Good day, and welcome to the Siyata Mobile Annual 2020 and First Quarter 2021 Financial Results and Corporate Update Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star then one on your touch-tone phone.
To withdraw your question, press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Daniel Kim, Vice President, Corporate Development of Siyata. Please go ahead.
Good morning, everyone. Thank you for joining the Siyata Mobile 4th Quarter and Year-End 2020 and 1st Quarter 2021 conference call. Today I'm joined by our CEO, Marc Seelenfreund, our CFO, Gerald Bernstein, and our VP of International Sales, Glenn Kennedy. We will all be available for questions at the end of the presentation.
During the course of 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, that the capital raised in 2020 is sufficient to both grow our business and address potential M&A opportunities, and the belief that our 1st quarter results put us on the path for strong organic growth coupled with higher gross margins.
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. Our expectations relating to our ClearRF acquisition, our future acquisition strategy, and the timing of the sale of our rugged handsets to North
American carriers, and the belief that we are better positioned today than we have ever been to be able to monetize the trends driving our industry. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected.
The forward-looking statements contained in this presentation are subject to other risks and uncertainties included those discussed in the Risk Factor section and elsewhere in the company's annual report on Form 20-F for the year ended December 31, 2020, filed with the Securities and Exchange Commission. I would now like to turn the call over to Marc.
Thank you, Daniel. In many respects, 2020 was a turning point for Siyata Mobile. After having completed major Tier 1 North American carrier qualifications in 2019, 2020 was marked with significant new sales hires to manage these key accounts. We signed agreements with numerous new distribution partners and resellers and launched multiple new products.
We also successfully listed on the NASDAQ Capital Market in September 2020 and raised $13 million in gross proceeds in the process. A subsequent private placement financing for an additional $13 million was completed at the end of 2020. We believe that this new capital is not only a testament to strong institutional support for our business, but also provides us with sufficient working capital to both grow our business and address potential M&A opportunities. In 2021, we are focused on driving our company to profitability.
As we witnessed in our first quarter results, we believe that we are on the path for strong organic growth coupled with higher gross margins. Our goal is to deliver to our shareholders strong year-over-year revenue growth and to reach profitability in coming quarters. Ultimately, our strategy is to augment our organic growth with complementary and accretive acquisitions. By the same token, like many companies, 2020 was also challenging for Siyata due to the COVID-19 pandemic.
In our commercial vehicle vertical, significantly fewer commercial vehicles were on the road, yellow school buses remained in their parking lots, and enterprise customers were not spending in our space. Our biggest sales decline was in the Israeli market, where sales dropped significantly, as this market suffered both from COVID shutdowns as well as a lack of government contracts and budget cuts due to the political situation there.
However, as demonstrated by our Q1 2021 financials, we have a reason to believe the worst is now behind us, and that we will continue to see strong sales in all of our product lines and across our various markets. To this point, we saw a 30% rise in sales of our booster portfolio in fiscal 2020 over fiscal 2019 as customers look for better cellular coverage in their workplace, home offices, and vehicles, and we expect this strong sales trend to continue going forward.
Revenue for the year ended December 31, 2020, was $6 million, compared to $9.8 million for the same period in the previous year. This decrease of $3.8 million was due mainly to a $4.7 million decrease in sales year-over-year in Israel and EMEA, offset by an $800,000 increase in North American revenue. This sales decline was also due to product returns from a few customers as well as delayed payments that caused us to take back products from some customers and write down bad debt from other customers.
Gross margin for the year ended December 31, 2020, was 26.4% compared to 27.4% last year. Net loss for the year ended December 31, 2020, was $13.6 million compared to $7.7 million for the same period the previous year, an increase of $5.9 million. This increase includes non-cash adjustments and one-time transaction costs totaling $4.9 million, which includes bad debt provisions of $1.5 million, an inventory impairment increase of $1.4 million, a $600,000 increase in non-cash finance charges, and a one-time transaction cost related to our initial public offering of $1.4 million.
Adjusted EBITDA for the year ended December 31, 2020, was negative $7.1 million versus negative $4.2 million for the same period in the previous year, an increase of $2.9 million. For the first quarter of 2021, we witnessed a robust return in broad-based demand punctuated by record sales, record organic growth, record margins, and lower adjusted EBITDA loss. Revenue increased 77% year-over-year to $4 million as compared to $2.3 million in 2019.
Gross margin increased to 43.2% versus 25.2% in the same period last year. Adjusted EBITDA loss decreased to $291,000 versus a loss of $460,000 in the same period last year. We closed the first quarter of 2021 with $9.7 million in cash and $11.4 million in working capital. Lastly, I will provide commentary on our M&A efforts. In the first quarter of 2021, we closed the acquisition of ClearRF.
ClearRF produces M2M, or machine-to-machine, cellular amplifiers for commercial and industrial applications. While this $700,000 acquisition was relatively small in size, it met all of our key acquisition criteria. It was accretive to our top and bottom line, it was highly complementary to our existing product portfolio, offered synergistic sales through our same carrier channels, opened up new military and government verticals, provided a
U.S. manufacturing footprint, and delivered critical and unique intellectual property, which we are in the process of implementing across all of our cellular and amplifier lines. Not only do we expect this acquisition to help increase interest in our cellular boosters with our existing customers, but we are also applying our sales force to more aggressively penetrate ClearRF's core M2M end markets.
As mentioned earlier, our goal is to undertake additional similar types of acquisitions in the future. Now I would like to pass the line back to Daniel, who will discuss some of the industry trends and market dynamics that are benefiting our business.
Thank you, Marc. Over the last 1.5 years, we have experienced numerous positive trends in each of our end markets. In 2021, FirstNet, a dedicated cellular network for U.S. first responders, announced it supports over 2.2 million connections with more than 16,000 subscribing agencies. This marked the fifth consecutive quarter FirstNet had reported at least 200,000 new connections and gained at least 1,000 subscribing agencies.
Over the last year, FirstNet has grown its subscriber base by 69% and subscribing agencies by 33%. As the market continues to appreciate the advantage of push-to-talk over cellular compared to land mobile radio, we believe we are well-positioned to capitalize on this trend with our innovative solutions. We note that over this forecast period, push-to-talk over cellular's growth is expected to outstrip land mobile radio growth by a factor of two.
Industry forecasts, most recently from Market Insights, forecast the push-to-talk over cellular industry will grow at a 10% compound annual growth rate to $9.1 billion by 2027. We believe these trends play right into our innovative and market-leading product offerings. As previously mentioned, our cellular booster business enjoyed increased demand in 2020.
This demand shift has been driven by enterprise and other Fortune 500 companies who wish to complement connectivity with strong, consistent cellular signals. Cellular communication provides a robust, secure environment, not just for remote workers in home and in vehicles,
but also for restaurant patrons who wish to download menus, for patients at pharmacies who need to verify identity and download scripts, for remote workers who require strong, clear cellular signals, and for first responders where connectivity literally means the difference between life and death, just to name a few. With that, I'd like to pass the line to Glenn Kennedy, who will discuss the success of the recent sales trends we have been enjoying.
Thank you, Daniel. Looking at our sales funnel, we have enjoyed both an increased cadence and size of recently announced contracts. We see strong sales potential in each of our three product categories. First, in our in-vehicle devices category, we are seeing projects that had been put on hold in 2020 due to COVID-19 now start to become active opportunities again.
We have initiated new proof-of-concept trials with several state and local government agencies in the U.S. In addition, we are seeing growing international demand for the UV350, which remains the market's flagship in-vehicle device and the only one that is approved for sale on North American wireless carriers' networks. Secondly, in our rugged handset product category, we historically sold these devices in international markets.
Currently, we have just presented a new innovative rugged handset that supports mission-critical push-to-talk, or MCPTT, to North American wireless carriers. The feedback from them has been strong. Our objective is to have multiple wireless carriers in North America and internationally to begin selling our new rugged handsets with the goal of launching in the second half of 2021.
Thirdly, in our cellular booster product category, we saw consistent demand for cellular boosters throughout 2020 as people who worked from home offices recognized the importance of having strong cellular signals in their homes to do their work. Encouragingly, we are also now seeing sales opportunities with the wireless operators as they sell to large enterprise and government customers, some of whom need innovative solutions like our cellular boosters.
Having launched a Hero Series in 2020, which are the first cellular boosters to support Band 14 for FirstNet, and having completed our acquisition of ClearRF, a small cellular booster company, in Q1 of 2021, we believe that Siyata is now well-positioned to capture large cellular booster opportunities for government agencies.
For Fortune 500 companies who require strong cellular signal throughout their brick-and-mortar locations and within their fleet vehicles. We have some very large cellular booster opportunities that we hope to close in 2021. Overall, we're very pleased with the growing acceptance by customers of our truly unique disruptive solutions, and we expect, based on what we're seeing today, continued rapid adoption in all of our product categories. I will now hand the line back to Marc for closing remarks.
Thanks, Glenn. We believe that Siyata Mobile is better positioned today than it has ever been to be able to monetize on the strong trends driving our industry. While COVID had a negative impact on our business in 2020, many of our end markets are now rebounding due to pent-up demand, coupled with a long-term fundamental shift to next-generation cellular solutions for enterprise customers and first responders.
In summary, we have the right sales team, the right product portfolio, and the right customer relationships in place in North America and internationally to drive sales throughout the balance of 2021. We are very excited about how we will grow our sales with a clear focus on reaching profitability in the coming quarters. That concludes our formal remarks. With that, operator, kindly open the call to questions. Thank you.
We will now begin the question and answer session , to ask a question may press star then one on your touch-tone telephone. If you are using a speaker phone please pick up your hand up before pressing the keys. If at any time your question has been addressed and you like to withdraw your question press star then two. At this time we will pause momentarily to assemble our roster. The first question comes from Jack Vander Aarde with Maxim Group. Please go ahead.
Okay, great. Good morning, guys. Thanks for taking my questions. I'll start with a question for Marc. Obviously the fourth quarter of 2020 was a challenging time, and I also understand that the Israel sales somewhat collapsed. You followed up with first-quarter results, which were exceptionally strong. It was really good to see that rebound there, at least in the data.
Maybe just a couple of things. How are Israel sales tracking this year, now that we're in 2021? Looking at the remainder of 2021, do you expect this Q1 kind of $4 million plus revenue number, do you expect the remainder quarters to kind of work off this as a base level? Just how do you expect the rest of 2021 to play out from a revenue stance? How are Israel sales tracking, to summarize that? Thanks.
Good morning, Jack. Thank you for the question. The Israeli market has definitely come back. Israel went through a difficult COVID period like many other countries, but they've actually, because of the vaccinations, the market has opened up, not fully, but relatively, it's opened up relative to the rest of the world very nicely, and we definitely see that in our sales. We've won some very large contracts both in Q1 and in Q2, and we expect that to continue going forward in 2021.
As I mentioned on the call earlier, we expect to be able to reach profitability in the coming quarters, and I think that that's very realistic, and that's going to be based, of course, not just on Israel, but the fact that Israel is part of the mix is very helpful for us, and we see very large-scale opportunities that we're coming into also in the U.S. and in Canada and internationally, and I think that you're going to be very pleased with 2021. My goal is to outbeat your estimations or projections, and I think that that's very achievable. Just maybe one more thing, Jack.
I think that, one more thing I just wanted to mention that also the gross margins that we're seeing now, we discussed this sort of at the end of last year, that we wanted to be around 40% gross margins, and I think that that is achievable and sustainable. I think that, as we add more and more sales in North America, we're seeing much better gross margins in that market, and therefore, I think that that gross margin is also sustainable, and that's really what a mix between the revenue growth and the higher gross margin will allow us to reach profitability.
Got you. Fantastic. I appreciate the added color there. Then maybe zeroing in more on a segment perspective. Cellular booster seems like you guys are really gaining momentum there. Seems like it has a bright future. I would like to understand kind of what's going on behind the scenes a little more. You made this acquisition of ClearRF. What are you providing out there with your cellular boosters?
We had COVID that had, is it a one-off event where consumers maybe are having increased demand because they're at home? What happens beyond COVID with boosters from a consumer perspective? What's the commercial opportunity? Anything you can share on cellular boosters, because it seems like it's a big opportunity.
I would say that historically, the company was more focused on consumers and sort of selling over the internet and less to enterprise customers. Last year was the first time that we really started focusing on enterprise customers. With our Band 14 portfolio, that's almost 100% enterprise customers because that's really for FirstNet responders. In general, we see that this is going to be a very large-scale market for us. I can tell you that our largest competitor sells anywhere between $150 to 200 million a year, just boosters.
That's all they sell. We think that it's a large scale market, and certainly the Band 14 part of the market is also a very large scale market for us. Think about it, if AT&T wants to give coverage, this is the most cost-effective way for them to be able to give a vehicle or a building coverage without having to put out a base station. In that sense, we think that this is a very big market for us, and it's not just a one-off COVID issue.
As people are working more and more from their home offices, and as offices in general and first responders need to have better cellular coverage, whether it's in their vehicles or in their buildings, this is the cheapest way to be able to get into, to allow you to have that kind of cellular coverage. We think that this is a very large scale market for us. It's a growing market, and it's definitely not a one-off just due to COVID.
Jack, this is Dan. I would add to that cellular is a very unique broadband medium whereby Wi-Fi, we are all experiencing it, has its own volatility issues. The other big issue with Wi-Fi is it's not a secure environment. It's an open network by design. Enterprises are recognizing that not only does cellular provide the boosters, provide good cellular connection, but also much better bandwidth.
With consumers moving more and more towards doing things online on their phone or working at home, there's a growing need for that kind of environment where you have constant connectivity, much better bandwidth, and a much more secure environment. That's the dynamic that's really benefiting us.
Got you. Dan, I appreciate the insight there, too.
One more thing, Jack. We're working now with multiple government offices and states on large scale opportunities specifically for vehicles that need to have better coverage for Band 14. Again, if you're a vehicle and you don't want to have to put out additional base stations because that's far more expensive, and you want to be able to give good coverage on Band 14, which of course, Band 14 is becoming popular, but the coverage is never going to be as good as the regular cellular network, right?
You'll give them a booster, that will allow them to have better coverage. Okay? Those types of opportunities we never had in the past, and that's why we're very bullish on this segment in our business. Another thing is that as 5G comes into the market, right? 5G, as you know, works in higher frequencies, right?
That higher frequency has a hard time getting into a building. Right? Again, if you want to put up less base stations and you want to be able to get into buildings, you're going to need more repeaters. Really, the market is playing into this segment of ours, and we think that it's going to be, going forward for many years, a very good part of our business.
Excellent. Then maybe I'll just ask one more, and I can hop back in the queue. I wanted to ask a question on the UV350, or maybe just in-vehicle device sales in general. I think you mentioned in the prepared remarks that segment was obviously, like most products, were under pressure because of COVID during the year, during 2020. Now that business that was maybe delayed or pushed out is coming back, as you mentioned.
I recall months ago that there was, I believe, a case study you guys provided on yellow school buses. Obviously with vaccines rolling out in the U.S. and schools coming back online, your target customer opportunity for you guys is yellow school buses. Can you just maybe talk about what this business that's coming back online is related to in-vehicle devices, and particularly maybe with school systems?
Sure. Glenn, you want to take that?
Yeah, sure. Jack, yeah, one of the key things, one of the key vertical markets that we've looked at with the UV350 device is the yellow school bus market. Not the only one, but certainly one of the primary ones. For sure, Marc mentioned earlier in his prepared comments that that particular vertical market during COVID, many of the buses were not active.
Certainly planning ahead for the August, September timeframe, the school districts are reengaging with their buses, reengaging with spending. We're actually seeing that vertical segment, but also other vertical segments as well, begin to reengage with us and begin to start to do trials again and those things.
We're doing a variety of trials on the state and government side of things with various DOT, Department of Transportation, agencies throughout the U.S. as well. We're very bullish on that market rebounding this year in 2021. We're already seeing some real positive signs reengaging with customer trials, both in the yellow school bus market as well as other vertical markets.
Excellent. I appreciate the added color, and nice to hear from everyone today. I'll hop back in the queue and let anyone else ask questions. Thank you.
Thank you very much.
The next question comes from Bruce Krugel with KRC Insights. Please go ahead.
Yeah, thanks. It seems that these two questions are related, so I'll ask them together. It's about the inventories and receivables. In Q4, both on inventories and receivables, you took write-offs, and then in Q1, both came back quite strongly. Can you just provide some color, some context what happened in Q4, and then obviously what happened in the increase in Q1?
Dan, you want to take that?
Morning, Bruce. Yeah, thank you. Good question. With regards to what happened in Q4, we went through an unusual period with COVID where we gave some extended payment terms to some key customer. Given the pandemic, obviously, things were slowing down for everybody. As a result, we decided, as that inventory started to age, we took that back, so we had to write that off.
With regards to how things are shaping up for the first quarter, yes, inventory did increase sequentially, just over $1 million from $3.7 million in Q4. If you look at our inventory days, they're at 149 days, which gives us roughly two and a half times turns, which is very normal given the revenue that we saw in Q1.
Okay. All right. I know.
Likewise on the receivable side as well. Receivables, likewise, had a similar dollar value increase, up roughly $1.3 million sequentially. Again, that's at 91 days sales outstanding, so a very normal number, and we're quite comfortable with where they sit today.
Yeah. Okay, tough. Do you have anything specific in terms of near-term catalysts that investors might expect?
Can you say the question again? Near term what? I didn't hear that.
Catalysts. Revenue catalysts.
One thing that we just want to bring to your attention is that, and we mentioned this also on the call, is that we are sort of at the end of developing a very unique mission-critical push-to-talk device, and we put out an announcement about that about two months ago. That device, we think, is going to be very innovative in the industry. It's going to be probably the lowest cost mission-critical push-to-talk device, and it's going to be a very high volume product in our opinion.
We're going to be selling it in North America as well as in international markets, and we plan to launch that product in the second half of this year. We think that that could be a major catalyst for the company simply because it's a very high volume type of a product.
Companies that sell these types of products are able to sell literally hundreds of thousands of units. We think that there's a very, very strong market for this specific product. As I said, it's very unique in its design and its functionality. We haven't actually announced exactly what the product looks like. That we plan to do probably in the next 30 to 60 days, something like that.
When you hear about it, we think that that's going to be very interesting for the company, and it'll be just a new catalyst because until now, the bulk of the handheld devices that we've sold have been either in Israel or in Europe. They were never in North America, right? Now we'll actually have all 3 of our product categories in North America, vehicle devices, cellular boosters, and handheld devices.
Obviously, the North American market is a very large-scale market and as I mentioned before, we've been in discussions with leading carriers in the United States. We think that we're going to be able to launch with them, and we think that this can be a very big catalyst for the company going forward.
Just as a reminder, Bruce, if you recall, as we continue to transition our portfolio towards North America, that is all 4G related, and as a result, our margin profile on these products are significantly higher than our legacy 3G products. You saw that benefit happen in Q1, and we would hope, as we continue to launch these new products into North America, as Marc suggested with the new product category, that that will continue to benefit both our top line and our margin profile for the balance of the year.
Oh, that's great. Thanks for taking my questions.
The next question comes from Daniel Charbonnie with Fard Investments. Please go ahead.
Good morning, guys. Really nice to hear you, and thank you for the updates. I just want to ask you 2 questions. One is my typical dream questions, and I always speak to Marc about, is that with the growing, I would say exponential growth of electric vehicles and charging stations, for example, here in Quebec, Lion Electric with the school buses, it's coming up with its own system to help computerize the school buses, whenever they need to get charged again.
Is Siyata even dreaming to be in that space where you can have your devices on a fleet, which help them maybe recharge more efficiently or go to the closest charging station? I don't know if that even coincides with your space. The second question is more of a capital raising question. Do you foresee that in the next, let's say, one year, we would have to go out again to the capital markets to get more funds if we're having this expansion, or if you can just give us an idea of what you think the next capital raising event would be?
Glenn, maybe you want to take the first question?
Yeah, for sure. On that first question, definitely because our in-vehicle device, the UV350, is an Android-based device, it can support various Android apps running on the product. Therefore, if there is an app developed that will help either commercial vehicles or whomever, buses you mentioned, whomever is in need of finding the local charging station,
if an app is developed to do exactly that can run on our products. Therefore, yes, we can help drivers to find their closest charging station. That's why that's the beauty of the Android system. While often people are interested in push-to-talk over cellular, that particular app, we can also support many other kinds of apps like the one you mentioned as well. Then on the raising of capital, Marc, do you or Dan want to address that question?
Yeah, I'll take that. I wouldn't say on a conference call that we're never going to raise money or that we're not going to raise money in the next year because obviously we would raise money if we had to for advantageous reasons, if we wanted to do a large-scale M&A or if we had some reason that we wanted to do that. Right now, our cash position is strong, and we don't have to.
I don't foresee it happening specifically in the near future. Again, if we feel that it's important for the company and the price is correct and it's advantageous for the company, then we would do that. The idea is to do as little dilution as possible for shareholders, only if we have to, otherwise, we would do it.
Thank you. Thanks a lot.
Again, if you would like to ask a question, press star then 1 to join the queue. The next question comes from Tim Moore with Zacks. Please go ahead.
Hi, thanks for taking my call. Most of my questions have already been addressed, I was wondering regarding your reaching profitability in the coming quarters, if you can maybe elaborate or share some thoughts on maybe what revenue milestone you have to achieve in North America, given its higher margin accretion to really get to breakeven or profitability. Along those lines, if you can maybe mention some details or actions taken recently or the year to date regarding maybe sales force improvements and additions.
We have to do about $5 million a quarter to reach profitability. That's sort of the number, or $20 million on an annual basis. I think that based on the various opportunities that we're going after, I wouldn't say that I think that we can achieve it in the coming quarters if I didn't think that we could. We're working on opportunities that are far greater than -- that would allow us to have far greater sales than just $5 million a quarter.
Therefore, we think that we can reach those numbers. I think that's going to happen in the coming quarters. I think it's very realistic. Again, we're not dependent on one product or on one customer. We sell to multiple customers. We have a large product portfolio. We have various verticals that we're going after.
We're not going after just yellow school buses or just first responders. We're also going after utilities and waste management and government contracts and whatnot. In that sense, we're really not limited. We have North American markets. We have international markets. We think that we're going to be able to launch with a large-scale carrier this year outside the United States also.
Between all of those opportunities, we think that it's very probable for us to be able to get to at least $5 million quarters and then have higher and higher margins and higher and higher revenue going forward. Okay. We have hired over the past, I want to say year, specifically salespeople in the United States. We have a very good team that now manages AT&T and Verizon. We have a very strong team that manages our booster sales.
We hired additional two booster salespeople just in the past couple of months, literally since the beginning of this year, just because we see that market is a growing market for us. We have a fantastic VP of sales for our booster portfolio. Just in general, the main hires that we are doing are specifically for sales and specifically for the North American markets.
Glenn is in charge of our international markets, and he's done an excellent job for us. We think that we have a very strong team in place. Again, we don't have to hire a lot of people. We're able to leverage a relatively small team to be able to get to very high sales. Okay, that's very important for you to understand. The whole company today is 25 people.
I don't envision the company, even in a year from now, being more than 30 or 32 people. That's the whole company. Simply because we're able to leverage the sales channels, the cellular carriers that we're working with to get very high volume sales. My goal is to keep the company as small and as lean as possible, and leveraging sales forces of the channels that we work with. In that sense, we won't have to grow our burn rate. We just want to grow our sales.
Great. That's very helpful. I appreciate that.
Thank you.
As we have no further questions, this concludes our question and answer session. I would now like to turn the conference back over to Marc Seelenfreund for any closing remarks.
I just want to thank our shareholders for bearing with us through this period of the delayed financials. We didn't realize it was going to take as long as it did, and I'm glad that it's now behind us. Anybody that has additional questions is always welcome to reach out to the company or to myself, and I would be happy to be in touch with all of our investors. Thank you very much.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.