F-1: ZenaTech Files for Nasdaq Capital Market Listing, Plans Resale of Over 101 Million Shares

ZenaTech, an enterprise software and drone technology company, is seeking a Nasdaq listing and registering the resale of over 101 million common shares by existing stockholders.

Summary

• ZenaTech, Inc., an enterprise software technology company with a focus on cloud-based applications and drone technology, has filed a registration statement with the SEC to list its common stock on the Nasdaq Capital Market under the symbol ZENA.
• The registration statement covers the resale of up to 101,441,427 shares of common stock, including 382,333 shares issuable upon exercise of outstanding warrants, by existing stockholders.
• The company will not receive any proceeds from the sale of these shares.
• ZenaTech expects its common stock to begin trading on or about March 31, 2024.
• ZenaTech is an emerging growth company and a foreign private issuer, allowing it to comply with certain reduced reporting requirements.
• The company's core business involves software development, sales, and distribution, with expansion plans into unmanned vehicle systems (drones).
• ZenaTech operates through several subsidiaries, including PacePlus, SystemView, ZigVoice, WorkAware, TillerStack, and PsPortals, offering software solutions across various industries.
• The company has developed and tested a drone, the ZenaDrone 1000, and is pursuing commercialization in multiple sectors.
• As of September 30, 2023, ZenaTech had total assets of $15,927,248 and total liabilities of $8,882,526.
• For the nine months ended September 30, 2023, the company reported total revenues of $1,126,577 and a net loss of $517,071.
• The company has signed five pilot program agreements to evaluate its drone technology.
• The company currently has 11 employees on staff and 45 contractors we utilize via the management services agreement with Epazz that we utilize throughout our business.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company is pursuing a Nasdaq listing and expanding into the drone market, it also reports a net loss and faces various risks and challenges. The reliance on related-party transactions and the lack of a public trading market for the common shares are also concerning.

Positives

• The company is expanding into the high-growth drone market.
• ZenaTech has a diversified software business with existing revenue streams.
• The company has secured contracts with the US Air Force and US Naval Research for drone technology demonstration.
• ZenaTech has a management service agreement with Epazz to support the development of our products.
• The company has 11 employees and 45 contractors.

Negatives

• The company will not receive any proceeds from the resale of shares.
• ZenaTech reported a net loss of $517,071 for the nine months ended September 30, 2023.
• The company has a limited operating history.
• The company has had negative operating cash flow.
• The company is dependent on its relationship with Epazz Inc.

Risks

• There is currently no public trading market for the Common Shares.
• The market price for our common stock may be volatile and trading volume may be uncertain.
• The Company has a limited operating history.
• The Company will need additional capital for its operations.
• The Company may not be able to manage its growth effectively.
• The Companys products will need market acceptance to be successful.
• The Companys business is subject to a variety of regulatory risks.
• The Company intellectual property rights may be infringed or the Company may infringe the intellectual property rights of others.
• We are dependent on key personnel.
• Our directors and officers may have conflicts of interest.
• It may be difficult for investors to enforce within Canada any judgments obtained against the Company in the United States and to effect service of process against certain of the Companys directors and officers who are not resident in the United States.

Future Outlook

The company plans to expand its business into Unmanned Vehicle Systems (drones) and expects its drone business will increasingly generate income over the next five years.

Industry Context

The announcement reflects a trend of technology companies seeking public listings to raise capital and expand into new markets, particularly in high-growth sectors like drone technology. The company's focus on both software and hardware solutions positions it to capitalize on the increasing demand for integrated systems across various industries.

Comparison to Industry Standards

• ZenaTech's strategy of combining software and drone technology is similar to companies like Draganfly, which also offers integrated drone solutions.
• The company's focus on specific industries such as agriculture, infrastructure, and mining aligns with the trend of drone companies targeting niche markets.
• ZenaTech's reliance on a management services agreement with Epazz is similar to some smaller companies that outsource certain functions to reduce costs.
• The company's financial performance, with a net loss for the nine months ended September 30, 2023, is not uncommon for companies in the early stages of growth and expansion.
• The company's plans to manufacture drones in the UAE and the US are similar to other drone companies that are seeking to establish local production capabilities.

Legal Proceedings

• The Company is being sued by vendors of WorkAware Corporation for $200,000, and the Company has countersued the vendors for $600,000 in damages.

Related Party Transactions

• The Company has entered into a number of agreements with Epazz that are material to the business of the Company.
• Shaun Passley is the founder and a director and officer of the Company and the sole director and office and 95% shareholder of Epazz.
• The Company has entered into a Management Services Agreement with Epazz pursuant to which Epazz provides the Company with a variety of services, including with respect to intellectual property relied on by the Company and personnel to develop products.
• The Company has entered into technology licensing agreements with Epazz relating to our software business, as well as to our drone business.
• The Company has borrowed funds from the GG Mars Capital, Inc., Star Financial Corporation and Jennings Family Investments, Inc. revolving lines of credit.
• GG Mars Capital, Inc. and Star Financial Corporation are related parties to the Company.
• Certain borrowings from GG Mars Capital, Inc., Star Financial Corporation and Jennings Family Investments, Inc. lines of credit have been converted into common stock of the Company in the past and are likely to occur in the future.
• The Company has authorized as back-up lines of credit from related parties totaling $16,274,000 to cover the repayment of the current portion of long-term debt, should the Company need it.

Stakeholder Impact

• Shareholders may experience dilution from the potential conversion of convertible notes and the sale of Common Shares.
• Employees may be affected by changes in management and operational strategies.
• Customers may benefit from the development of new products and services.
• Suppliers may be affected by changes in the Companys sourcing strategies.
• Creditors may be affected by the Companys ability to generate profitable operations and execute a sufficient financing plan.

Next Steps

• Complete the Nasdaq Capital Market listing process.
• Convert pilot customers into paying customers for drone technology.
• Expand drone offerings utilizing PacePlus, SystemView, WorkAware, TillerStack, and PsPortals assets.
• Pursue business enterprises in a variety of sectors, from agriculture to infrastructure to mining.
• Continue to develop software and drone technology.

Key Dates

Keywords

ZenaTech, drones, software, listing, Nasdaq, resale, shares, technology, enterprise, growth