Interview with Jim Sherman, CFO and Linda Montgomery, VP of Corporate Development of ZenaTech, Inc. (NASDAQ: 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, um, to Small Cap Stocks Today. I am your host Dave Donlin. And today we are joined once again by by Linda Montgomery, Vice President of Corporate Development and Jim Sherman, CPA CFO at Xanatec Inc. Trading on NASDAQ under the ticker symbol of Z E N A. Now if you're not familiar with Zenatec, Zenatec is a technology company. They specialize in AI autonomy drone platforms to transform industrial, government and defense sectors. Its subsidiaries include drone manufacturing through Xenodrone and a global drone as a service, also known as DAS business and a separate enterprise SaaS division of multiple software brands. With an operating footprint spanning North America, Europe, the Middle east and Asia, Zenatec is advancing AI drones for agriculture and logistics as well as ISR cargo and counter UAS applications for US Defense and NATO allies. The company is investing in next generation technologies including drone swarms, quantum computing and advanced AI autonomy to capture long term opportunities in key markets through its R and D initiatives. So without further ado, let's welcome Linda and Jim to our program. Thank you both very much for joining us today. Linda, I guess the first question is for you. Recently the 2025 financials were released which were outstanding for the company. Acquisitions played a major role in 2025. In fact approximately 20 acquisitions. You uh, have more acquisitions already announced here in 2026. Tell us about that.

Speaker B: Yeah, thank you. Well, thank you for having us on. Um, as you know we design and manufacture drones and we also have this business called Drone as a Service. So those acquisitions were part of um, in fact uh, $10 million of our 13 million in revenue that we achieved in 20. And what we're doing with drone as a service is we're acquiring all these under digitized legacy businesses and we are combining our drones with the workflow and of course improving the speed and the efficiency and of course improving the margins and just sort of creating the leverage with this AI autonomy platform that we're building now. We did around 20 and 2025. Right now we're at 23 acquisitions that we've done. Uh, we just recently added Australia, uh, onto uh, our network of um, drone as a service locations in, in the US Canada and uh, in the UK and uh, Ireland and Dubai as well.

Speaker A: Jim, Zenatec reported record 558% year over year revenue growth to $12.9 million for the full year of 20 grown as a service business. Expansion accelerates and Q4 revenue increases 670%. Unbelievable. What does the outlook look like for 2026?

Speaker C: So um, uh, acquisitions is um, a very integral part of our growth strategy. Um, it's actually easier to acquire a company than to uh, market your drones and convince people that uh, they're of use. Um, it's better to uh. What we do is we focus on acquisitions of companies that are in industries that are ripe for drone technology. Um then we look for an acquisition in that company, in that industry and then we convert them to drone technology. We find that the uh, acquisition strategy that we have, uh, we're able to get uh, relatively low cost of revenue, low multiples of revenue. Um then we add value to that uh, company by adding drone technology to it and it increases their marketability. Uh, most of our growth in 2025 was associated with uh, acquisitions. In 2026 we'll have intrinsic uh, growth as well as acquisition growth. Uh, so far this year we made uh, three acquisitions uh, in uh, drone uh, technology space. Um, they're again they're, they're not actually drone companies. They're companies and industries that are ripe for drone technology. And then we're adding drone technology to them. So it's been very exciting. Uh, the, the growth has gone from 2 million in total revenue in 2024 to um, uh if we uh, project first quarter revenue and annualize it uh, will be in 30, uh to 35 uh million range this year. So it's this very fast paced growth. And um, since first quarter we've already made uh, four acquisitions. So um, we are growing fast. We'll continue to use drone strategies and growth through um, um through acquisition. Um, the idea of growth through acquisition is important. Uh, so if we can find companies that are not valued uh, properly, uh, and then we acquire them and um, even though we have to issue stock, um, it increases the overall uh, stock value for people we believe. So um, that's kind of the strategy in a nutshell. And um, it's going well. Integration is going very well.

Speaker A: Linda, this question is for you. Since we're talking about drone as a service, it seems to be a huge part of Zenna's revenues. What makes Xena unique in the drone as a service business?

Speaker B: Yes, well, we're really unique with the clarity of our vision to launching this across the US we're in like 10 states now I mentioned and all the other um, countries as I mentioned and I think the speed of execution is um, what makes us unique and in doing this as well, we really just started this strategy in January of 2025. And then I think the other thing is that this, it's really an AI autonomy platform as I mentioned. And we're really creating this global platform with this and with our acquisitions and also our corporate stores, uh, done as a service as well really to create leverage. And really this makes Xenatech a uh, revenue generating commercial um, drone company. And we even haven't even talked about defense. We have a defense upside as well. We're working on um, the defense side of our business too. So I think that's what makes us part of what makes us attractive to investors.

Speaker A: Company revenue growth is exploding and looks like that will continue as cfo. Jim, when you are talking about hyper growth, which seems to be really the case here, what are the main areas you need to focus on?

Speaker C: Um, it is hard when you have hypergrowth. Um, there's a lot of change. Um, employees have to be open to doing things that are outside of their normal job. Um, because there is a lot of work. Um, we're constantly hiring new employees. We're constantly trying to make sure we're in compliance in all the different jurisdictions we operate in. Um, and then 2026 we're starting to take uh, drones as a service to the world stage. We concentrated a lot of our acquisitions in United States in 2025. But um, moving to the world stage adds a whole new compliance issue. And uh, so we need expertise in all different areas, um, on the administrative side, uh, which is what I see. Um, um, on the technology side, um, using drones in the United States and using drones elsewhere, M there's licensing issues and different types of uh, jurisdictions where the drones can operate in different specifications. So there's a whole host of issues from all aspects of the company and managing these issues and researching them, um, before we make acquisitions, um, to try to identify which acquisitions, which areas are ripe for growth. Um, those are the challenges that we face right now. I think we're doing pretty well at it.

Speaker A: Linda, any updates on the Zenna prototypes? I know they've been talked about before but anything new on Xenodrone 2000 and the IQ Aqua?

Speaker B: Sure. Well these are products we just come out with in first quarter. This is on top of our existing product line, uh, that we do inspection and uh, reconnaissance and surveillance. And we have a cargo, medium sized heavy lift cargo drone. Um, also. So these products we've come up with, uh, first of all the IQ Nano is ah, Aqua. I should Say is very exciting one. It's an underwater drone and so it's uh, going to be used to find underwater mines. Would be one of the defense uh, use cases for this one. And then there's a, a lot of times you need an underwater drone comes really handy uh, for a lot of commercial and government uh, applications, public works, uh, types of uh, customers we hope to sell um, this solution to as well. Uh, and then the Zentrone 2000 is part of a new, our counter UAS solutions that we just announced and it's kind of based on our Xenodrone 1000 drones. It's going to be a gas powered interceptor drone. So the kind of drone that uh, looks and tracks, finds, tracks enemy drones, enemy objects and uh, is involved with um, neutralizing them also. But this particular drone is going to be more you know, slow moving, slower moving objects and these, these products um, will also be. We're going to be doing a lot of work in Ukraine. We just recently recently announced that we're going to be manufacturing um, and, and doing testing in the Ukraine in addition to our other three manufacturing facilities around the world. So very exciting. They are at the prototype stage and you know we're working on bringing them through to the, the testing stage. Um, the Xenodrome 1000-2000. We've already done the uh, we, we have the um, fuselages for them and they're now in our manufacturing facility near Dubai and they're working on assembling them and testing them and so yeah, we're excited to bring those products through to market.

Speaker C: So we also, we have to constantly keep updating our technology. Um, drone technology is changing so fast and uh, we are constantly on research initiatives and uh, uh to keep our technology up to date in this area. We're growing fast but the back office and the technology needs to, needs to keep up with everybody else too. So.

Speaker A: Okay, great conversation. Uh, anything else either of you would like to add?

Speaker C: Um, yeah, keep an eye on us. Uh, uh, if you think we grew fast in the past, keep an eye on us in the future. Uh, we're going to continue our strategies. We want to be a leader in this industry and uh, we are taking steps to get us there and we are focusing on opening offices across the world to bring drone technology, um, not only in the United States where we have a significant presence but uh, across the world.

Speaker A: And once again my thanks to Jim Sherman, CFO and Linda Montgomery, VP of Corporate Development. The name of the company is Zenatec Trades on the NASDAQ under Zena. If you like more information and there's a lot out there, go over to Zenatech.com thanks so much for joining us. Small Cap Stocks Today A ah, brand new episode is coming up soon. Stay with us and have a great day in the market. You have 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 Stock Today. This program is entirely produced and sponsored by Servel 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 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 Survel Group or Small Cap Stocks Today.