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

ZenaTech, Inc. announced a significant increase in total revenue for the year ended December 31, 2025, driven by its newly launched Drone as a Service (DaaS) segment.

Summary

• ZenaTech's total revenue for the year ended December 31, 2025, reached $12,912,722, a substantial 558% increase from $1,963,605 in 2024.
• This growth was primarily fueled by the Drone as a Service (DaaS) segment, which contributed $10,105,734 in revenue from land surveying services acquired throughout 2025.
• The Enterprise SaaS Software segment also saw growth, with revenue increasing by 43% to $2,806,988 in 2025.
• The company reported a net loss of $45,218,074 for 2025, an increase from $4,481,751 in 2024, largely due to significant finance expenses and increased operating costs associated with acquisitions and expansion.
• Total assets grew by 188% to $99,932,297 as of December 31, 2025, driven by acquisitions and investments in property, plant, and equipment.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing as mixed; while revenue growth is exceptionally strong, the significant increase in net loss and the identified material weakness in internal controls temper the positive outlook.

Positives

• Significant revenue growth of 558% year-over-year, reaching $12.9 million.
• Successful launch and rapid scaling of the Drone as a Service (DaaS) segment, contributing 78% of total revenue.
• Expansion of the Enterprise SaaS segment with 43% year-over-year revenue growth.
• Substantial increase in total assets by 188%, indicating significant investment and growth.
• Positive working capital of $18.3 million as of December 31, 2025.
• Management believes existing cash resources and credit facilities are sufficient for the next twelve months.

Negatives

• Net loss increased significantly to $45.2 million in 2025 from $4.5 million in 2024.
• High finance expenses of $19.9 million, largely due to non-cash loan derivative expenses.
• Substantial increase in wages and benefits ($12.8 million) and general, administrative, and other expenses ($6.3 million) due to acquisitions and market entry strategies.
• A material weakness in internal control over financial reporting was identified due to rapid business expansion not keeping pace with control evolution.

Risks

• The company's ability to successfully integrate the approximately twenty land surveying companies acquired in 2025.
• The risk of not obtaining necessary regulatory approvals for drone operations, particularly for Beyond Visual Line of Sight (BVLOS) operations.
• Dependence on continued access to revolving credit facilities and ability to generate sufficient cash flows from operations.
• The impact of convertible debt instruments on the company's financial position and share count.
• Potential adverse effects from foreign currency fluctuations.
• The company's substantial dependence on the leadership of Dr. Shaun Passley, Chairman and CEO.
• The identified material weakness in internal control over financial reporting could lead to regulatory scrutiny and a loss of public confidence.

Future Outlook

Management expects continued growth in 2026, driven by a full year of DaaS segment revenue from 2025 acquisitions, maturation of the drone conversion program, further acquisitions, cross-selling of drone capabilities to SaaS customers, and new revenue streams from drone product development. Non-cash finance expenses are expected to decrease, and the company anticipates achieving positive operating cash flow as the DaaS segment scales.

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."
• "We believe compensation should be structured to ensure that a significant portion of an executive's compensation opportunity is at risk and related to factors that influence shareholder value."

Industry Context

StockSavvy.ai notes that ZenaTech's aggressive acquisition strategy in the land surveying sector, coupled with its integration of drone technology, positions it to capitalize on the growing demand for DaaS solutions. The company's focus on securing US-made drone components aligns with recent US policy directives aimed at strengthening domestic drone industry dominance and supply chain security.

Comparison to Industry Standards

• ZenaTech's revenue growth of 558% significantly outpaces the typical growth rates seen in the broader enterprise software market, but is more aligned with high-growth technology companies undergoing aggressive M&A.
• The company's net loss, while substantial, is not uncommon for companies in a rapid expansion and acquisition phase, particularly those investing heavily in new technology development like drones.
• The significant increase in DaaS revenue, driven by acquisitions, reflects a trend in the surveying industry towards adopting new technologies to improve efficiency and service offerings.

Corporate Governance

Legal Proceedings

• ZenaTech is aware of a claim filed by NightSun LLC in the Shoshone & Aropaho Tribal Court for purported breach of contract. The company believes the claim is frivolous and without merit and will defend itself vigorously.

Related Party Transactions

• Significant transactions with Epazz, Inc., including advances for services, programming and support fees, wages and benefits, and product development costs.
• Issuance of shares (Common, Preferred, Super Voting) to related parties including Epazz, Inc., Ameritek Ventures, Inc., Shaun Passley, and family members of management as compensation and in connection with acquisitions.
• Revolving line of credit facilities and convertible debentures with related parties such as GG Mars Capital, Inc., Star Financial Corporation, Jennings Family Investments, Inc., and LoneStella, LLC.
• The company has advances outstanding to Epazz, Inc. for future services, with a significant portion classified as long-term assets.

Stakeholder Impact

• Shareholders may experience dilution due to ongoing share issuances for acquisitions and financing.
• Investors should be aware of the increased net loss and the material weakness in internal controls.
• The company's reliance on Dr. Shaun Passley presents a key person risk for stakeholders.
• The significant increase in debt and convertible instruments could impact future financial flexibility and shareholder value.

Next Steps

• Continue integration of acquired land surveying companies into the DaaS model.
• Advance development and commercialization of the ZenaDrone product family.
• Pursue Green UAS and Blue UAS certifications for defense market access.
• Expand DaaS footprint through additional targeted acquisitions.
• Continue to invest in quantum computing and AI applications for drone and enterprise software.

Key Dates

Recommendation

ZenaTech demonstrates impressive revenue growth driven by strategic acquisitions and expansion into the DaaS market. However, the significant increase in net loss, coupled with a material weakness in internal controls and substantial debt, warrants a cautious approach. While the company's long-term potential is evident, the current financial performance and operational challenges suggest a 'hold' rating until these issues are addressed and profitability improves.

Keywords

ZenaTech, Form 20-F, Annual Report, Drone as a Service, DaaS, Enterprise Software, SaaS, Land Surveying, Acquisitions, Revenue Growth, Net Loss, Nasdaq, ZENA