F-1/A: ZenaTech Files for Nasdaq Direct Listing, Registered Stockholders May Resell Over 102 Million Shares

ZenaTech, an enterprise software technology company, has filed an amendment to its Form F-1 registration statement for a direct listing on the Nasdaq Capital Market, allowing registered stockholders to resell up to 102,481,427 shares of common stock.

Summary

• ZenaTech, Inc., an enterprise software technology company, has filed an amendment to its Form F-1 registration statement for a direct listing on the Nasdaq Capital Market.
• The filing covers the potential resale of up to 102,481,427 shares of common stock by registered stockholders, including shares issuable upon exercise of outstanding warrants.
• Unlike an initial public offering, this direct listing does not involve underwriters, and the company will not receive any proceeds from the resale of shares by the registered stockholders.
• The company expects its common stock to begin trading on or about June 26, 2024, under the symbol ZENA, contingent upon Nasdaq approval.
• ZenaTech is an emerging growth company and a foreign private issuer, allowing it to comply with certain reduced reporting requirements.
• The company's CEO, Dr. Shaun Passley, controls more than 50% of the outstanding voting stock, making it a controlled company under Nasdaq rules.
• The company's revenue for the three months ended March 31, 2024, was $591,379, with a net loss of $120,924.
• For the year ended December 31, 2023, revenue was $1,831,912, with a net loss of $241,504.
• The company's total assets as of March 31, 2024, were $18,210,732, and total liabilities were $10,162,355.
• The company is developing a drone manufacturing, sales, and distribution business through its subsidiary, ZenaDrone, Inc.

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 net losses and faces various risks and challenges. The lack of an underwritten offering and dependence on related parties contribute to a neutral outlook.

Positives

• The company is pursuing a direct listing on the Nasdaq Capital Market, which can provide increased visibility and liquidity.
• The company has a diverse portfolio of software products and is expanding into the drone market.
• The company has existing revenue streams from its software business.
• The company has secured contracts with the US Air Force and US Naval Research for drone technology demonstrations.

Negatives

• The company will not receive any proceeds from the resale of shares by registered stockholders.
• The company has a history of net losses, including a net loss of $120,924 for the three months ended March 31, 2024.
• The company is considered a controlled company under Nasdaq rules, which may reduce corporate governance protections for shareholders.
• The company is dependent on a management services agreement with Epazz, Inc., which is controlled by the company's CEO.

Risks

• There is currently no public trading market for the company's common shares, and an active market may not develop.
• The company's stock price may be volatile, especially given the novel method for commencing public trading.
• The company is subject to a variety of regulatory risks, including those related to the drone industry.
• The company may face product liability claims related to its software or drone technology.
• The company may not be able to manage its growth effectively.
• The company is dependent on key personnel, including its CEO, Dr. Shaun Passley.
• The company may face competition from larger and more established companies.
• The company may have operations in countries known to experience high levels of corruption.
• The company does not currently carry directors and officers insurance.

Future Outlook

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

Industry Context

The announcement reflects a growing trend of technology companies seeking direct listings to access public markets without traditional underwritten IPOs. The company operates in the competitive software and drone industries, requiring continuous innovation and adaptation to changing market conditions.

Comparison to Industry Standards

• Comparable companies in the software industry include AdvanceMD, DrChrono EHR, NextGen, and Kareo for medical records software; Alcumus, gocanvas, EHSInsight, SimPRO, and ServiceTitan for safety and field management software.
• In the drone industry, competitors include DJI, Draganfly, and Drone Delivery Canada.
• ZenaTech's direct listing approach differs from traditional underwritten IPOs, potentially leading to greater price volatility and uncertainty in trading volume.

Legal Proceedings

• The Company is involved in a legal proceeding with vendors of WorkAware Corporation regarding revenue reporting and misrepresentation of software capabilities.

Related Party Transactions

• The company has a management services agreement with Epazz, Inc., which is controlled by the company's CEO.
• The company licenses certain patents from Epazz, Inc.
• The company has convertible lines of credit with GG Mars Capital, Inc. and Star Financial Corporation, which are owned by family members of the company's CEO.
• The company sold ZenaPay, Inc. wallet software to Epazz Limited, Ireland, a related party.

Stakeholder Impact

• Shareholders may experience price volatility and uncertainty in trading volume.
• Employees may be affected by the company's ability to manage growth and retain key personnel.
• Customers may benefit from the company's innovative software and drone solutions.
• Suppliers may be impacted by the company's ability to obtain components and parts on a timely basis.

Next Steps

• Secure Nasdaq approval for the direct listing.
• Convert pilot customers into paying customers for the drone technology.
• Continue developing and marketing software and drone products.
• Manage growth and expansion effectively.
• Monitor and mitigate various risks, including regulatory, product liability, and competition.

Key Dates

Keywords

direct listing, Nasdaq, ZenaTech, common stock, resale, drones, software, financial results, emerging growth company, foreign private issuer