Siyata Mobile: A Strategic Pivot into the Gaming Sector

Siyata Mobile Inc. (Nasdaq: SYTA), a global developer and vendor of Push-to-Talk over Cellular (PoC) handsets and accessories, has announced a definitive merger agreement with Core Gaming, Inc., a privately-held, global gaming developer and publisher with approximately $80 million in revenues in 2024. This strategic move marks a significant shift for Siyata, as it seeks to capitalize on the fast-growing mobile gaming industry and unlock value for its shareholders.



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, while 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."

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.

Potential Risks and Challenges
While the merger with Core Gaming presents an exciting opportunity for Siyata to tap into the fast-growing mobile gaming industry, there are potential risks and challenges that investors should be aware of:

1. Significant dilution for existing Siyata shareholders: The transaction structure reveals significant dilution for existing Siyata shareholders, who will collectively maintain only 10% ownership in the combined entity through a future stock dividend. This suggests approximately 90% dilution, which could lead to shareholder dissatisfaction and potential legal challenges.
2. Integration risks: The merger combines two companies from disparate industries – critical communications and gaming. Integrating these businesses may prove challenging, leading to operational inefficiencies, cultural clashes, and potential loss of key talent from either side.
3. Lack of profitability metrics for Core Gaming: The announcement does not mention any profitability metrics or EBITDA margins for Core Gaming. This lack of information raises concerns about the private company's financial health and the potential for synergies post-merger.
4. AI advantages require verification: Core Gaming's claimed AI advantages in content production efficiency (50% boost, 40% time reduction) will require verification, especially in the highly competitive $126 billion gaming market where numerous developers employ AI tools. Overstating these advantages could lead to unrealistic expectations and potential disappointment.
5. Regulatory approval and closing conditions: The fairness opinion valuing Core Gaming at $160 million warrants scrutiny, given the public information about the private company's operations and competitive positioning. Investors should closely monitor regulatory approval progress and potential closing conditions that could impact deal completion in Q2 2025.

In conclusion, Siyata Mobile's strategic pivot into the gaming sector through its merger with Core Gaming presents an exciting opportunity for the company to capitalize on the fast-growing mobile gaming industry. However, investors should be aware of the potential risks and challenges associated with this transaction, including significant dilution for existing Siyata shareholders, integration risks, and the need for verification of Core Gaming's AI advantages. As the merger progresses, investors should closely monitor regulatory approval progress and potential closing conditions that could impact deal completion in Q2 2025.