Siyata Mobile, Inc.

Good morning, ladies and gentlemen, and welcome to the Sciata Mobile second quarter 2023 conference call. At this time, all lines are on a listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during the call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 15, 2023. I would now like to turn the conference over to Glenn Kennedy, Vice President of International Sales. Please go ahead.

Thank you for joining the Sciata Mobile second quarter 2023 conference call. Today, I'm joined by our CEO, Mark Seelenfreund, and we will be available for questions at the end of the presentation. During this call, management will make express and implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. These forward looking statements include but are not limited to those statements regarding future product offerings the belief that we're on the path for strong organic growth. The goal to deliver strong year over year revenue growth and reach profitability in the coming quarters. The belief that the worst of the pandemic is behind us and that we will continue to see strong sales in all of our product lines and across our various markets. and the timing and sale of our rugged handsets to North American and international carriers. Such forward-looking statements are based on the company's current expectations and assumptions regarding its business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are not statements of historical fact and are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. The company's actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, against relying on any of these forward-looking statements. The company cannot guarantee future results, levels of activity, performance, or achievements. The forward-looking statements contained in this presentation are subject to other risks and uncertainties. including those discussed in the risk factors section and elsewhere in the company's annual report on Form 20F for the year ended December 31st, 2022, filed with the Securities and Exchange Commission. Now, I'd like to turn the call over to Mark.

Thank you, Glenn. Good morning, and thank you for joining the call. Before reviewing the second quarter financials, I want to first share with you that we previously announced two capital raises on June 27th and July 11th, which generated a total of $4.55 million in gross proceeds for the company to support its working capital for growth. Then, on August 8th, Seattle announced that it affected a reverse stock split for 1 to 100 of its common shares to meet NASDAQ minimum bid price requirements. These transactions leave Sciata in a stronger position to grow the business in 2023 and beyond. Now, in the second quarter of 2023, ended June 30th, we are pleased to report that growth continued to accelerate with a 180% year-over-year increase in revenue compared to Q2 2022 on strengthening sales of our mission-critical SD7 handset and accessories. Adoption of our critical communication devices is expanding. Just as important, the increase in sales reaches beyond emergency services to include school safety, healthcare, industrial, and enterprise use cases, among others. Given our performance in the first half of the year and our expanding sales pipeline, we are increasingly optimistic that 2023 will be a strong sales growth year for SIADA. Total revenue was $2.7 million in Q2 2023 compared to just under $1 million in Q2 2022, a 180% increase in revenue. Revenue from the U.S. was 84% of total revenue for the quarter compared to 49% in Q2 2022. Rugged device sales in Q2 2023 are approximately 10 times higher than in Q2 2022, $2.1 million versus $220,000, an increase of approximately $1.9 million in the quarter directly attributed to sales of the SD7 handset. Gross margin percentage for Q2 2023 was 29.7% versus 11.2% in Q2 2022. Gross margin dollars increased from $109,000 to $804,000, a $695,000 positive variance, which is greater than 600% increase in gross margin dollars. SG&A expenses are $2.7 million in Q2 2023 versus $3 million in Q2 2022, a decrease of $275,000, or 9%. Adjusted EBITDA for Q2 2023 with negative $2 million compared to negative $3.4 million in Q2 2022, a $1.4 million positive variance in EBITDA, a 41% increase. Working capital as of June 30th, 2023 was $3.7 million versus $1.6 million as of December 31, 2022, a $2.1 million increase in working capital. So far this year, for the six months ended June 30th, 2023, total revenue was $4.5 million compared to $1.8 million in the same period of 2022, which is a positive variance of $2.7 million, a 150% increase. Gross margin dollars were $1.3 million in 2023 compared to $400,000 in the same period of 2022, which is a positive variance of $900,000, a 257% increase. Finally, the gross margin percentage was 29% in 2023, compared to 20% for the same period in 2022, a 45% improvement. Turning over to significant business highlights, we are pleased to report that Sciata has delivered on its plan to build and expand its potential customer base for the SD7 handset and accessories portfolio. We previously announced that the SD7 is certified and approved for use with growing lists of North American carrier customers, including FirstNet and AT&T, Verizon, T-Mobile, U.S. Cellular, and international carrier customers, including Dell Mobility in Canada, Telstra, which is the largest wireless carrier in Australia, and KPN, which is based in the Netherlands. We also previously announced that we have expanded our distribution to include strategic resellers, including Two-Way Direct and Tango Tango in the United States, and Entropia in Belgium. These companies will help us further grow sales of SD7 handsets and related accessories in their respective markets. And we also announced that Mobile Tornado is the latest PTT app provider to ensure that SD7 handsets will work with its PTT app solution. This foundation of increased distribution is directly leading to many potential opportunities that could be of significant size. We have begun shipping products in an increasing number of verticals beyond our primary focus of first responders, including government, schools, hospitals, utilities, security companies, defense contractors, amusement parks, and hotel resorts, to name a few. I am pleased to report that as we expected, the increase in the number of crucial concept trials by our customer base translated into volume growth for our SD7, which was the primary growth driver of our rugged devices and related accessories, increasing nearly six times year over year to $3.5 million in the six months ending Q2 2023, compared to $590,000 in the six months ending Q2 2022. Having said that, this remains a process. Interest is increasing and demand is growing, but we continue to believe that we are just hitting the tip of the iceberg in a multi-billion dollar industry. We expect even larger volumes will follow as end customers grow to appreciate our unique offerings of this new product categories. We also previously announced an exciting new product, the SD7 Plus, which features a wide-angle camera coupled with 4G connectivity that will have traditional body camera functionality as well as real-time situational and traditional tracking capabilities. The SD7 Plus will be powered with Visual Labs' innovative body camera software. Visual Labs is a highly respected software company and developer of Android-based body cam software. The company provides the software to public safety, private security, and other customers throughout the United States and internationally. Its public safety companies include town marshals, city police departments, country sheriff offices, wildlife, and other state agencies and federal customers. We expect the SD7 Plus with body camera capabilities will begin shipping in the coming months. And finally, we recently expanded our sales team by hiring Doug Clark, who previously was the Assistant Vice President at AT&T's FirstNet. In the brief time that Doug has been on board with Sciata, he has already helped us develop new sales opportunities based on his career experience and positive reputation with our customers and carrier partners, and we are excited to have a person of his caliber on our team. Now I would like to pass the line back to Glenn, who will discuss some of the industry trends and market dynamics that are benefiting our business and an update on our product categories.