses, profitability, or other financial information for these various types of business
activities. As a result, management, including the chief operating decision maker reviews operating results by total profitability, thus
the Company has determined that it operates under one reportable segment. Furthermore, the disclosure of geographical information is impracticable.
Foreign Currency Translation: The
Company translates the financial statements into U.S. dollars from its functional currencies. Assets and liabilities denominated in foreign
currencies are translated at the exchange rates in effect at the consolidated balance sheet dates. Revenues and expenses are translated
at the average exchange rates prevailing during the period. Unrealized gains or losses arising from currency translation are included
in other comprehensive income/(loss).
Revenue and Account Receivables:
The Company generates its income through in-game advertising from advertising platforms and agencies. Revenues are recognized at the point-in-time
the advertisements are displayed in the game or the services has been completed as the customer simultaneously receives and consumes the
benefits provided from these services.
Account and Related Party Payables: Accounts
Payable primarily consist of amounts due to advertising platforms and agencies for marketing services, as well as game development fees
owed to third-party game suppliers. These payables are typically settled within the standard payment terms contracted with the respective
suppliers.
Related Party Payables represent amounts due to
related parties for advertisement publishing services and technical consulting support provided to the Company. In addition, the related
parties offer administrative support services under standard contractual terms.
Neither accounts payable nor related party payables
bear interest.
Cash and Cash Equivalents: Cash
consists of cash in banks. The Company considers highly liquid investments such as time deposits and certificates of deposit with original
maturities of three months or less to be cash equivalents.
Income Taxes: In determining provisions
for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income. The Company’s annual
estimated effective tax rate differs from the statutory rate primarily as a result of non-deductible expenses and nontaxable gains.
| 3. |
Significant accounting judgements and estimates |
The preparation of the Company’s financial
statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. Uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in
the future periods.
| 4. |
Fair value measurements |
The fair values of applicable assets and liabilities,
are determined and categorized using a fair value hierarchy as follows:
(a) Level
1 - the fair values of assets and liabilities with standard terms and conditions and which trade in active markets that the Company can
access at the measurement date are determined with reference to quoted market prices (unadjusted).
(b) Level
2 - in the absence of quoted market prices, the fair values of the assets and liabilities are determined using the other observable, either
directly or indirectly, inputs such as quoted prices for similar assets/liabilities in active markets or included within Level 1, quoted
prices for identical or similar assets/liabilities in non-active markets.
(c) Level
3 - in the absence of quoted market prices included within Level 1 and observable inputs included within Level 2, the fair values of the
remaining assets and liabilities are determined in accordance with generally accepted pricing models.
Fair value measurements that use inputs of different
hierarchy levels are categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant
to the entire measurement.
The carrying values of cash and cash equivalents,
account receivables, other receivables, account and other payables, and payables to related parties are reasonable estimates of their
fair value due to the short-term nature of these financial instruments. Cash and cash equivalents are considered Level 1 items as they
represent liquid assets with short-term maturities.
| 5. |
Transactions with related parties and shareholders |
The transactions with related parties are as follows
(in USD):
Transactions with the shareholder:
The Company’s holding company, Moremo Network
Limited, provides technical consulting services and administrative services to the Company.
| | |
2023 | | |
2022 | |
| Technical consulting services | |
| - | | |
| 49,083 | |
| Administrative service outsourcing | |
| 838,974 | | |
| 888,064 | |
| Total | |
| 838,974 | | |
| 937,147 | |
Transactions with related parties under common
control:
The related parties under common control provide
marketing promotion services and technical consulting support to the Company.
| | |
2023 | | |
2022 | |
| Technical consulting services | |
| 204,418 | | |
| 48,876 | |
| Marketing promotion services | |
| 2,458,166 | | |
| - | |
| Total | |
| 2,662,584 | | |
| 48,876 | |
Short-term borrowings with related parties:
The Company takes up short-term borrowings from
related parties to finance working capital. The short-term borrowings do not bear interest.
| | |
2023 | | |
2022 | |
| Short-term borrowings | |
| 1,583,177 | | |
| 378,221 | |
The payable balances from the related party transactions
are included in “Amounts due to related parties” in the accompanying balance sheet as follows:
| | |
December 31 | |
| | |
2023 | | |
2022 | |
| Amount due to holding company | |
| | |
| |
| Administrative service outsourcing | |
| 2,114,575 | | |
| 1,298,938 | |
| Amount due to other related parties | |
| | | |
| | |
| Marketing promotion services | |
| 300,142 | | |
| 305,232 | |
| Short-term borrowings | |
| 501,925 | | |
| 612,928 | |
| Total | |
| 2,916,642 | | |
| 2,217,098 | |
Revenues for the years ended December 31, 2023 and 2022 consists of
the following items:
| | |
December 31, | |
| | |
2023 | | |
2022 | |
| Advertisement publishing service | |
| 57,001,647 | | |
| 38,948,277 | |
| | |
2023 | | |
2022 | |
| Income tax expense: | |
| | |
| |
| Current year | |
| 20,968 | | |
| 1,993 | |
The income tax on the results for the financial
year differs from the amount of income tax determined by applying the Hong Kong standard rate of income tax due to the following factors:
| | |
2023 | | |
2022 | |
| Profit before income tax | |
| 254,155 | | |
| 20,837 | |
| Tax at the applicable tax rate of 16.5% (2022: 16.5%) | |
| 41,935 | | |
| 3,438 | |
| Tax effect of: | |
| | | |
| | |
| - non-taxable profits | |
| (20,967 | ) | |
| (1,445 | ) |
| Income tax expense | |
| 20,968 | | |
| 1,993 | |
| 8. |
Account and other payables |
Account and other payables consist of the following
items:
| | |
December 31 | |
| | |
2023 | | |
2022 | |
| Account payables | |
| 8,995,164 | | |
| 4,324,420 | |
| Other payables | |
| 10,117 | | |
| 5,320 | |
| Total | |
| 9,005,281 | | |
| 4,329,740 | |
| | |
2023 | | |
2022 | |
| | |
Number
of
ordinary shares | | |
$ | | |
Number
of
ordinary
shares | | |
$ | |
| Issued and fully paid: | |
| | |
| | |
| | |
| |
| At the beginning and end of the year | |
| - | | |
| - | | |
| - | | |
| - | |
| Issuance of shares during the year | |
| 10,000 | | |
| 2,833,697 | | |
| - | | |
| - | |
| At the end of the year | |
| 10,000 | | |
| 2,833,697 | | |
| - | | |
| - | |
The ordinary shares have no par value.
| 10. |
Financial instruments and financial risks |
The Company’s activities expose it to a
variety of financial risks from its operation. The key financial risk relevant to the Company is credit risk.
The management team reviews and agrees policies
and procedures for the management of financial risks. There has been no change to the Company’s exposure to the financial risks
or the manner in which it manages and measures the risks.
Credit risk
Credit risk refers to the risk that the counterparty
will default on its contractual obligations resulting in a loss to the Company. The Company’s exposure to credit risk arises primarily
from trade and other receivables. For other financial assets (including cash and cash equivalents), the Company minimises credit risk
by dealing exclusively with high credit rating counterparties.
The Company has adopted a policy of only dealing
with creditworthy counterparties. The Company performs ongoing credit evaluation of its counterparties’ financial condition and
generally does not require a collateral.
The Company considers the probability of default
upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period.
Payment terms are specified in agreements between
the Company and the platforms and agencies. The Company generally reconciles with the platforms and agencies at the end of each month
for the price of impressions filled in that month. Specific payment terms may vary by agreement but are generally sixty days or less.
Accounts receivables are unsecured, and do not
bear interest. The allowance for doubtful accounts is reviewed monthly, requires judgment, and is based on the best estimate of the amount
of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable
on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current
information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts.
Accounts receivables are presented net of an allowance for doubtful accounts. Accounts receivables are written off against the allowance
for doubtful accounts when the Company determines amounts are no longer collectible.
| 11. |
Commitments and Contingencies |
The Company’s agreements with platforms
and agencies typically obligate the Company to provide indemnity and defense for losses resulting from claims of intellectual property
infringement, damages to property or persons, business losses, or other liabilities. No material demands have been made upon the Company
to provide indemnification under such agreements and there are no claims that the Company is aware that could have a material effect on
the Company’s condensed financial statements.
Subsequent events have been
evaluated through February 14, 2024, the date of issuance of these consolidated financial statements.
On February 15, 2024, Core
Gaming Inc, signed a letter of intent (“LOI”) with Siyata Mobile Global Inc (“Siyata Mobile”) an entity listed
on the NASDAQ and incorporated in Delaware, United States. The LOI outlines the general terms and conditions pursuant to which the Company
proposes to engage in a business combination with Siyata Mobile.
Unaudited Financial Statements for the Six Months
Ended
June 30, 2024
Preparation of the Financial Statements of Newbyera
Technology Limited
These are the unaudited, internal, financial statements
of Newbyera Technology Limited. The management of Newbyera Technology have prepared these financial statements in good faith and believe
them to be in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS. They do
not include all of the information and footnotes required by IFRS for complete financial statements. Newbyera Technology’s management
believes that these financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for
a fair statement of Newbyera Technology’s financial position and the results of its operations for the periods presented.
Newbyera Technology Limited
Balance Sheets
As of June 30, 2024 and December 31, 2023
(Expressed
in United States Dollars, except number of shares)
| | |
June 30, 2024 | | |
December 31,
2023 | |
| ASSETS | |
| | |
| |
| Current assets | |
| | |
| |
| Prepayments, net | |
| 813,209 | | |
| 76,499 | |
| Other receivables, net | |
| 115,396 | | |
| 94,821 | |
| Accounts receivable, net | |
| 9,204,859 | | |
| 9,278,318 | |
| Cash and cash equivalents | |
| 14,544,826 | | |
| 5,457,860 | |
| Total current assets | |
| 24,678,290 | | |
| 14,907,498 | |
| | |
| | | |
| | |
| Total assets | |
| 24,678,290 | | |
| 14,907,498 | |
| | |
| | | |
| | |
| LIABILITIES AND EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Account and other payables | |
| 18,451,635 | | |
| 9,005,281 | |
| Taxes Payable | |
| 40,498 | | |
| 22,754 | |
| Amounts due to related parties | |
| 3,042,775 | | |
| 2,916,642 | |
| Total current liabilities | |
| 21,534,908 | | |
| 11,944,677 | |
| | |
| | | |
| | |
| Total liabilities | |
| 21,534,908 | | |
| 11,944,677 | |
| | |
| | | |
| | |
| Equity | |
| | | |
| | |
| Share capital | |
| 2,833,697 | | |
| 2,833,697 | |
| Other reserves | |
| (144,090 | ) | |
| (125,213 | ) |
| Retained earnings | |
| 453,775 | | |
| 254,337 | |
| Total Equity | |
| 3,143,382 | | |
| 2,962,821 | |
| | |
| | | |
| | |
| Total liabilities and equity | |
| 24,678,290 | | |
| 14,907,498 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Statements of Operation and Comprehensive Income
For the Six Months Ended June 30, 2024 and 2023
(Expressed
in United States Dollars)
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Revenue | |
| 35,016,410 | | |
| 25,290,443 | |
| Cost of providing services | |
| (34,511,302 | ) | |
| (24,363,831 | ) |
| Gross profit | |
| 505,108 | | |
| 926,612 | |
| | |
| | | |
| | |
| General and administrative expenses | |
| (528,654 | ) | |
| (432,866 | ) |
| Net impairment losses on financial and contract assets | |
| (86,066 | ) | |
| (163,390 | ) |
| Other income | |
| 299,291 | | |
| 7,611 | |
| Foreign gain/(loss) - net | |
| 32,552 | | |
| 257,681 | |
| Operating (loss)/profit | |
| 222,231 | | |
| 595,648 | |
| | |
| | | |
| | |
| Interest income | |
| 4,248 | | |
| 10,314 | |
| Finance cost | |
| (9,108 | ) | |
| (4,530 | ) |
| Finance cost - net | |
| (4,860 | ) | |
| 5,784 | |
| | |
| | | |
| | |
| Profit before income tax | |
| 217,371 | | |
| 601,432 | |
| | |
| | | |
| | |
| Income tax expenses | |
| (17,933 | ) | |
| (77,938 | ) |
| | |
| | | |
| | |
| Profit for the period | |
| 199,438 | | |
| 523,494 | |
| | |
| | | |
| | |
| Other comprehensive income | |
| (18,877 | ) | |
| (195,869 | ) |
| | |
| | | |
| | |
| Total comprehensive income | |
| 180,561 | | |
| 327,625 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Statements of Changes in Equity
For the Six Months Ended June 30, 2024
(Expressed
in United States Dollars)
| | |
Share capital | | |
Retained Earnings | | |
Other Reserves
Foreign currency translation | | |
Total Equity | |
| Balance as of January 1, 2024 | |
| 2,833,697 | | |
| 254,337 | | |
| (125,213 | ) | |
| 2,962,821 | |
| Net income | |
| - | | |
| 199,438 | | |
| - | | |
| 199,438 | |
| Foreign currency translation loss | |
| - | | |
| - | | |
| (18,877 | ) | |
| (18,877 | ) |
| Balance as of June 30, 2024 | |
| 2,833,697 | | |
| 453,775 | | |
| (144,090 | ) | |
| 3,143,382 | |
The accompanying notes are an integral part of
these financial statements.
Newbyera Technology Limited
Notes to the Financial Statements
(Expressed in United States Dollars)
| 1. |
Basis of Presentation and Summary of Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited financial statements
have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and interpretations issued by the IFRS Interpretations Committee (IFRS IC) applicable to companies reporting under IFRS.
They do not include all of the information and footnotes required by IFRS for complete financial statements.
The financial statements have been prepared on
a historical cost basis.
New and amended standards adopted by the
Company
The Company has applied certain standards and
amendments for the first time for its reporting period commencing January 1, 2024. The amendments did not have any impact on the amounts
recognized in prior periods and are not expected to significantly affect the current or future periods.
New standards and interpretations not yet
adopted
Certain amendments to accounting standards have
been published that are not mandatory for December 31, 2024 reporting periods and have not been early adopted by the company. These amendments
are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.
Summary of Significant Accounting Policies
Foreign Currency Translation: The
Company translates the financial statements into U.S. dollars from its functional currencies. Assets and liabilities denominated in foreign
currencies are translated at the exchange rates in effect at the consolidated balance sheet dates. Revenues and expenses are translated
at the average exchange rates prevailing during the period. Unrealized gains or losses arising from currency translation are included
in other comprehensive income/(loss).
Revenue and Account Receivables:
The Company generates its income through in-game advertising from advertising platforms and agencies. Revenues are recognized at the point-in-time
the advertisements are displayed in the game or the services has been completed as the customer simultaneously receives and consumes the
benefits provided from these services.
Account and Related Party Payables: Accounts
Payable primarily consist of amounts due to advertising platforms and agencies for marketing services, as well as game development fees
owed to third-party game suppliers. These payables are typically settled within the standard payment terms contracted with the respective
suppliers.
Related Party Payables represent amounts due to
related parties for advertisement publishing services and technical consulting support provided to the Company. In addition, the related
parties offer administrative support services under standard contractual terms.
Neither accounts payable nor related party payables
bear interest.
Cash and Cash Equivalents: Cash
consists of cash on hand and cash in banks. The Company considers highly liquid investments such as time deposits and certificates of
deposit with original maturities of three months or less to be cash equivalents.
Income Taxes: In determining provisions
for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income. The Company’s annual
estimated effective tax rate differs from the statutory rate primarily as a result of non-deductible expenses and nontaxable gains.
| 2. |
Significant accounting judgements and estimates |
The preparation of the Company’s financial
statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets
and liabilities, and the disclosure of contingent liabilities at the end of each reporting period. Uncertainty about these assumptions
and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in
the future periods.
| 3. |
Transactions with related parties and shareholders |
The transactions with related parties are as follows
(in USD):
Transactions with the former shareholder:
The Company’s former holding company, Moremo
Network Limited, provides administrative services to the Company.
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| Administrative service outsourcing | |
| 378,388 | | |
| 424,088 | |
Transactions with other related parties:
A related party provides marketing promotion services
to the Company.
| | |
Six Months Ended
June 30 | |
| | |
2024 | | |
2023 | |
| Marketing promotion services | |
| 568,044 | | |
| 860,363 | |
Short-term borrowings with related parties:
The Company takes up short-term borrowings from
related parties to finance working capital. The short-term borrowings do not bear interest.
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| Short-term borrowings | |
| 231,236 | | |
| - | |
The payable balances from the related party transactions
are included in “Amounts due to related parties” in the accompanying balance sheet as follows:
| | |
June 30,
2024 | | |
December 31,
2023 | |
| Administrative service outsourcing | |
| 2,476,278 | | |
| 2,114,575 | |
| Marketing promotion services | |
| 295,715 | | |
| 300,142 | |
| Short-term borrowings | |
| 270,782 | | |
| 501,925 | |
| Total | |
| 3,042,775 | | |
| 2,916,642 | |
Revenues for the six-month period ended June 30, 2024 and 2023 consists
of the following items:
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| Advertisement publishing service | |
| 35,016,410 | | |
| 25,290,443 | |
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| Income tax expense: | |
| | |
| |
| Current year | |
| 17,933 | | |
| 77,938 | |
The income tax on the results for the financial
year differs from the amount of income tax determined by applying the Hong Kong standard rate of income tax due to the following factors:
| | |
Six Months Ended
June 30, | |
| | |
2024 | | |
2023 | |
| Profit before income tax | |
| 217,371 | | |
| 601,432 | |
| Tax at the applicable tax rate of 16.5% (2023: 16.5%) | |
| 35,866 | | |
| 99,236 | |
| Tax effect of: | |
| | | |
| | |
| - non-taxable profits | |
| (17,933 | ) | |
| (21,298 | ) |
| Income tax expense | |
| 17,933 | | |
| 77,938 | |
| | |
30 June, 2024 | |
| | |
Number of
ordinary shares | | |
$ | |
| Issued and fully paid: | |
| | |
| |
| At January 1, 2024 and June 30, 2024 | |
| 10,000 | | |
| 2,833,697 | |
The ordinary shares have no par value.
| 7. |
Financial instruments and financial risks |
The Company’s activities expose it to a
variety of financial risks from its operation. The key financial risk relevant to the Company is credit risk.
The management team reviews and agrees policies
and procedures for the management of financial risks. There has been no change to the Company’s exposure to the financial risks
or the manner in which it manages and measures the risks.
Credit risk
Credit risk refers to the risk that the counterparty
will default on its contractual obligations resulting in a loss to the Company. The Company’s exposure to credit risk arises primarily
from trade and other receivables. For other financial assets (including cash and cash equivalents), the Company minimises credit risk
by dealing exclusively with high credit rating counterparties.
The Company has adopted a policy of only dealing
with creditworthy counterparties. The Company performs ongoing credit evaluation of its counterparties’ financial condition and
generally does not require collateral.
The Company considers the probability of default
upon initial recognition of assets and whether there has been a significant increase in credit risk on an ongoing basis throughout each
reporting period.
Payment terms are specified in agreements between
the Company and the platforms and agencies. The Company generally reconciles with the platforms and agencies at the end of each month
for the price of impressions filled in that month. Specific payment terms may vary by agreement but are generally sixty days or less.
Accounts receivables are unsecured, and do not
bear interest. The allowance for doubtful accounts is reviewed monthly, requires judgment, and is based on the best estimate of the amount
of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable
on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current
information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts.
Accounts receivables are presented net of an allowance for doubtful accounts. Accounts receivables are written off against the allowance
for doubtful accounts when the Company determines amounts are no longer collectible.
| 8. |
Commitments and Contingencies |
The Company’s agreements with platforms
and agencies typically obligate the Company to provide indemnity and defense for losses resulting from claims of intellectual property
infringement, damages to property or persons, business losses, or other liabilities. No material demands have been made upon the Company
to provide indemnification under such agreements and there are no claims that the Company is aware that could have a material effect on
the Company’s condensed financial statements.
SIYATA MOBILE INC.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
Introduction
On February 26, 2025, Core Gaming, Inc. entered
into a Merger Agreement (the “Merger Agreement”) with Siyata Mobile Inc., a corporation existing under the laws of the Province
of British Columbia (“Siyata Mobile”) and Siyata Core Acquisition U.S., Inc., a wholly-owned subsidiary of the Purchaser (“Merger
Sub”), pursuant to which (i) Core Gaming will merge (the “Merger”) with and into Merger Sub, with Core Gaming continuing
as the surviving entity and a wholly owned subsidiary of Siyata Mobile, (ii) in exchange for the outstanding shares of the Core Gaming’s
common stock, Siyata Mobile will issue common shares to the shareholders of Core Gaming based on an exchange ratio calculated as $160,000,000
divided by the volume-weighted average closing price of Siyata Mobile’s common shares on the Nasdaq Stock Market LLC for the 10-day
trading period immediately preceding the effective time of the Merger, (iii) on the Closing Date (as defined in the Merger Agreement),
the parties will cause a certificate of merger to be executed and filed with the Secretary of State of Delaware, with the Merger becoming
effective on the date and time specified in the certificate of merger (the “Effective Time”), and (iv) at the Effective Time,
all assets, properties, rights, privileges, powers, and franchises of Core Gaming and Merger Sub will vest in Core Gaming as the surviving
corporation in the Merger.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE
SHEET
AS OF JUNE 30, 2024
| | |
Core Gaming
(Historical) | | |
Newbyera
(Historical) | | |
Siyata
(Historical) | | |
Transaction
accounting
adjustments | | |
Notes | | |
Pro Forma Combined | |
| Assets | |
| | |
| | |
| | |
| | |
| | |
| |
| Current | |
| | |
| | |
| | |
| | |
| | |
| |
| Cash | |
| 75 | | |
| 14,544,826 | | |
| 2,653,226 | | |
| | | |
| | |
| 17,198,127 | |
| Trade and Other Receivables | |
| - | | |
| 9,320,255 | | |
| 1,508,799 | | |
| | | |
| | |
| 10,829,054 | |
| Prepaid Expenses | |
| - | | |
| 813,209 | | |
| 2,244,232 | | |
| (813,209 | ) | |
[H] | | |
| 2,244,232 | |
| Inventory | |
| - | | |
| - | | |
| 2,299,647 | | |
| | | |
| | |
| 2,299,647 | |
| Advance To Suppliers | |
| - | | |
| - | | |
| 891,144 | | |
| 813,209 | | |
[H] | | |
| 1,704,353 | |
| | |
| 75 | | |
| 24,678,290 | | |
| 9,597,048 | | |
| | | |
| | |
| 34,275,413 | |
| Long Term Receivable | |
| - | | |
| - | | |
| 142,904 | | |
| | | |
| | |
| 142,904 | |
| Investment in Securities | |
| - | | |
| - | | |
| 1,000,000 | | |
| | | |
| | |
| 1,000,000 | |
| Right Of Use Assets | |
| - | | |
| - | | |
| 500,849 | | |
| | | |
| | |
| 500,849 | |
| Equipment | |
| - | | |
| - | | |
| 157,022 | | |
| | | |
| | |
| 157,022 | |
| Intangible Assets | |
| - | | |
| - | | |
| 7,785,176 | | |
| | | |
| | |
| 7,785,176 | |
| Goodwill | |
| - | | |
| - | | |
| - | | |
| 15,628,581 | | |
[A] | | |
| 15,628,581 | |
| Total Assets | |
| 75 | | |
| 24,678,290 | | |
| 19,182,999 | | |
| | | |
| | |
| 59,489,945 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Liabilities and Shareholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Current | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Loans to Financial Institutions | |
| - | | |
| - | | |
| 619,068 | | |
| | | |
| | |
| 619,068 | |
| Sales of future receipts | |
| - | | |
| - | | |
| 2,152,375 | | |
| | | |
| | |
| 2,152,375 | |
| Tax payable | |
| - | | |
| 40,498 | | |
| | | |
| (40,498 | ) | |
[H] | | |
| - | |
| Accounts Payable and Accrued Liabilities | |
| - | | |
| 18,451,635 | | |
| 4,087,199 | | |
| 1,000,000 | | |
[C] | | |
| 23,579,332 | |
| | |
| | | |
| | | |
| | | |
| 40,498 | | |
[H] | | |
| - | |
| Amount due to related parties | |
| - | | |
| 3,042,775 | | |
| - | | |
| | | |
| | |
| 3,042,775 | |
| Deferred Revenue | |
| - | | |
| - | | |
| 3,182 | | |
| | | |
| | |
| 3,182 | |
| Short Term Lease Liability | |
| - | | |
| - | | |
| 243,214 | | |
| | | |
| | |
| 243,214 | |
| Warrant Liability | |
| - | | |
| - | | |
| 10,755,482 | | |
| | | |
| | |
| 10,755,482 | |
| | |
| - | | |
| 21,534,908 | | |
| 17,860,520 | | |
| | | |
| | |
| 40,395,428 | |
| Long Term Lease Liability | |
| | | |
| - | | |
| 284,393 | | |
| | | |
| | |
| 284,393 | |
| | |
| - | | |
| - | | |
| 284,393 | | |
| | | |
| | |
| 284,393 | |
| Total Liabilities | |
| - | | |
| 21,534,908 | | |
| 18,144,913 | | |
| | | |
| | |
| 40,679,821 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Shareholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| Share Capital | |
| 75 | | |
| 2,833,697 | | |
| 92,565,727 | | |
| (92,565,727 | ) | |
[D] | | |
| 19,810,124 | |
| | |
| | | |
| | | |
| | | |
| 16,666,667 | | |
[D] | | |
| | |
| | |
| | | |
| | | |
| | | |
| 309,685 | | |
[B] | | |
| | |
| Reserves | |
| - | | |
| (144,090 | ) | |
| 14,845,086 | | |
| (14,845,086 | ) | |
[E] | | |
| - | |
| | |
| | | |
| | | |
| | | |
| 144,090 | | |
[B] | | |
| | |
| Accumulated Other Comprehensive Loss | |
| - | | |
| - | | |
| 98,870 | | |
| (98,870 | ) | |
[F] | | |
| - | |
| Retained Earnings/(Deficit) | |
| - | | |
| 453,775 | | |
| (106,471,597 | ) | |
| 106,471,597 | | |
[G] | | |
| (1,000,000 | ) |
| | |
| | | |
| | | |
| | | |
| (1,000,000 | ) | |
[C] | | |
| | |
| | |
| | | |
| | | |
| | | |
| (453,775 | ) | |
[B] | | |
| | |
| | |
| 75 | | |
| 3,143,382 | | |
| 1,038,086 | | |
| | | |
| | |
| 18,810,124 | |
| Total Liabilities and Shareholders’ Equity | |
| 75 | | |
| 24,678,290 | | |
| 19,182,999 | | |
| | | |
| | |
| 59,489,945 | |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF LOSS
FOR THE SIX MONTHS ENDED JUNE 30, 2024
| | |
Newbyera (Historical) | | |
Siyata
(Historical) | | |
Transaction
accounting
adjustments | | |
Notes | | |
Pro Forma Combined | |
| Revenue | |
| 35,016,410 | | |
| 4,248,847 | | |
| | | |
| | |
| 39,265,257 | |
| Cost Of Sales | |
| (34,511,302 | ) | |
| (3,188,616 | ) | |
| | | |
| | |
| (37,699,918 | ) |
| Gross Profit | |
| 505,108 | | |
| 1,060,231 | | |
| | | |
| | |
| 1,565,339 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| Amortization And Depreciation | |
| - | | |
| 837,787 | | |
| | | |
| | |
| 837,787 | |
| Development Expenses | |
| - | | |
| 35,000 | | |
| | | |
| | |
| 35,000 | |
| Selling And Marketing | |
| - | | |
| 2,102,406 | | |
| | | |
| | |
| 2,102,406 | |
| Equity promotion and marketing | |
| - | | |
| 2,150,000 | | |
| | | |
| | |
| 2,150,000 | |
| Inventory Impairment | |
| - | | |
| - | | |
| | | |
| | |
| - | |
| General And Administrative | |
| 528,654 | | |
| 2,071,853 | | |
| | | |
| | |
| 2,600,507 | |
| Bad Debts (Recovered) | |
| 86,066 | | |
| 18,858 | | |
| | | |
| | |
| 104,924 | |
| Share-Based Payments | |
| - | | |
| 200,886 | | |
| | | |
| | |
| 200,886 | |
| Foreign Exchange | |
| (32,552 | ) | |
| | | |
| 32,552 | | |
[H] | | |
| - | |
| Other income | |
| (299,291 | ) | |
| | | |
| 299,291 | | |
[H] | | |
| - | |
| Total Operating Expenses | |
| 282,877 | | |
| 7,416,790 | | |
| | | |
| | |
| 8,031,510 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Net Operating Loss | |
| 222,231 | | |
| (6,356,559 | ) | |
| | | |
| | |
| (6,466,171 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Other income | |
| | | |
| | | |
| | | |
| | |
| | |
| Investment income | |
| - | | |
| - | | |
| 299,291 | | |
[H] | | |
| 299,291 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Other Expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| Finance Expense | |
| 4,860 | | |
| 1,722,039 | | |
| | | |
| | |
| 1,726,899 | |
| Loss on issuance | |
| - | | |
| 6,129,282 | | |
| | | |
| | |
| 6,129,282 | |
| Loss on extinguishment of financial liability | |
| - | | |
| 601,163 | | |
| | | |
| | |
| 601,163 | |
| Foreign Exchange | |
| - | | |
| (10,651 | ) | |
| (32,552 | ) | |
[H] | | |
| (43,203 | ) |
| Change In Fair Value of Warrant Liability | |
| - | | |
| (54,570 | ) | |
| | | |
| | |
| (54,570 | ) |
| Transaction Costs | |
| - | | |
| 977,318 | | |
| | | |
| | |
| 977,318 | |
| Total Other Expenses | |
| 4,860 | | |
| 9,364,581 | | |
| | | |
| | |
| 9,336,889 | |
| Profit Before Income Tax | |
| 217,371 | | |
| (15,721,140 | ) | |
| | | |
| | |
| (15,503,769 | ) |
| Income tax expense | |
| 17,933 | | |
| - | | |
| | | |
| | |
| 17,933 | |
| Net Loss for The Period | |
| 199,438 | | |
| (15,721,140 | ) | |
| | | |
| | |
| (15,521,702 | ) |
| Other Comprehensive Income | |
| (18,877 | ) | |
| - | | |
| | | |
| | |
| (18,877 | ) |
| Comprehensive Income/(Loss) For the Period | |
| 180,561 | | |
| (15,721,140 | ) | |
| | | |
| | |
| (15,540,579 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Weighted average shares | |
| 2,179,341 | | |
| 70,307 | | |
| | | |
| | |
| 2,249,648 | |
| Basic and diluted earning/(loss) per share | |
| 0.09 | | |
| (223.61 | ) | |
| | | |
| | |
| (6.90 | ) |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT
OF LOSS
FOR THE YEAR ENDED DECEMBER 31, 2023
| | |
Newbyera (Historical) | | |
Siyata
(Historical) | | |
Transaction
accounting
adjustments | | |
Notes | | |
Pro Forma Combined | |
| Revenue | |
| 57,001,647 | | |
| 8,233,301 | | |
| | | |
| | |
| 65,234,948 | |
| Cost Of Sales | |
| (55,748,651 | ) | |
| (5,575,372 | ) | |
| | | |
| | |
| (61,324,023 | ) |
| Gross Profit | |
| 1,252,996 | | |
| 2,657,929 | | |
| | | |
| | |
| 3,910,925 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| Amortization And Depreciation | |
| - | | |
| 1,754,957 | | |
| | | |
| | |
| 1,754,957 | |
| Development Expenses | |
| - | | |
| 578,356 | | |
| | | |
| | |
| 578,356 | |
| Selling And Marketing | |
| - | | |
| 4,784,994 | | |
| | | |
| | |
| 4,784,994 | |
| General And Administrative | |
| 931,882 | | |
| 6,080,014 | | |
| | | |
| | |
| 7,011,896 | |
| Inventory Impairment | |
| - | | |
| (161,450 | ) | |
| | | |
| | |
| (161,450 | ) |
| Inventory Loss (Income) From Water Damage | |
| - | | |
| (834,713 | ) | |
| | | |
| | |
| (834,713 | ) |
| Bad Debts (Recovered) | |
| 329,525 | | |
| 47,526 | | |
| | | |
| | |
| 377,051 | |
| Share-Based Payments | |
| - | | |
| 930,564 | | |
| | | |
| | |
| 930,564 | |
| Foreign Exchange | |
| (43,111 | ) | |
| - | | |
| 43,111 | | |
[H] | | |
| - | |
| Other income | |
| (215,906 | ) | |
| - | | |
| 215,906 | | |
[H] | | |
| - | |
| Total Operating Expenses | |
| 1,002,390 | | |
| 13,180,248 | | |
| | | |
| | |
| 14,441,655 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Net Operating Loss | |
| 250,606 | | |
| (10,522,319 | ) | |
| | | |
| | |
| (10,530,730 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Other income | |
| | | |
| | | |
| | | |
| | |
| | |
| Investment income | |
| - | | |
| - | | |
| 215,906 | | |
[H] | | |
| 215,906 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Other Expenses | |
| | | |
| | | |
| | | |
| | |
| | |
| Finance Expense - net | |
| (3,549 | ) | |
| 841,815 | | |
| | | |
| | |
| 838,266 | |
| Foreign Exchange | |
| | | |
| (49,258 | ) | |
| (43,111 | ) | |
[H] | | |
| (92,369 | ) |
| Change In Fair Value of Convertible Promissory Note | |
| - | | |
| - | | |
| | | |
| | |
| - | |
| Change In Fair Value of Opening Warrant Liability | |
| - | | |
| - | | |
| | | |
| | |
| - | |
| Change In Fair Value of Warrant Liability | |
| - | | |
| 1,517,389 | | |
| | | |
| | |
| 1,517,389 | |
| Transaction Costs | |
| - | | |
| 99,529 | | |
| 1,000,000 | | |
[C] | | |
| 1,099,529 | |
| Total Other Expenses | |
| (3,549 | ) | |
| 2,409,475 | | |
| | | |
| | |
| 3,362,815 | |
| Profit Before Income Tax | |
| 254,155 | | |
| (12,931,794 | ) | |
| | | |
| | |
| (13,677,639 | ) |
| Income tax expense | |
| 20,968 | | |
| - | | |
| | | |
| | |
| 20,968 | |
| Net Loss for The Period | |
| 233,187 | | |
| (12,931,794 | ) | |
| | | |
| | |
| (13,698,607 | ) |
| Other Comprehensive Income | |
| (124,387 | ) | |
| - | | |
| | | |
| | |
| (124,387 | ) |
| Comprehensive Income/(Loss) For the Period | |
| 108,800 | | |
| (12,931,794 | ) | |
| | | |
| | |
| (13,822,994 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| | |
| Weighted average shares | |
| 2,179,341 | | |
| 228,578 | | |
| | | |
| | |
| 2,407,919 | |
| Basic and diluted earning/(loss) per share | |
| 0.11 | | |
| (56.57 | ) | |
| | | |
| | |
| (5.69 | ) |
Note 1 – Basis of Presentation
The accompanying unaudited pro forma condensed
combined financial information was prepared in accordance with Article 11 of SEC Regulation S-X.
The unaudited pro forma condensed combined
balance sheet was prepared using the historical balance sheet of Siyata Mobile Inc. (the “Company”) as of June 30, 2024, the
historical balance sheet of Core Gaming, Inc. as of June 30, 2024, and the historical balance sheet of Newbyera as of June 30, 2024, taking
into account the pro forma effect of the merger transaction(s). Siyata Mobile’s, Core Gaming’s and Newbyera’s fiscal
years end on December 31.
The unaudited pro forma condensed combined
statements of loss were prepared using:
| ● | the historical unaudited consolidated statement of loss of
Siyata Mobile for the six months ended June 30, 2024; |
| ● | the historical audited consolidated statement of loss of
Siyata Mobile for the year ended December 31, 2023; |
| ● | the historical unaudited statement of income of Newbyera
for the six months ended June 30, 2024; |
| ● | the historical audited statement of income of Newbyera for
the year ended December 31, 2023. |
Since Core Gaming, Inc. was incorporated on May
24, 2024, there was no operation for the six months ended June 30, 2024 and the year ended December 31, 2023.
Both Siyata Mobile and Newbyera’s historical
audited and unaudited financial statements were prepared in accordance with International Financial Reporting Standards and are presented
in U.S. dollars. Certain reclassifications have been made to the historical financial statements of Newbyera to conform to the financial
statement presentation to be adopted by the combined company. These adjustments are related to the presentation of prepayment, tax payables,
foreign currency exchange gain and other incomes. All such adjustments and reclassifications have been included in Pro Forma Adjustments
in the Unaudited Pro Forma Condensed Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statement of Loss.
Because the former stockholders of Core Gaming
will now own approximately 90% of the Company’s outstanding common shares immediately following the closing of the merger, and the
management of Core Gaming assumes key positions in the management of the Company, Core Gaming is deemed to be the acquiring company for
accounting purposes, and the merger is accounted for as a reverse acquisition under the acquisition method of accounting for business
combinations. Accordingly, the assets and liabilities of Siyata Mobile will be measured at fair value and added to the assets and liabilities
of Core Gaming, and the historical results of operations of Core Gaming will be reflected in the results of operations of the Company
following the merger.
The total acquisition consideration (for accounting
purposes) is equal to fair value of the number of equity interests that Core Gaming would have had to issue to give the owners of Siyata
Mobile the same percentage equity interest in the combined company that results from the merge transaction. The related fair value of
equity interests of Core Gaming is based on preliminary management valuations.
Under the acquisition method of accounting, identifiable
assets and liabilities of Siyata Mobile, will be recorded based on their estimated fair values as of the effective time of the merger.
Goodwill is calculated as the difference between the estimated acquisition consideration and fair values of identifiable net assets acquired.
The estimated acquisition consideration and the
preliminary allocation of the estimated acquisition consideration are, in part, based upon a preliminary management valuation, as described
below, and the Company’s estimates and assumptions which are subject to change.
| | |
30 June
2024 | |
| Cash | |
| 2,653,226 | |
| Trade And Other Receivables | |
| 1,508,799 | |
| Prepaid Expenses | |
| 2,244,232 | |
| Inventory | |
| 2,299,647 | |
| Advance To Suppliers | |
| 891,144 | |
| Long Term Receivable | |
| 142,904 | |
| Investment in Securities | |
| 1,000,000 | |
| Right Of Use Assets | |
| 500,849 | |
| Equipment | |
| 157,022 | |
| Intangible Assets | |
| 7,785,176 | |
| Fair value of assets acquired | |
| 19,182,999 | |
| | |
| | |
| Loans to Financial Institutions | |
| 619,068 | |
| Sales of future receipts | |
| 2,152,375 | |
| Accounts Payable and Accrued Liabilities | |
| 4,087,199 | |
| Deferred Revenue | |
| 3,182 | |
| Short Term Lease Liability | |
| 243,214 | |
| Warrant Liability | |
| 10,755,482 | |
| Long Term Lease Liability | |
| 284,393 | |
| Fair value of liabilities acquired | |
| 18,144,913 | |
| | |
| | |
| Fair Value of Net Assets acquired | |
| 1,038,086 | |
| Goodwill | |
| 15,628,581 | |
| Total estimated consideration (for accounting purpose) | |
| 16,666,667 | |
The final determination of the fair value of the
identifiable net assets acquired may change significantly from these preliminary estimates. The actual acquisition accounting of the merger
will be based on the fair value of the acquisition consideration and the fair values of Siyata Mobile’s assets and liabilities as
of the effective time.
Note 2 – Pro Forma Adjustments
The pro forma adjustments in the unaudited
pro forma condensed combined financial information which represent only transaction accounting adjustments are as follows:
| [A] | To record the goodwill from Core Gaming’s acquisition of
Siyata (for accounting purpose) |
| [B] | To record the exchange of Core Gaming’s shares for Newbyera’s
shares |
| [C] | To record the estimated transaction costs for the merge |
| [D] | To record the exchange of Core Gaming’s shares for Siyata’s
common shares |
| [E] | To eliminate Siyata’s historical reserves |
| [F] | To eliminate Siyata’s historical other comprehensive loss |
| [G] | To eliminate Siyata’s historical deficit |
| [H] | To reclass certain balances to confirm to the combined company’s
presentation |
Note 3 – Loss Per Share
Net loss per share calculated using the historical
weighted average shares outstanding, and the issuance of additional shares in connection with the merge transaction, assuming the shares
were outstanding since January 1, 2023. As the transaction is being reflected as if they had occurred at the beginning of the periods
presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable
relating to the transactions have been outstanding for the entire periods presented.
62
Exhibit 99.2
Fairness
Opinion
Related
to the Purchase
of Core
Gaming, Inc.
by Siyata
Mobile Inc.
Valuation
Date: January 31, 2025
Report
Date: February 26, 2025
Prepared for:
Board of Directors
Siyata Mobile
Inc.
February 26, 2025
Board of Directors of Siyata Mobile Inc.
c/o Mr. Marc Seelenfreund
CEO and Director
Siyata Mobile Inc.
1751 Richardson Street, Suite 2207
Montreal, QC H3K 1G6
Dear Mr. Seelenfreund:
ValueScope, LLC (referred to herein as “ValueScope”,
“we”, “our” or words of similar import) has been engaged to advise the Board of Directors of Siyata Mobile Inc.
(the “Board” and “Siyata” respectively) as to the fairness, from a financial point of view, to Siyata of the consideration
to be paid by Siyata to acquire Core Gaming, Inc. (“Core Gaming”). We understand that the transaction (the “Proposed
Transaction”) contemplates that Siyata will issue shares of its common stock to the shareholders of Core Gaming based on an exchange
ratio calculated as $160,000,000 divided by the volume-weighted average closing price of the SYTA’s common shares. In the event
the existing shareholders of SYTA would hold less than 10% of the issued and outstanding shares of the post-transaction entity, SYTA would
declare a stock dividend such the existing SYTA shareholders hold at least 10% of the post-transaction entity (the “Acquisition
Consideration”).
This Opinion is being provided to assist the Board
in determining whether or not to enter into a definitive agreement with Core Gaming memorializing the Proposed Transaction and whether
or not, in the event that such definitive agreement is entered into, to recommend the Proposed Transaction to Siyata’s shareholders.
Our analysis is based on the available financial information as of January 31, 2025 (the “Valuation Date”). Our Opinion is
based on the assumption that all provisions related to the financial elements of the Proposed Transaction are as set forth in the Term
Sheet. Our Opinion speaks solely as of the Valuation Date, and to no other date. It is understood that we have no obligation to update
this Opinion, even if new, additional or revised information is brought to our attention. This Opinion is being issued pursuant to our
Engagement Letter dated November 25, 2024, including the General Contractual Conditions incorporated therein (our “Agreement”)
and is subject to the terms, conditions, qualifications and limitations of our Agreement.
Our Opinion is based on a review of publicly available
business and financial information relating to Core Gaming and Siyata. We have also reviewed internal financial and operating information
related to Core Gaming and Siyata. In addition, we interviewed members of Core Gaming and Siyata’s respective management teams (individually,
“Core Gaming Management” and “Siyata Management” and collectively, “Management”).
950 E. State Highway 114 • Suite 120 •
Southlake • Texas • 76092 • Tel: 817.481.4902 • Fax: 817.481.4905
www.valuescopeinc.com
Board of Directors of Siyata Mobile Inc.
c/o Mr. Marc Seelenfreund
Page 2
This opinion is based on financial analyses prepared
in accordance with applicable professional standards. These procedures included such valuation analyses as we considered necessary and
appropriate under the circumstances of this engagement. With your approval: (i) we have valued Core Gaming based on its enterprise value
as a going concern; (ii) we have valued the common stock of Siyata based on trading history, without taking into account dilution which
would result from the consummation of the Proposed Transaction and (iii) we have not separately valued Siyata as a business entity and
express no opinion as to the stand alone value of Siyata.
Our analyses relied
upon, but were not necessarily limited to, the consideration of the following information:
| ● | Emails
describing the terms of the Proposed Transaction (the “Term Sheet”); |
| ● | The
historical financial statements of Core Gaming and its subsidiaries; |
| ● | Financial
projections of Core Gaming prepared by Core’s management; |
| ● | Core
Gaming presentation prepared by Core Gaming management; |
| ● | Information
relating to Core Gaming’s industry and similar companies; |
| ● | Discussions
with and information obtained from Core Gaming management; |
| ● | Market
information regarding trading volumes in and trading prices of Siyata common stock; |
| ● | Discussions
with and information provided by the management of Siyata and the Board; and |
| ● | Such
other information as we have determined to be useful to our analysis. |
We
have not independently verified any of the foregoing information and, with your permission, have relied upon its completeness and accuracy
in all material aspects. We have not made an independent evaluation or appraisal of the underlying assets of either Siyata or Core Gaming.
Our engagement was only to consider the fairness
to Siyata, from a financial point of view, of the Acquisition Consideration being paid for Core Gaming. We have not been engaged to consider
or advise upon the fairness of any other aspect of the Proposed Transaction, such as, without limitation, any fees paid or to be paid,
any bonuses paid or to be paid, any incentive equity plans adopted or to be adopted, any executive employment agreements entered into
or to be entered into, or the fact that the Potential Transaction will result in a change of control of Siyata. In reaching our conclusions
we have not considered the impact (positive or negative) of the transaction itself.
VALUESCOPE
Board of Directors of Siyata Mobile Inc.
c/o Mr. Marc Seelenfreund
Page 3
We are acting only as a valuation advisor to the
Board and are not acting as the financial advisor, dealer, brokers or fiduciary to the Board, Siyata or its shareholders or any other
individual or entity (together with any governmental or quasi-governmental agency or authority, each a “Person”) in connection
with the Proposed Transaction. It is understood that this Opinion is for the exclusive use of the Board and may only be relied upon by
the Board.
Based on the above information and the qualifications
and limitations set forth herein, we are of the view that, as of the Valuation Date, the Acquisition Consideration to be paid by Siyata
to acquire Core Gaming is fair to Siyata from a financial point of view.
We are independent of and have no current or prospective
economic interests in Siyata and/or Core Gaming.
As noted above, this Opinion is solely for
the benefit of and may only be relied upon by the Board. This Opinion is not tax advice or a recommendation to any Person as to how to
vote their interests with respect to the Proposed Transaction or any other transaction, or whether to purchaser, sell or hold any securities.
Respectfully submitted,
/s/ ValueScope, LLC
ValueScope, LLC
/s/ Martin Hanan
Martin Hanan, CFA
President
VALUESCOPE
Exhibit 99.3
N E W S R E L E A S E
Siyata Mobile Signs Definitive Agreement to
Merge with Leading AI Gaming Developer, Core Gaming
Company to Host a Virtual Press Conference to
Discuss the Transaction at 4:05 pm ET Today
Vancouver, BC – February 26, 2025 --
Siyata Mobile Inc. (Nasdaq: SYTA) (“Siyata” or the “Company”),
a global developer and vendor of Push-to-Talk over Cellular (PoC) handsets and accessories, today announced that the Company has
signed a definitive merger agreement with Core Gaming, Inc. (“Core Gaming”) a privately-held, global gaming developer
and publisher with approximately $80 million in revenues in 2024.
Key Highlights of the Merger:
| ● | Core Gaming, Inc., a Delaware corporation, will become a
wholly owned subsidiary of Siyata through a merger with a subsidiary of Siyata. |
| ● | The combined public company will be led by Mr. Aitan Zacharin,
the current CEO of Core Gaming. |
| ● | Marc Seelenfreund, the current CEO of Siyata, will step down
as the public company CEO to serve as President and lead a newly formed Push-To-Talk subsidiary of Siyata. |
| ● | The Board of Directors of the combined public company will
consist of Marc Seelenfreund and four directors designated by Core Gaming. |
| ● | In exchange for the outstanding shares of Core Gaming, Siyata
will issue common shares to the shareholders of Core Gaming based on an exchange ratio calculated as $160,000,000 divided by the volume-weighted
average closing price (VWAP) of Siyata’s common shares on the Nasdaq Stock Market LLC for the 10-day trading period immediately
preceding the effective time of the merger. |
| ● | Legacy Siyata shareholders shall have the right to receive
a stock dividend within six months after the merger so that they will own a minimum of 10% of the combined entity. |
| ● | The Board of Directors of Siyata received a fairness opinion from ValueScope, LLC., a marshall + stevens
company, valuing Core Gaming at $160 million. |
Marc Seelenfreund, CEO of Siyata, commented, “Today’s
announcement is the product of an exhaustive assessment of numerous strategic alternatives for Siyata over the past several months. Core
Gaming possesses all of the qualities we look for in a merger partner - strong business fundamentals, excellent management and opportunities
for outsized growth. We could not be more excited to partner with Core Gaming and unlock value for our shareholders. The timing of this
transaction is significant given the positive outlook for Core Gaming’s business. Core Gaming operates in the fast-growing mobile
gaming industry and we believe is well-positioned for rapid growth in the near-term. It has been independently valued at approximately
$160 million, which will provide Siyata’s shareholders with a premium to our current market valuation.”
Mr. Seelenfreund continued, “At Siyata,
we remain committed to our mission of being a leader in critical communications, providing outstanding service to our customers and ensuring
a seamless transition for our partners. We have made great progress towards expanding distribution and increasing sales, and we are highly
optimistic about the future of this business. Despite our many successes, we believe that the company is undervalued, and the merger with
Core Gaming represents an exciting path forward. I am pleased to remain with Siyata to continue to lead our efforts and further our strategic
objectives.”
Core Gaming’s Business Profile:
| ● | Core Gaming is an international gaming developer and publisher that has developed, published and marketed
over 2,000 casual mobile games in over 140 countries. |
| ● | Core Gaming engages 40 million monthly active users, and has an extensive worldwide distribution platform,
which has led to over 600 million downloads. |
| ● | Core Gaming has a unique, algorithm-driven technology that gives it an edge in user acquisition. |
| ● | Core Gaming has developed cutting edge AI tools using text, language, image and video models to achieve
a 50% boost in content production, reducing production time by over 40%, and significantly enhancing creative output and efficiency. |
| ● | In fiscal year 2024, Core Gaming had unaudited gross revenues of approximately $80 million. |
Aitan Zacharin, CEO of Core Gaming, commented,
“We are excited to announce this reverse-merger with Siyata as it provides us with the opportunity to become a publicly traded company
at a pivotal time in our industry. We believe that Core Gaming is well positioned to enter the public markets to pursue our vision of
becoming a leading AI-driven gaming company in what is now a $126 billion global market1. We are beginning to see how our AI
tools and algorithms are shaping the next generation of gaming. Our unique technology coupled with our exceptional team puts us on track
for significant growth potential. I look forward to working with Marc and his team to finalize the transaction, and to make this a tremendous
success for Siyata shareholders.”
The Board of Directors of both Siyata and Core
Gaming have unanimously approved the proposed transaction, which is expected to be completed in the second quarter of 2025, subject to
regulatory approval and the satisfaction of customary closing conditions in the merger agreement. For further information regarding the
terms and conditions contained in the definitive Agreement, please see Siyata’s Current Report on Form 6-K to be filed with the
U.S. Securities and Exchange Commission.
The Company plans to hold a virtual press conference
today at 4:05pm EST to discuss the merger. The event can be viewed on the Siyata Investor Relations website, or by clicking this link.
| 1 | https://www.statista.com/outlook/amo/media/games/mobile-games/worldwide |
About Core Gaming
Core Gaming is an international AI driven mobile
games developer and publisher headquartered in Miami. We create entertaining games for millions of players worldwide, while empowering
other developers to deliver player-focused apps and games to enthusiasts. Core’s mission is to be the leading global AI driven gaming
company. Since our launch we have developed and co-developed over 2,000 games, driven over 600 million downloads, and generated a global
footprint of over 40 million users from over 140 countries.
Visit www.coregaming.co to learn more.
About Siyata Mobile
Siyata Mobile Inc. is
a B2B global developer and vendor of next-generation Push-To-Talk over Cellular handsets and accessories. Its portfolio of rugged PTT
handsets and accessories enables first responders and enterprise workers to instantly communicate over a nationwide cellular network of
choice, to increase situational awareness and save lives. Police, fire, and ambulance organizations as well as schools, utilities, security
companies, hospitals, waste management companies, resorts and many other organizations use Siyata PTT handsets and accessories today.
In support of our Push-to-Talk
handsets and accessories, Siyata also offers enterprise-grade In-Vehicle solutions and Cellular Booster systems enabling our customers
to communicate effectively when they are in their vehicles, and even in areas where the cellular signal is weak.
Siyata sells its portfolio
through leading North American cellular carriers, and through international cellular carriers and distributors.
Siyata’s common shares trade on Nasdaq under the
symbol “SYTA” and its warrants under the symbol “SYTAW”.
Visit www.siyata.net to learn more and Contact
IR - Siyata Mobile to sign up for email alerts
Investor Relations:
Brett Maas
Hayden IR
SYTA@Haydenir.com
646-536-7331
Siyata Mobile Corporate:
Glenn Kennedy, VP of International Sales
Siyata Mobile Inc.
glenn@siyata.net
Forward Looking Statements
This press release contains forward-looking statements
within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and other Federal
securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking
statements. Because such statements deal with future events and are based on Siyata’s current expectations, they are subject to various
risks and uncertainties and actual results, performance, or achievements of Siyata could differ materially from those described in or
implied by the statements in this press release. The forward-looking statements contained or implied in this press release are subject
to other risks and uncertainties, including those discussed under the heading “Risk Factors” in Siyata’s filings with the Securities
and Exchange Commission (“SEC”), and in any subsequent filings with the SEC. Except as otherwise required by law, Siyata undertakes
no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. References and links to websites and social media have been provided as a
convenience, and the information contained on such websites or social media is not incorporated by reference into this press release.
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