20-F/A: ZenaTech Reports 558% Revenue Growth in 2025

ZenaTech, Inc. announced a significant revenue increase of 558% to $12.9 million for the fiscal year ended December 31, 2025, driven by its newly launched Drone as a Service (DaaS) segment.

Summary

• ZenaTech, Inc. reported a substantial revenue increase of 558% to $12.91 million for the fiscal year ended December 31, 2025, compared to $1.96 million in 2024.
• The company's Drone as a Service (DaaS) segment, launched in 2025 through the acquisition of approximately twenty land surveying companies, contributed $10.11 million, representing 78% of the total revenue.
• The Enterprise SaaS Software segment saw modest organic growth, with revenue increasing by 43% to $2.81 million in 2025.
• General and administrative expenses increased significantly to $58.11 million in 2025, primarily due to expanded operations from acquisitions, increased wages and benefits, and higher sales and marketing spend.
• The company reported a net loss of $45.22 million for 2025, an increase from $4.48 million in 2024, largely attributed to finance expenses (including non-cash derivative expenses), increased wages, and higher G&A costs.
• Total assets grew by 188% to $99.76 million, driven by acquisitions and investments in property, plant, and equipment, as well as intangible assets and goodwill.
• Cash reserves increased by 59% to $5.98 million, and the company has access to revolving credit facilities to fund its ongoing operations and acquisition strategy.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant increase in net loss and operating expenses, despite strong revenue growth. The reliance on related-party transactions and the material weakness in internal controls also contribute to a cautious outlook.

Positives

• Significant revenue growth of 558% year-over-year, reaching $12.91 million in 2025.
• Successful launch and rapid scaling of the Drone as a Service (DaaS) segment, which now forms the majority of the company's revenue.
• Expansion of the DaaS segment through approximately twenty strategic acquisitions of land surveying companies.
• Modest organic growth of 43% in the Enterprise SaaS Software segment.
• Increase in cash reserves by 59% to $5.98 million.
• Growth in total assets by 188% to $99.76 million, reflecting strategic acquisitions and investments.
• The company believes its existing cash resources and credit facilities are sufficient to fund operations for the next twelve months.

Negatives

• Net loss increased significantly to $45.22 million in 2025 from $4.48 million in 2024.
• General and administrative expenses and finance expenses (including non-cash derivative expenses) increased substantially, impacting profitability.
• The company's DaaS strategy involves integrating drone technology into acquired businesses, which is a complex process with inherent risks.
• The company relies heavily on related party transactions, particularly with Epazz, Inc., for services and technology, which could pose risks.
• The company has a history of operating losses and an accumulated deficit of $53.74 million as of December 31, 2025.

Risks

• The successful integration of approximately twenty acquired land surveying companies into ZenaTech's drone-based service delivery model is a significant operational risk.
• The conversion of land-based surveying operations to drone-based delivery is dependent on regulatory approvals (FAA Part 107 waivers, commercial drone permits), technology readiness, and customer acceptance.
• The company's convertible debt instruments create non-cash finance charges that significantly impact reported net loss, and their resolution will affect share count and financial position.
• The company is substantially dependent on the leadership of Dr. Shaun Passley, and the loss of key personnel could adversely affect operations.
• The company operates in competitive markets for both enterprise software and drone technology, facing larger and more established competitors.
• The company's business is subject to foreign currency risk due to operations in multiple countries.
• The company has a material weakness in internal control over financial reporting due to its rapid expansion, which is being addressed through remediation measures.

Future Outlook

ZenaTech expects continued growth in 2026, with the DaaS segment benefiting from a full year of acquired operations and the maturation of its drone conversion program. The Enterprise SaaS segment is expected to grow through cross-selling drone capabilities. The company anticipates a decrease in non-cash finance expenses and a move towards positive operating cash flow as the DaaS segment scales. However, there is no assurance that anticipated developments will occur on the expected timeline.

Management Comments

• "The year ended December 31, 2025 represented a transformational period for ZenaTech."
• "Management believes that its existing cash resources, amounts available under its revolving credit facilities, and cash flows expected from the DaaS operations are sufficient to fund the Company's operational needs for the next twelve months."
• "The Company's acquisition program is funded primarily through seller acquisition notes (loans payable of $17,256,413) and three revolving lines of credit..."
• "The Company's long-term debt-to-total capitalization ratio is approximately 25%, which management considers appropriate for a company in a high-growth acquisition phase."
• "Management believes that ZenaTech is well-positioned to continue its growth trajectory in 2026."

Industry Context

StockSavvy.ai notes that ZenaTech's aggressive acquisition strategy in the land surveying sector, coupled with its integration of drone technology, aligns with broader industry trends of technological adoption for efficiency and data accuracy. The company's focus on DaaS and its expansion into defense applications reflect a strategic pivot towards high-growth technology areas.

Comparison to Industry Standards

• ZenaTech's revenue growth of 558% significantly outpaces the average growth rates seen in the broader enterprise software market, which typically experiences more moderate single-digit to low double-digit growth.
• The company's net loss, while substantial, is not uncommon for companies in high-growth, acquisition-heavy phases, particularly those investing heavily in R&D and market expansion, such as in the drone technology sector.
• The significant increase in G&A expenses and finance costs is a common characteristic of companies undergoing rapid expansion through M&A, though ZenaTech's reliance on related-party financing and convertible debt warrants close monitoring.
• Compared to established drone manufacturers like DJI or AeroVironment, ZenaTech is in an earlier stage of development, focusing on integrating acquired businesses and building its DaaS model rather than large-scale, established drone production.

Corporate Governance

Legal Proceedings

• ZenaDrone, Inc. is aware of a litigation initiated by NightSun LLC in Wyoming for purported breach of contract. The Company believes the claim is frivolous and baseless, and NightSun LLC has been dissolved by the State of Wyoming for failure to pay taxes.

Related Party Transactions

• The Company acquired assets and technologies from Epazz, Inc. and its subsidiaries, and from entities controlled by Dr. Shaun Passley and other related parties, for which shares were issued as consideration.
• The Company has a management services agreement with Epazz, Inc., a related party, for various services including software development, office space, project management, and hosting.
• The Company advanced funds to Epazz, Inc. under a management services agreement, with a portion of these advances being settled through services provided.
• The Company has revolving lines of credit and convertible debentures with entities controlled by family members of Dr. Shaun Passley and James Sherman.
• Dr. Shaun Passley, CEO, and other directors and officers received compensation in the form of company shares and preferred stock.
• The Company's financial statements reflect significant balances outstanding with related parties, including advances and loans.

Stakeholder Impact

• Shareholders: Potential dilution from future equity issuances, impact of net losses on share value, and reduced protections due to controlled company and foreign private issuer status.
• Employees: Increased employment base due to acquisitions, but also potential impact from rapid growth and integration challenges.
• Creditors: The company has significant loans payable and revolving credit facilities, with a portion of these being with related parties.
• Suppliers: The company relies on various suppliers for drone components and has no long-term agreements, posing a risk of supply shortages or price increases.

Next Steps

• Continue integration of acquired land surveying companies into the DaaS model.
• Advance development and commercialization of the ZenaDrone product family, including the ZenaDrone 1000 and IQ Drone Series.
• Pursue additional targeted land survey company acquisitions.
• Expand Enterprise SaaS revenue through cross-selling drone monitoring and compliance capabilities.
• Continue development of quantum computing initiatives for drone and enterprise SaaS applications.
• Seek Green UAS and Blue UAS certifications for drone products to enter the US defense market.
• Continue to utilize the at-the-market (ATM) offering program for capital raising.

Key Dates

Recommendation

ZenaTech demonstrates strong revenue growth driven by strategic acquisitions in the DaaS sector, indicating successful market penetration. However, the significant increase in net loss, high operating expenses, reliance on related-party financing, and a material weakness in internal controls present considerable risks. While the company's pivot to drone technology and DaaS is promising, the path to profitability remains uncertain and requires careful execution of its integration and development plans. Therefore, a 'hold' recommendation is appropriate, pending further clarity on profitability and risk mitigation.

Keywords

ZenaTech, SEC Filing, Form 20-F/A, Drone as a Service, DaaS, Enterprise Software, SaaS, Acquisitions, Land Surveying, Financial Results, Revenue Growth, Net Loss, Capital Expenditures, Related Party Transactions, Nasdaq