Featured Guest - Zena

Speaker A: This is Small Cap Stocks Today, your best source for information on small cap stocks coast to coast with your host, Dave Donlin. Now from the Stock Investor Daily studios, here is Dave Donlin. Welcome to Small Cap Stocks Today. I'm, uh, your host Dave Donlin. And today we are joined by Jim Sherman, cpa, CFO at Xanatech Inc, along with Linda Montgomery, VP of Corporate development. Zenatec Inc. Trades on the NASDAQ under the ticker symbol Z E N A. Very happy to have them with us. Now the company Zenatech is a business technology solution provider specializing in AI drone, drone as a service which is DaaS, DAS, Enterprise, SAS SaaS and Quantum Computing solutions for mission critical business applications. Since 2017, the company has leveraged this software development expertise and grown its drone design and manufacturing capabilities through Xenodrome Drone to innovate and improve customer inspection, monitoring, safety, security, compliance and surveying processes with enterprise software customers. Using branded solutions in law enforcement, government and industrial sectors and drones being implemented in agriculture, defense, logistics and land survey sectors, Zenatec's portfolio of solutions helps drive exceptional operational efficiencies, precision and cost savings. The company operates through offices in North America, Europe, Taiwan and UAE and is growing its DAS business and network in the US So we know about Zenatec. Let's learn more. And without further ado, let's welcome our guests Jim and Linda to our program. Thank you both very much for joining us today. Jim and Linda, thank you so much for joining us today from Zenatec. Uh, Linda, Zena has just announced signing an offer recently to acquire a land survey, an engineering firm. They're based out of Virginia state, serving major US Federal clients. Now it certainly looks like a complimentary Zenatech business model. Uh, do you have any other information you'd like to share with us? You care to add to that?

Speaker B: Sure. Well, this company has long standing relationships with, well one in particular major federal government department, does a lot of work in the area of uh, building roads and bridges, um, and surveying and engineering work. So we, we, so it's a great opportunity for us to uh, implement our drones for a lot of the land survey work, um, that they do to improve the speed, the precision and also the safety of um, doing these land surveys. They also do a lot of work with large real estate and construction companies. So we see a lot of opportunities for cross selling as well. Um, cross selling our drone solutions for inspection and, and uh, project management work, um, in construction and also site surveillance and security kind of applications. So it really consolidates our southeast region which includes Florida, um, Virginia, South Carolina, North Carolina. So this particular acquisition has uh, presence in three states. Virginia, South Carolina, North Carolina.

Speaker A: Okay. And the company acquisitions. I want to talk to you, Jim and Linda about this as well. Add anything you like to this, because I'm really curious on the company acquisitions. Now, after doing some of my homework, it looked like acquisitions are actually a really big part of Zena's growth. In fact, the CEO, Dr. Sean Pasley, actually stated that the company is going to expand its range of drone services with a pipeline of over, I believe it's 20 acquisitions over the next 12 months. Acquisitions and joint venture partnerships look like they're very much a, uh, vital, integral part of uh, Zena's expansion. Is that correct? You'd like to add to that as well on the acquisition side.

Speaker C: So acquisitions are a big part of our growth. Uh, that is true. We believe we can uh, grow through the acquisitions. And we don't just acquire companies, we transform them. And we're looking for areas where drone technology can be implemented and to an industry that hasn't had much drone technology implemented to it up to this point in time. And so we're acquiring companies, we're transforming their service to uh, being performed with drone technology. And it's improving both the, the product and it's reducing costs. Um, so there's many industries out there that are ready and ripe for drone technology to take over. Uh, we feel that it's better to acquire a customer rather than trying to sell to a customer. Its uh, success rate is much higher, 100% success rate versus um, less than 50% success rate when you get a customer and try to um, transform them to drone technology. And so we see this as a real positive way of growing our drone services.

Speaker B: Yeah, and I'll just add to that, you know, these are legacy businesses that we're after with strong reputations, a multi decade experience and customers. And then um, it's really, we have, you know, old business processes, old technology that uh, that they may be doing that's right for, for innovation. Drones for instance, like land surveys of course, but also all kinds of inspection services. So companies that are, do inspection services for roofs or, or um, power line inspection, solar panels, wind turbine inspection are all ripe for drone innovation. Also power washing of um, buildings and stad, uh, it's a big application, it's more efficient um, to use a drone, uh, tethered to electrical cord and water supply and then precision agriculture and security, just to give you some examples.

Speaker A: Interesting. Now one of the things I like to point out about the company since I've been following it and I've been following it actually for years. Um, but one of the things I really like about it as ah, say a prospective investor, and I'm sure other investors and shareholders can talk up about this is the fact that the company is consistently putting out news and updating shareholders and prospective investors about what's going on. And really looks like there's a lot of news. And one of the things that you've talked about and that you released as far as uh, news goes, is the revenues. So Zenatech reported nearly double revenue year over year for the first quarter 2025. Those total revenues by the way were up 92% in the first quarter 2025 compared to the same time last year. Phenomenal growth. Are you anticipating those types of strong numbers to continue this year, Jim?

Speaker C: So um, first quarter revenue was up, uh, we went through drones of service, had um, part of that growth and we launched that product this year and so it has a comparable uh, to nothing in 2024. Uh also though our uh, technology sector was up, our uh, business software was up and uh, so both sectors were up. Um in the past we were just a one sector company. Now we have uh, technology as well as management, uh, software, we have drones service software or hardware and services as well as uh, the technology. But um, going forward, first quarter, second quarter, all I can say is our, our report uh, is going to be issued uh, within the next few weeks here and I would, I would challenge people to take a look at us and to watch us and I've been challenging people for the last uh, year uh, or so to watch us and that's what I'm going to say about that. Watch us and you'll see for yourself of our strategy as it rolls out.

Speaker A: The manufacturing side of the business obviously is really key. Uh, generating revenues, bringing in new clients as you both alluded to earlier. And any chance you can give us some updates? Uh, I'm sure shareholders are kind of interested in uh, latest updates on where the company stands on production as an example of the AQ Square drone and also on the Xenodrone 1000. Any updates on that by chance?

Speaker B: Yeah, sure. You know we have a 10,000 square foot facility in um, UAE at the moment where our manufacturing happens and our team is focused on our internal goals of how many drones we want to be getting through our uh, manufacturing process per month. So we're focused on 10 to 15 drones per month and ramping up to that number and then that's drone 1000. And then um, 25, um, 25 or more for our IQ series of drones. And that consists of our IQ nano, our indoor drone, and our IQ square, which is uh, our um, our outdoor drone. Um, and so then on top of that we're also planning to manufacture or expand our, our sales and R and D facilities to incorporate uh, manufacturing in Phoenix, Arizona. And we've had a lot of tailwinds recently. There's been some policy directives that have really been historic and uh, have really been positive. Entire drone industry, American made drones. And uh, so we're planning to also um, move to a new facility in uh, Phoenix. Um, we plan to um, increase our, our uh, square footage by three times and we want to hire um, up to 30 people and start our manufacturing there.

Speaker A: That's great. And Linda, you kind of think, reading my mind, leading into the next question I had which was um, talking about the, the, the defense, the military Secretary of Defense Pete, he recently came out, was talking about the use for drones, American made drones. And the company uh, has really been focused on this green UAS and blue UAS certification which I think is really fascinating myself. Now once approved and officially recognized as a secure and mission ready drone supplier to US Military customers, what do you think the market potential is in terms of revenue, customers and reach? And I'm talking about the certification on the green UAS and the blue uas. And again if you want to comment anything about Hegset's comments within the last couple of weeks talking about the drone

Speaker B: side of things, uh, it's like a historic memo unleashing US Military drone dominance. So his policy, um, personal policy directive is going to make um, streamline even further this, this whole process. And basically for Group 1 and 2 types of drones which we fall under, um, these are considered expendables or commodities. And hence he says they shouldn't have a, they shouldn't have a long and arduous uh, um certification process. And also frontline, um, officers should be able to be able to buy them and even prototypes and to start to use them, um, both in training and um, he's even said in the field. So this has been really positive and in fact that's part of the reason why we've moved forward our manufacturing plans for the Phoenix area. And so. So um, you know this has just really, really been positive and so this green and blue UAS certification which is really for cybersecurity controls and also country of origin and this sort of verifies that uh, your Drones, your components have nothing, do not have, um, uh, Chinese parts that come from um, countries that are, that uh, are not on the restricted list. Uh, and so uh, this process even is going to be even more streamlined so we um, and it will be made faster. Now we don't know what that means quite yet, but uh, it's certainly um, I mean we're still planning to go forward with these certifications but uh, but these policy directives certainly point to um, uh, being able to go. It takes a number of months but it certainly points to us being able to go through these faster.

Speaker C: I believe it will help us to speed track some of our products into the military use.

Speaker B: Yeah, and it's a huge marketplace. Fourteen, um, billion dollars, um, currently is what some market analysts say and it's growing to 47 billion by uh, 2032 and um, probably 40% of that is in the US according to market analysts. So it's a huge marketplace and our drones are focused on isrt, um, um, which is mostly inspection, uh, surveillance and reconnaissance and also border patrol. Um, we also have a gas powered version of our Xenodrone 1000 that can go for longer, can go, um, fly for a number of hours. So um, those are just some of the applications. Uh, and also our indoor drone. Um, there's a billion square feet of uh, warehouse space and armories that uh, both the federal government and the dod, um, operate. And so we feel that our indoor drone counts inventory and helps with inventory management, could be a good fit. Uh, so we're focused on those products for defense agencies as well.

Speaker A: Okay, we only have a couple of minutes left. Um, I have a question or two left I'd like to ask you if that's okay, um, for both of you. I mean, where do you see the largest growth for Zenna over the next 12 to 18 months? Ah, uh, either one of you like to venture a guess on that and give us kind of a short answer so we can get into the last question.

Speaker C: I think the largest growth that we have is we're going to continue to roll out our drones of service technology and continue to transform um, how things are being done without drones to doing them with drones. And there's a lot of growth in this sector. It's, it's growth we can manage through acquisitions and uh, we're going to continue that. Uh, that's going to be the hottest thing in the company for the next uh, 12 months. Um, at some point in time we're going to have to focus and transition to um, more military I believe we're about two years behind where Redcat is today and with the military and uh, so one is a long term growth, uh, with the military and one is a more shorter manageable growth, um, with um, transforming civilian industries into drone technology.

Speaker A: Linda and Jim, would you like to add anything to the conversation for those listening today?

Speaker B: Just having these historic policy directives I think has really accelerated um, certainly accelerated our plans and accelerated the growth of American um, ah, drone manufacturers. So that will certainly help us bring our products to market faster. And you know we're targeting sectors we can sell to right now like drone as a service. And so I think going forward uh, investors can expect to see um, good uh, news from us there as well.

Speaker A: Great answer Jim.

Speaker C: We're going to continue to roll out our strategy. We believe that investors have bought into our strategy and um, are favorable to what we're doing now. We've had success, we're going to continue to have success I believe. And I um, think it's a bright future for Zenatec right now.

Speaker A: And you have been listening to Small Cap Stocks Today. My thanks to Jim Sherman, cpa, CFO at Zenatec Inc. As well as Linda Montgomery, VP of Corporate Development at Zenatec Inc. The company trades on the NASDAQ under the ticker symbol Z E N A. For more information go to the corporate website@zenatech.com thanks so much for joining us. We'll talk to you soon and good luck in the markets. This is Dave Donlin for Small Cap Stocks Today. Been listening to Small Cap Stocks Today, your best source for information on Small Cap Stocks coast to coast with your host Dave Donwan. Join us again soon for another edition of Small Cap Stocks today. This program is entirely produced and sponsored by Survel Group, which is responsible for the content, opinions and information provided on this program are those of the guests and those of the respective companies they represent and do not necessarily reflect those of the staff or management of Surveill Group. Small Cap Stocks Today encourages all listeners of this program to do their due diligence and research when determining investment strategies that will work for them or to seek the assistance of an investment professional. The guests of this program may have paid for its distribution and are not directly affiliated with Servel Group or Small Cap Stocks Today.