ZenaTech $ZENA: Drone Services, Growth and Funding Risks

01Scenarios: acquired services have to fund a broader technology ambition

The favorable scenario for ZenaTech is an operating network that becomes more productive after acquisition. Established surveying and inspection businesses retain customer relationships, introduce drone and software tools where useful, and complete more work with the same or a proportionately smaller resource base. Organic growth supplements the revenue acquired through new transactions. The company then uses a stronger service contribution to fund selected product development, rather than relying on capital markets to finance every part of the expansion.

The middle scenario is strong consolidated revenue growth with an expensive transition. Acquisitions add customers and work, while integration, marketing, wages and development increase the cost base. The service network can be commercially useful without yet generating enough cash to support the group. Some drone products may improve operations, while others remain prototypes. This outcome would make capital allocation and the pace of expansion central to the investment case. Growth in reported revenue and growth in value per common share would need separate assessment.

The adverse scenario combines integration problems, insufficient service contribution and continuing financing demands. Customer retention can suffer if local expertise is lost or delivery changes too quickly. A product intended to improve fieldwork can require more testing and certification before use. Related-party exposures and complex instruments can reduce financial clarity. The company may need further equity or debt while the network is still absorbing acquisitions, changing the ownership and obligation structure before the commercial model becomes self-supporting.

The reported financial position makes these scenarios economically relevant. First-half revenue was C$17.735 million, while operating cash use was C$43.482 million. October’s preliminary Q3 revenue range points to another increase in activity, but it provides no final quarter cash-flow or profitability result. The organic-growth metric concerns an older acquisition cohort, which is useful for examining improvement within existing locations. The strongest outcome would connect that improvement to group-level cash generation and disciplined funding of technology. A larger network and a wider product portfolio create possibilities; the economics of delivering services and allocating capital determine the value of those possibilities. June statements

02The operating structure: services, software and drones have different maturity

ZenaTech Inc. is domiciled in British Columbia and moved its headquarters to Vancouver in January 2025, according to its September management discussion. Its common shares trade primarily on Nasdaq as ZENA, with additional listings identified by the company. The group operates through subsidiaries in software, survey services and drone development. This structure creates a broad commercial footprint, while requiring readers to distinguish the business already generating revenue from the technology intended to support future services or products.

The management discussion describes two operating segments: software and survey services, the latter presented as Drone as a Service. It says the company began generating survey revenue through acquisitions in 2025 and intends to deliver those services using internally developed drones and related technologies. That wording matters. Acquired surveying revenue is part of the group’s current business. The degree to which every location already uses each proprietary drone or autonomous system is a separate operational question.

A survey customer typically purchases a useful deliverable: measurements, mapping, inspection information or support for a construction and infrastructure task. A software customer purchases an application and associated support. A defense customer evaluates a platform against technical and procurement requirements. Each business can use related technology, while having its own sales cycle, regulation, margin structure and capital demands. A consolidated growth headline does not automatically describe progress equally across all three.

The group may benefit when the activities reinforce each other. Software can organize work and data; drones can collect information; local service companies can provide customer access and professional expertise. That interaction is most valuable when it improves a concrete customer outcome. It becomes less useful if the group spends heavily to integrate tools that add complexity without improving delivery or economics. The commercial strategy should therefore be assessed through the practical effect on jobs, customers and cash rather than through the breadth of the technology description.

For shareholders, segment maturity is a central distinction. The service network supplies most reported revenue, enterprise software provides a smaller revenue base, and many new hardware programs remain in development. A fair valuation gives appropriate weight to the operating businesses and treats future products according to their stage. ZenaTech’s opportunity is to turn those different activities into a coherent commercial system without letting the financing burden outrun the benefits. Management discussion and corporate structure

03The October growth metric: cohort improvement and acquisition growth

On October 13, ZenaTech reported average organic revenue growth of 27.1% in 2026 across approximately twenty primarily U.S. DaaS locations added in 2025. The company expressly excluded acquisitions completed during 2026 from that metric. This is a useful attempt to separate improvement in an established part of the network from growth obtained by adding more businesses. Its scope is the identified cohort, rather than every subsidiary or every dollar of consolidated revenue.

An acquisition-led group needs that distinction because consolidated growth can occur even when the underlying locations are flat. Buying a business adds its revenue to the reporting perimeter. Improving an existing business adds value through a different mechanism. The organic measure can provide evidence for the second mechanism within its defined population. The next question is how the growth is distributed, whether it persists and whether the cost of achieving it leaves a useful contribution.

Management attributed the cohort’s growth to operational and commercial changes, including drone and AI workflows, training, marketing and packaged services. Those explanations are the company’s interpretation of its results. They describe plausible routes to increased capacity and demand. The investment case depends on the measurable economic outcome: additional work completed, retained customers, pricing, labor and other delivery costs, and cash collected. A revenue increase can be encouraging while still requiring expenditure that limits the improvement in cash flow.

The same announcement estimated total Q3 revenue of C$13.4 million to C$14.8 million, against reported Q2 revenue of approximately C$9.3 million. The range itself was not new on October 13: ZenaTech had first furnished it on a Form 6-K on October 8 in U.S. dollars, at US$9.5 million to US$10.5 million, and the October 13 release restated it in Canadian dollars alongside the organic-growth metric. The Q3 range is preliminary and unaudited. It concerns the consolidated total, while the organic percentage concerns the older location cohort. Combining the two as if they were one same-store result would obscure their different populations. Final reporting will add information on the mix of revenue and the expenses and capital needs behind it.

The strongest interpretation keeps both signals in view. The organic cohort measure may support the idea that acquired businesses can improve after integration. The preliminary consolidated range may support continued growth in the group. Neither provides a final Q3 profitability or cash-flow result. The growth narrative becomes more persuasive if final statements show that the operating network increasingly supports its own expansion and the selective development work attached to it. October 13 growth announcement

04Merritt Paul and the acquisition model: buy expertise, then preserve it

ZenaTech announced completion of the Merritt Paul Land Surveying acquisition on September 15 and described it as its twenty-ninth DaaS acquisition. The Georgia-based business brings surveying work in solar, transportation and construction, with licenses in seventeen states. The transaction adds an established professional service business rather than merely a drone fleet. The value includes customer relationships, local knowledge, licensed capability and experience delivering the measurements and records that customers require.

Those assets can be difficult to reproduce through a hardware sale alone. A surveying customer may need accuracy, interpretation, professional responsibility and familiarity with the particular project, in addition to aerial data. Acquiring a business can provide access to that commercial infrastructure. The challenge is to preserve what made the business useful while improving its workflow. Replacing expertise with an assumption that every task can be automated could weaken the very asset acquired.

The opportunity for drones depends on the job. Aerial collection can help with large areas, repeated inspection or hard-to-access features. Other tasks can require ground measurements, interpretation or professional judgment. The economic benefit comes from combining the methods effectively. If technology reduces the time needed for a suitable part of a job, the service company may increase capacity or improve turnaround. The full benefit depends on the cost of equipment, training, processing, permissions and the remaining work needed to complete the deliverable.

Acquisition economics also require attention to the price and funding structure. Buying revenue is not the same as creating organic value. The company needs to earn a return on the cash, shares and obligations used to acquire the business. Integration costs and customer retention influence that return. A long list of completed transactions can demonstrate execution of a strategy while also increasing complexity and the number of relationships management must maintain.

Merritt Paul’s sector experience gives the network more specific customer applications. Solar and transport infrastructure may provide recurring or follow-on work when the service is useful and competitively priced. The commercial test is whether the acquisition retains that work and improves its economics inside the larger group. ZenaTech’s model becomes stronger when acquired expertise and technology produce measurable service improvements, rather than when the acquisition count alone rises. Merritt Paul acquisition

05Enterprise software: an existing business and a potential workflow layer

The June statements reported software revenue of C$702,315 in the second quarter and C$1.292 million for the first half. Survey services accounted for the much larger share of total revenue. The software portfolio remains a distinct part of the group, with applications in field management, compliance, inventory, workplace scheduling and other enterprise functions. Its value should be examined through customer retention, service requirements and development costs, rather than assumed from the general appeal of recurring software revenue.

The management discussion identifies subsidiaries including Tillerstack, WorkAware, PsPortals and other brands. It describes the April acquisition of NOW Solutions’ material assets through a bankruptcy sale process, adding HR and payroll software capabilities and customer relationships. An acquired software business can offer recurring work, while also requiring product maintenance, integration and support. Buying a customer base does not eliminate the cost of keeping the application dependable and useful.

The potential connection to DaaS is practical. Software can coordinate jobs, organize field information, document inspection work or support customer communication. If the applications fit the service network, they may improve the delivery process and provide data that helps management allocate resources. Integration can also create costs and operational disruption if the tools are poorly matched to local needs. The best evidence of synergy is improvement in customer service and economics after the tools are introduced.

One concrete example of that connection was announced on August 13. ZenaTech said it had expanded ZenaWorx, the LiDAR-based construction progress monitoring software it delivers through the DaaS division, to include digital terrain modeling for cut-and-fill volumes, grading and drainage, a function still at the beta stage, and that it had signed its first paying customer for a building project in the AI data center construction market. The release did not name the customer or disclose the contract value, duration or expected revenue. Management presented the service as a recurring relationship across the life of a project; a single signed project is evidence of initial demand, not yet of the recurring model. ZenaWorx announcement

The hardware initiatives broaden this software narrative. Stacklens is being developed by Tillerstack within the group’s enterprise ecosystem. It is intended to support field technicians, which could connect with inspection and maintenance activities. The program is still a prototype and testing effort. Existing software revenue should therefore remain separate from assumed future revenue from eyewear or other hardware. The distinction preserves the value of the operating business without assigning commercial maturity to products that have further milestones ahead.

For shareholders, enterprise software can be both an existing revenue source and a possible enabling layer for the broader strategy. Those roles should be evaluated separately. A software operation with stable customers can contribute value even if a new drone product takes longer. Conversely, a successful drone demonstration does not automatically improve the software business. The group creates the most value when its different activities reinforce one another through concrete customer outcomes and a sustainable cost structure. Software portfolio and acquisition discussion · Segment revenue

06The defense portfolio: qualification is a route to compete

On September 17, ZenaTech announced selection into Canada’s Defence Drone Initiative Marketplace as a qualified supplier. The announcement describes a pre-qualified pool through which companies can compete for later defense and security requirements. This can reduce a barrier to participation and give the company a route to present its products. An actual procurement award would involve a separate requirement and decision. Qualification and contract revenue occupy different stages of the commercial process.

The distinction is particularly relevant because several defense-focused platforms remain in development or testing. The company’s announcement described ZenaDrone 1000 at the testing stage and additional counter-UAS and maritime systems under development. A customer evaluating defense capability needs evidence that the system meets the mission requirements, can be supported and can be supplied on acceptable terms. A design specification helps define the intended product; testing and acceptance provide evidence about its performance.

The broad portfolio can create opportunities, while increasing the number of development paths that require resources. Surveillance, logistics, underwater work and counter-UAS applications can have different engineering and operating demands. Sharing technology may produce efficiencies, but each application still needs an appropriate system and test process. A company’s ability to pursue several markets does not mean all programs will reach commercial scale on the same timetable.

The financial question is how the group prioritizes those paths. A funded customer program could justify development spending with a clearer commercial connection. An internally funded prototype can be useful for demonstrating capability and attracting demand, while creating more uncertainty about recovery of the investment. The service network may provide customer access and cash contribution over time, but it currently coexists with material group cash consumption. Capital allocated to defense development should be assessed against the other uses of funds.

The favorable outcome would be focused products that pass relevant tests, fit customer requirements and move from qualification into funded delivery. The adverse outcome would be a wide set of announcements with limited conversion and growing expense. The marketplace selection is a meaningful commercial step within that process. Its investment significance depends on later customer decisions and on the company’s ability to execute the specific systems being offered. Canada marketplace qualification

07ZenaDrone 2000: specifications remain test objectives

The October 6 update described ZenaDrone 2000 as a heavy-lift interceptor prototype being assembled in Sharjah, with first flight testing expected in Q1 2027. The company reported completion of the airframe and folding-arm structure, bench testing of the gasoline propulsion system and propellers, and ground testing of the controller and autonomy software. These are development milestones. The planned first flight phase will evaluate the integrated aircraft under flight conditions.

The disclosed design specifications include a maximum takeoff weight of 200 kilograms, payload capacity of 40 kilograms and a target hover endurance above four hours. These figures describe the intended platform and its testing objectives. They are not a report that the complete prototype has already achieved all those values in an operational customer mission. Bench performance and integrated flight performance can differ because the full system combines power, weight, controls, sensors and environmental conditions.

Management outlined later phases involving pursuit, multi-target operations, coordination with the Interceptor P-1 and maritime launch and recovery. That sequence implies additional work beyond the first takeoff, hover and landing tests. A useful milestone assessment should identify which capability was actually demonstrated at each stage. Completing the first flight would support the development record, while the more complex intended functions would still require their own evidence.

The proposed role in a layered defense system could make the platform valuable if it meets an operator’s requirements at an acceptable lifecycle cost. Endurance and payload capacity can influence what equipment the aircraft carries and how long it remains available. They also affect mechanical complexity, maintenance and operating procedures. A larger platform may solve a different problem from a small interceptor, rather than simply being a superior version of the same product. The customer determines whether the combination is useful.

For investors, the Q1 2027 target supplies an identifiable development window. The commercial question comes afterward: who funds the system, what tests and approvals are required, and can the company manufacture and support it economically? ZenaDrone 2000 adds optionality to the group. It also adds a claim on engineering resources and capital. The value of the program should rise with completed evidence and funded demand, rather than with design specifications alone. October 6 prototype update

08Mobile agriculture operations: the trailer targets the complete field workflow

ZenaDrone’s October 8 announcement described a mobile agricultural operations trailer at the prototype build-and-test stage in Mesa, Arizona. The design is intended to support transport, charging, replenishment, takeoff and landing for drone service work, initially using the IQ Octo prototype. It is configured for multiple aircraft, with the stated design supporting up to five. Future adaptations are planned for surveying and inspection. The initial focus is therefore a field-operation system, not just an additional aircraft.

The IQ Octo design described in the announcement uses eight motors, targets approximately twenty to twenty-five minutes of flight per charge and up to twenty-five kilograms of liquid or seed payload. Those specifications are relevant to the service workflow because a short flight cycle requires charging and replenishment between tasks. Automating part of the support process could increase the useful work a crew performs. The benefit depends on reliability, turnaround time, the job conditions and the cost of the complete system.

A field service contains several steps that can constrain productivity. Aircraft time is one; travel, setup, supply handling, permissions, data processing or customer acceptance may be others. Improving one step can help while leaving another as the bottleneck. A mobile hub is attractive when it reduces the total time or resources needed to complete a job. It may be less attractive when the additional equipment is underused or requires support that offsets the intended saving.

The trailer concept also creates a capital-allocation question. Purchasing or building support equipment can improve unit economics if it is deployed often enough on suitable work. If the network has too few jobs requiring the configuration, utilization can remain low. The service business should therefore relate equipment investment to actual demand and crew needs. A prototype creates an opportunity to test that relationship before a wider deployment commits more funds.

The October announcement is a product-development milestone with a clear operational rationale. The next evidence would be testing of the integrated process and the effect on real service delivery. Faster setup, dependable charging and more productive field work could support the DaaS strategy if they translate into contribution and customer value. The company still has to demonstrate those outcomes. The trailer’s value lies in the complete workflow it improves, rather than in the number of drones the design can accommodate. Mobile operations trailer

Agricultural services also need permission to fly. On September 10, ZenaTech announced that the Irish Aviation Authority had granted ZenaDrone a SORA-based operational authorization under EASA guidelines, issued at its EMEA DaaS headquarters near Dublin, for large-scale targeted aerial application of fertilizer, lime, biostimulants and other non-plant-protection products, as well as granular spreading, on Irish farmland. Management described the EASA framework as a replicable template it intends to apply market by market as it expands across Europe. As described, the authorization covers non-plant-protection products, so it does not by itself extend to pesticide spraying, and the release does not publish its specific conditions or the aircraft covered. An authorization removes a regulatory barrier; the economic test remains the number of paid jobs and their margin after crews, equipment and travel. Irish Aviation Authority authorization announcement

09Stacklens: the announced product is still before its customer-pilot stage

The October 9 Stacklens announcement describes AI-powered safety eyewear for field technicians, inspectors and industrial crews. Tillerstack is developing the product within ZenaTech’s enterprise software ecosystem. The stated functions include hands-free assistance, communication and inspection capture. The product is at prototype and testing stage, with customer pilots expected in 2027 and applicable safety certifications being pursued. Commercial maturity therefore remains ahead of the current announcement.

The use case is understandable. A field technician may need instructions or remote expert support while using both hands. A wearable device could help collect information without interrupting the task. Its value would depend on how reliably it fits that workflow, including comfort, battery behavior, connectivity, visibility and the handling of captured data. Features that are useful in a consumer device may need adaptation for a jobsite. The customer’s requirements and the intended operating environment determine whether the product solves a meaningful problem.

Safety certification is part of the commercial proposition. Eyewear used as protective equipment must meet the relevant requirements for its intended application. The announcement’s description of the intended category should be read together with its statement that certifications are still being pursued. Prototype development, pilot testing and certification each provide different evidence. A product may perform a useful demonstration while requiring further work before a customer adopts it in routine operations.

The software connection could help differentiate the offering if it supports existing enterprise processes. A technician’s captured information could fit into inspection, compliance or maintenance workflows. That integration would need to preserve data quality and customer trust. It can also create support obligations and costs. The attractive commercial outcome is a product that improves the service sufficiently to justify its price and operating requirements, rather than one that merely adds another device to the work process.

For investors, Stacklens is a development option within the broader group. It may provide a new product and a connection between software and field operations, while consuming resources before commercial results are available. The 2027 pilot expectation gives a future stage to follow. The value of the program should be reassessed with pilot evidence, certification status and customer demand. Existing software and DaaS revenue remain the nearer operating businesses; the new eyewear program has to earn its place through its own results. Stacklens development announcement

10Financial resources: cash, securities and receivables are different assets

At June 30, ZenaTech reported C$12.235 million of cash and C$22.341 million of marketable securities. The calculated sum is C$34.576 million, while the statements present the items separately. They also report accounts receivable, affiliate advances, inventory and other assets. These categories have different availability and risk. Treating every current asset as cash would overstate the resources immediately available to meet obligations and fund development.

Marketable securities can support the financial position, but their value and realizability depend on the instruments held. Receivables depend on customer payment. Affiliate advances depend on the counterparty and repayment terms. Inventory supports future delivery while tying up resources before a sale or service. The classification of an asset as current addresses an accounting horizon, not a guarantee that it can be converted into cash at its recorded value whenever the company needs it.

The first-half cash-flow statement reported C$43.482 million used in operations and C$25.038 million used in investing activities. Financing supplied C$74.109 million, including stock-sale proceeds and credit-line activity. The net increase in cash was therefore the result of financing exceeding the combined cash uses and exchange effects. The group was growing its activities while remaining dependent on external funding. The revenue story and the financing story are connected.

The cash-flow categories also help separate economic events. Purchasing securities uses investing cash while creating a financial asset; it is different from paying operating expenses. Acquisition costs and product-development spending can create future benefits while still consuming resources. A financing inflow can replenish cash while issuing ownership or creating obligations. Each should be assessed according to what the company receives and what it commits in exchange.

A runway calculation based on the June balances and historical burn would require assumptions about securities, future expenditures, acquisitions, receipts and financing. The pace of the company’s expansion makes a simple steady-rate extrapolation especially uncertain. The useful financial assessment examines whether operating contribution improves and whether management can adjust the pace of investment to available resources. The reported balances provide capacity, while the first-half cash uses show why funding discipline remains central. A larger network becomes financially stronger when customer activity supports more of its growth, rather than requiring proportionate new capital at each stage. Balance sheet and cash flows

Part of the securities activity continued after the period. The subsequent-events note reports that between July and September 2026 ZenaTech bought Boardwalktech Software Corp. shares on the TSX Venture Exchange and through a private placement of 15,000,000 units, reaching 25,779,437 common shares, approximately 19.9% of Boardwalktech on a non-diluted basis, with a blocker preventing warrant exercise above that threshold. Management concluded that it does not have significant influence and continues to account for the stake at fair value through profit or loss. The holding is a financial asset whose value moves with Boardwalktech, not cash available to the operating plan. Subsequent events, Note 17(c)

11Income statement: rapid revenue growth coexists with a much larger expense base

The first-half income statement reported total revenue of C$17.735 million, comprising C$16.442 million of DaaS revenue and C$1.292 million of software revenue. Total operating expenses were C$61.207 million. The loss before other income and expense was C$43.472 million, and the net loss was C$49.095 million. These figures show why growth percentages alone provide an incomplete view of the business. The expense base expanded on a scale much larger than the current revenue contribution.

The principal reported expense categories included wages and benefits of C$20.560 million, sales and marketing of C$11.108 million, general and administrative expense of C$9.323 million, and stock-based compensation of C$8.942 million. Programming and support, professional fees, amortization and other categories added to the total. Some expenses support acquired operations; others support integration, corporate activity or development. The statements provide the aggregate result, while the investment question is how those costs translate into future service capacity and customer value.

Stock-based compensation is a noncash expense in the period’s cash reconciliation, but it has an ownership cost. Wages and marketing generally have a more direct current cash connection. Capitalized development can shift part of the accounting expense into later periods while requiring cash now. These differences explain why the net loss and operating cash use are distinct measures. Neither should be substituted for the other when assessing financial sustainability.

The Q2 DaaS share of reported revenue was approximately 92.5%, calculated from the segment and total figures, consistent with the company’s rounded description of about 93%. This shows the importance of the acquired service network to current activity. The near-term commercial thesis should therefore be tied primarily to that network’s economics, even while drone and software development create possible future benefits. A promising prototype can be relevant without determining the profitability of the entire group.

The strongest financial improvement would involve more useful service work with controlled incremental cost, a better cash contribution from existing locations and selective spending on development. The risk is a cost structure that keeps growing ahead of realized benefits. Final Q3 reporting will be useful because a higher revenue range can coincide with different expense outcomes. The October estimate adds a growth signal; the financial statements will show what that growth required. Income statement and segments

12Related-party assets and transactions: economic availability requires more scrutiny

The June balance sheet reported C$11.225 million of short-term advances to an affiliate and C$17.995 million of long-term advances to affiliates. It separately reported an affiliate note receivable. These assets are not cash and should not be added to the group’s cash balance as though they had the same immediate availability. Their economic value depends on contractual rights, counterparties, repayment and any impairment considerations.

The related-party note describes connections involving entities controlled by the chief executive and other related participants. The software-asset sale to Epazz Limited, for example, created a convertible note receivable rather than an ordinary cash sale. Related transactions can have a business rationale, while also requiring careful oversight because the parties may have interests on both sides. The disclosed relationship itself is a fact; conclusions about fairness require examination of the terms, consideration and governance process.

The cash-flow statement recorded C$4.905 million of cash use from changes in amounts due from affiliates during the half. That is relevant to funding capacity because it represents resources directed into related balances while the company also financed operations and development. A growing balance of receivables can coexist with a growing need for external funds. The distinction between an accounting asset and money available for the operating plan becomes particularly important in that setting.

The statements also describe technology acquisitions under common control and shares issued to related parties. Some issuances were subject to shareholder approval, including the identified IQ Quad and IQ Slider transaction. These conditions matter when assessing the capital structure and governance. An announced technology purchase, an accounting entry and completion of all corporate approvals are different stages. The October prospectus supplement later stated that, after shareholder approval at the Annual General and Special Meeting of June 29, 2026, the company completed the acquisition of IQ Quad Generation 3, the IQ Quad charging station and IQ Slider from Epazz for 4,000,000 common shares, of which 1.5 million were issued directly to Dr. Passley. Both filings also record the purchase of IQ Rover, IQ Max, IQ Flex and ZenaDrone 2000 from Epazz, a related party controlled by Dr. Passley, for 10,426,540 common shares: the June statements say the shares were issued on April 15, 2026, while the October prospectus supplement places completion after the June 29 shareholder approval and adds the related intellectual property and the set-off of advances made by the company to Epazz. The ZenaDrone 2000 program was therefore acquired from an entity under the chief executive’s control. October prospectus supplement · Related-party technology transfers

The constructive outcome would be related transactions that supply useful assets or services on defensible terms, with transparent oversight and repayment where applicable. The adverse outcome would be resources tied up in arrangements that create limited operating benefit or uncertain recovery. A shareholder cannot assess the group solely through consolidated revenue if material financial assets and capital transfers involve affiliates. ZenaTech’s disclosures make related-party analysis a core part of understanding its resources and ownership, alongside the progress of the service network. Related-party disclosures and cash flows

A court ruling has since reshaped part of this related-party map. The subsequent-events note to the June statements reports that on August 11, 2026, the Eighth Judicial District Court of Nevada issued a judgment declaring void ab initio certain related-party transactions under the common control of Dr. Shaun Passley, including the January 1, 2022 Technology Exclusive License Agreement for the Robotic Arm Technology and the October 2024 acquisition of Ecker Capital. ZenaTech then entered into two transfer agreements dated September 4, 2026, restoring the licence rights (from Epazz, Inc. and Augmum, Inc.) and the ownership of Ecker Capital (from Epazz, Inc.), with effective dates of January 1, 2022 and October 1, 2024. The company states that it continued to hold the licence and control Ecker throughout, that the change is limited to the related-party counterparty, now Epazz in place of Ameritek Ventures, and that the carrying amounts of the assets are unchanged. The related-party share table adds that the 1,583,333 common shares, 750,000 preferred shares and 5,000 super-voting shares issued to Ameritek were cancelled after the judgment. The company says it will continue to monitor the legal situation. The facts are the judgment and the restructured agreements; whether the episode carries further consequences is not shown by the filing, and it underlines why related-party arrangements deserve close reading. Subsequent events, Note 17(b)

13Common shares, preferred shares and convertibles: growth changes the denominator

The share-capital note reported 94,884,193 common shares at June 30, 2026, compared with 48,020,885 at December 31, 2025. The financial statements identify common shares issued for related-party technology acquisitions, at-the-market transactions, financing arrangements and direct funding. This makes the ownership change a significant part of the half-year development. The company received resources and assets through different transactions, while common ownership was distributed across a larger denominator.

The expansion of the denominator accelerated after June. A Form 6-K furnished on October 2, 2026 reports 201,157,883 common shares issued and outstanding at September 30, 2026, against 94,884,193 at June 30: an increase of roughly 112% in one quarter, and more than four times the year-end 2025 count. On October 9, ZenaTech filed a prospectus supplement after amending its at-the-market agreement with Maxim Group and Northland Securities, dated February 6, 2026, to raise the aggregate offering limit from US$75 million to US$150 million. The company stated that it had already issued approximately 29,744,407 common shares to raise approximately US$57 million under the prospectus. For the roughly US$93 million remaining, the supplement illustrates the sale of 68,831,674 further shares, which would bring the count to approximately 269,989,557; the actual number depends on how many shares are sold and at what prices. The same document excludes from that figure 13,398,006 shares issuable on outstanding warrants and 23,386,004 shares issuable on stock units, and reports 5,128,000 preferred shares convertible into 15,384,000 common shares. The company lists acquisitions, capital expenditures, research and development, sales and marketing, investments and general corporate purposes among the intended uses of proceeds. The capacity gives the group a financing route; the cost of that route falls on the common denominator.

The common share count should be distinguished from the carrying amount of common share capital in Canadian dollars. The balance-sheet capital entry is an accounting amount, not the number of shares. Confusing the two would materially distort valuation. The note also identifies common, preferred and super-voting classes, with different rights and conversion conditions. A public common shareholder’s economic and governance position depends on that structure, rather than on the common count alone. According to the June statements, preferred shares are non-voting and each is convertible into three common shares; 27,570,000 were outstanding at June 30, 2026, with a carrying amount of C$82.710 million. Each super-voting share carries 1,000 votes; 185,000 were outstanding at June 30, with a carrying amount of C$5.550 million. The October prospectus supplement reports 5,128,000 preferred shares outstanding at October 7, 2026 and 443,533 super-voting shares at its date, and describes the issuance to Epazz of 258,533 super-voting shares and 1,108,000 preferred shares for the Provitrac assets, BoxesOS technology and K9 Sky shares. The filings do not reconcile the change in preferred shares between the two dates in a single table. In its annual report, ZenaTech describes itself as a foreign private issuer and as a “controlled company” under Nasdaq rules, because Dr. Shaun Passley controls more than 50% of the outstanding voting stock; that status allows it to rely on certain exemptions from Nasdaq governance requirements, while audit committee members must still be independent. Share capital, Note 10 · Capitalization table · Annual report 2025

Loans payable totaled C$21.881 million at June 30, combining the current and long-term carrying balances. A separate conversion table presents C$8.057 million of conversion amounts and an estimated 3,783,573 shares under specified period-end pricing and currency assumptions. Those estimates are conditional calculations in the filing. They should not be treated as an unconditional fixed number of future shares or as all of the company’s debt. Conversion terms can link the ownership outcome to prices and the holder’s choices.

Warrants add another layer. The balance sheet reported a C$16.687 million warrant liability, while the income statement recorded changes in its fair value. A liability’s accounting value is different from warrant cash proceeds or the count of shares that could eventually be issued. The terms and classification determine those effects. An increase in a fair-value liability can affect reported loss without being an equivalent cash payment during the period.

For shareholders, a useful capital assessment tracks what each transaction supplied, what rights it created and how the common denominator can change. Acquisition-led growth may require shares as consideration, while operating and development funding may require cash financing. The favorable result is value creation greater than the ownership cost and obligations incurred. The adverse result is a rapidly expanding enterprise whose value per common share fails to keep pace. ZenaTech’s complex structure makes this distinction especially important. Capital and financing notes

14Acquisition accounting: asset growth is not the same as free cash creation

The June balance sheet included C$18.735 million of goodwill, C$13.841 million of intangibles and C$7.933 million of capitalized product-development costs. These entries reflect expected future benefits under the company’s accounting policies. They are different from cash that can be used immediately to pay a supplier or employee. An acquisition strategy can expand the asset base while also expanding the commitments and expenditures needed to realize those benefits.

Goodwill relates to the residual value assigned in an acquisition after other identifiable items are measured. Its economic support depends on the performance of the acquired business and the benefits expected from the transaction. Intangible assets can represent technology or other identifiable rights with future usefulness. Capitalized development assumes that the relevant criteria for recognizing future benefit have been met. Subsequent amortization, impairment or changes in expectations can affect the income statement without matching cash spent in the same period.

The financial statements also show a common-control adjustment account within equity. That accounting category is relevant because some transactions involve entities under common control, rather than a simple purchase from an unrelated seller. Such transactions can produce equity and asset effects that are not captured by an ordinary cash acquisition narrative. The reported book equity should therefore be read with the detailed notes about how it was created.

The practical investment question is what the acquired and developed assets contribute to services. A technology that reduces the cost of fieldwork or opens a funded customer application can support its economic value. A technology that remains unused or requires much more funding before adoption creates a different outcome. An acquired customer relationship that persists can be valuable; one that weakens after integration can undermine the acquisition’s return. The accounting entry describes the recognition of the asset, while operating performance tests its usefulness.

ZenaTech’s balance sheet is thus a record of a rapidly expanding group with several types of expected benefit. It should not be valued by assuming every recorded asset is readily saleable at carrying value. Nor should the assets be dismissed simply because their benefits are future-oriented. Their value depends on customer results, integration and capital discipline. The strongest evidence would be a growing contribution from the assets already acquired and developed, before the group commits proportionately more resources to another layer of expansion. Asset and acquisition accounting

The acquisition pace did not slow after June. The subsequent-events note lists completed purchases of Velocity Geomatics (Velocity Group, Alberta) on July 16, BA Land Professionals (Ohio) on July 23, Benchmark Partners (Galena-Benchmark Engineering, Idaho) on August 6, Cogswell Engineering (Nova Scotia) on August 20, ESM Software of Boston on August 25 and Merritt Paul in September. The initial accounting for these business combinations was incomplete when the June statements were authorized, so consideration and the amounts recognized will appear only in later financial statements. The October prospectus supplement adds two letters of intent, for a New Brunswick engineering company (proposed price C$3.5 million) and a New Mexico surveying and civil engineering company (proposed price US$3.8 million), both mixing cash and three-year notes and both subject to conditions. Each new transaction adds revenue to the perimeter and adds to the goodwill, integration and financing questions described above. Subsequent events, Note 17(a) and (e) · October prospectus supplement

15Operational and regulatory risk across a distributed network

ZenaTech’s strategy crosses several operating environments: licensed surveying work, industrial software, agricultural drone services and defense development. Each has requirements that can affect the delivery process. A local service business relies on professional competence and customer trust. A drone application may require operating permissions and training. An industrial product may require certification for its intended environment. A defense platform may need testing and procurement qualification before a funded order becomes possible.

The marketplace qualification and prototype announcements illustrate different stages of this process. The Canadian supplier pool creates a route to compete. ZenaDrone 2000 has planned flight testing. The mobile trailer is in build-and-test work. Stacklens has expected customer pilots and certifications ahead. These developments can all be positive while remaining economically distinct. A timeline that treats them as equivalent commercial launches would make the business appear more mature than the disclosed stages support.

The distributed acquisition network creates another execution challenge. Local teams bring expertise and customer relationships; the parent seeks to introduce common technology, processes and branding. Standardization can improve efficiency where the needs align. It can also create friction if it ignores regional practices, customer requirements or the professional role of the acquired business. The company must coordinate growth without losing the service quality that produces revenue.

Financial and operating risks can reinforce one another. A delayed product can consume additional development funds. An acquisition with weak retention can reduce expected cash contribution. A financing need can change the pace of investment or dilute owners. Foreign currency exposure can affect reported results because the group operates across several jurisdictions while presenting its consolidated statements in Canadian dollars. The filing describes this exposure and says the company does not use derivative contracts to mitigate currency risk.

The constructive operating model would match the expansion pace to the ability to integrate, retain customers and fund the required work. It would use completed evidence to prioritize development rather than assigning equal resources to every announced application. The adverse model would accumulate complexity faster than it improves service economics. ZenaTech’s broad opportunity set is real as a description of the programs it pursues. Its investment value depends on how well those programs are converted into reliable customer outcomes under the financial constraints the statements show. Operating structure and risk disclosures · Financial risk

Financial reporting controls belong to the same execution picture. In Item 15 of its annual report for 2025, as amended, ZenaTech’s chief executive and chief financial officer concluded that disclosure controls and procedures were not effective at December 31, 2025, because of a material weakness in internal control over financial reporting: as the business expanded rapidly in the drone sector, internal controls did not evolve at a commensurate pace, which the company says contributed to the need to amend its annual report for 2024. The remediation measures under way include strengthening finance and accounting personnel, improving documentation and review procedures and reinforcing the control framework. The company states that the weakness will not be considered remediated until the controls have operated for a sufficient period and testing confirms they are effective. A material weakness concerns the reliability of controls; it is not a finding that the statements are misstated. For a group adding acquisitions at this pace, it is a reason to read each set of figures together with its notes. Annual report 2025, Item 15

16Valuation and evidence: give the operating network and prototypes different weights

A valuation framework for ZenaTech should begin with the services that already earn revenue. DaaS is primarily an acquired survey-services network in the reported segment structure, and it supplies most current activity. Its value depends on customer retention, productive capacity, pricing and the cost of delivery and integration. Enterprise software has a different revenue and support profile. Defense and industrial hardware in development require a further set of assumptions about testing, certification and customer adoption.

Applying a single high-growth technology multiple to the entire group can hide those differences. A local service company may have valuable expertise and recurring customers without the margins or scalability of a mature software platform. A promising drone design may offer future value while requiring substantial capital before a sale. Potential interaction among the activities does not imply that every subsidiary has the economics of the most attractive category.

The October organic-growth disclosure gives a specific operating measure for the older cohort. It can help evaluate the proposition that integration improves acquired businesses. Final Q3 results will add the consolidated revenue and cost picture. The two streams should be compared without replacing one with the other. A healthy network would ideally show both useful local growth and a group cash contribution that increasingly supports the cost of expansion. That is a more demanding test than reaching the top of a preliminary revenue range.

The financing and ownership structure then determines how that value is allocated. More revenue can increase enterprise value while a larger common denominator and other claims affect value per share. Affiliate assets and acquisition accounting can make simple cash or book-value comparisons unreliable. A scenario approach should specify the pace of integration, the cash requirements of development and the likely funding instruments. The purpose is to make the drivers visible, rather than present a price target that conceals them.

The next useful evidence is practical and stage-specific: final reporting for the service network, retention and contribution from acquisitions, testing results for prototypes, certification progress where required and funded customer adoption. ZenaTech has already assembled a broad commercial and technology platform. The unresolved question is whether the platform can produce sustainable economics with an acceptable financing and governance burden. The investment thesis becomes stronger when the operating businesses support more of that burden and the development portfolio advances through completed, commercially useful milestones. Financial basis · October growth measure

Frequently asked questions

What generates most of ZenaTech’s revenue?

The DaaS segment, built through survey-service acquisitions, represented approximately 92.5% of reported Q2 revenue, calculated from the June statements. Software supplied the smaller remainder. Segment results

Is the 27.1% organic-growth figure for the whole group?

It is the company’s reported average for approximately twenty DaaS locations added in 2025 and excludes acquisitions completed in 2026. It differs from consolidated acquisition-led revenue growth. October 13 announcement

Are the Q3 revenue figures final?

The range was first furnished on October 8 as US$9.5–10.5 million and restated on October 13 as C$13.4–14.8 million. It is preliminary and unaudited; final results can differ. Preliminary estimate

How many common shares does ZenaTech have outstanding?

201,157,883 at September 30, 2026, against 94,884,193 at June 30, 2026. In October the company raised its at-the-market program limit to US$150 million, so further issuance is possible. Share count · Prospectus supplement

When is ZenaDrone 2000 expected to begin flight tests?

The October 6 update targets Q1 2027. The disclosed endurance and payload figures are design specifications and intended test objectives. Prototype update

Does Canadian marketplace qualification represent an order?

The qualification provides a route to compete for future requirements. A procurement award is a separate decision. Marketplace announcement

In which currency are the financial statements presented?

The June consolidated statements are expressed in Canadian dollars and use IFRS. The company’s news may also provide U.S.-dollar equivalents, which should remain identified as such. Financial statements

Why do affiliate advances matter?

They are separate financial assets with counterparty and repayment risk, rather than cash. The related-party notes explain material balances and transactions that affect resources and governance. Affiliate and related-party notes

Official sources

• Quarterly financial statements — June 30, 2026
• Investor relations
• Company website
• 2026-10-13 — Organic growth metric and preliminary Q3 revenue range
• 2026-10-09 — Prospectus supplement: at-the-market program raised to US$150 million
• 2026-10-09 — Stacklens safety-glasses concept enters prototype testing
• 2026-10-08 — Agricultural mobile drone trailer begins build-and-test work
• 2026-10-08 — Form 6-K: preliminary Q3 revenue range
• 2026-10-06 — ZenaDrone 2000 flight testing targeted for Q1 2027
• 2026-10-02 — Form 6-K: common shares outstanding at September 30, 2026
• 2026-09-24 — Form 6-K: June 30, 2026 financial statements and MD&A
• 2026-09-17 — Qualification for Canada’s Defence Drone Initiative Marketplace
• 2026-09-15 — Merritt Paul acquisition expands the surveying network
• 2026-09-10 — Irish Aviation Authority SORA authorization for drone nutrient application
• 2026-08-13 — ZenaWorx digital terrain modeling and first AI data center customer
• 2026-05-04 — Annual report 2025 (Form 20-F/A)