The Drone Market Is Surging as Regulation and Defense Demand Accelerate ZenaTech's Momentum

Over the past few months, the once-niche drone market has evolved into a compelling, investable secular story. Regulatory friction is giving way to clarity. On August 5, 2025, the U.S. Department of Transportation, alongside the FAA and TSA, unveiled a Notice of Proposed Rulemaking (NPRM) aimed at normalizing Beyond Visual Line of Sight (BVLOS) drone operations for platforms up to 1,320 lbs-truly unlocking scalable commercial use cases like package delivery, agriculture, surveying, and more. This isn't just optimism-it's a tangible path to broader, demand-driving deployment.

Simultaneously, military procurement is stabilizing into predictable streams. Defense planners now treat drones as "consumable battlefield assets," seeking low-cost mass production rather than one-off acquisitions-fueling visibility and scale in defense budgets.

Real-world validation continues to power adoption. The Ukraine conflict remains a high-velocity proving ground for loitering munitions, interceptors, and rapid drone iteration-accelerating technological maturity and easing commercialization timelines for drone developers.

Investment momentum confirms it: Shield AI, for instance, opened an office in Kyiv early in 2025 to support Ukraine operations, reinforcing battlefield presence and credibility.

Put simply, the convergence of regulatory de-risking, formalized defense purchasing, battlefield-validated demand, and rising investor interest creates a powerful tailwind for drone equities. Now may be a particularly fertile moment to examine drone stocks.

Amid this wave of regulatory clarity, defense normalization, and battlefield-proven demand, certain players stand out for their ability to scale quickly and capture share in both commercial and defense markets. One such name is ZenaTech Inc. (Nasdaq: ZENA), a rapidly growing technology solutions provider that has evolved from a diversified software player into a rising force in the drone ecosystem. Now, let's take a closer look at the results and strategy driving its momentum.

ZenaTech: Scaling Into the Drone Opportunity

Over the past several quarters, ZenaTech Inc. (Nasdaq: ZENA) has moved from a diversified technology player into one of the most compelling integrated drone service providers in the public markets. The company's strategic blend of AI-powered hardware, subscription-based "Drone as a Service" (DaaS), and enterprise SaaS has begun to deliver the type of revenue acceleration investors typically associate with early-stage category leaders.

The second quarter of 2025 marked a watershed moment. ZenaTech posted record quarterly revenue of $2.24 million, a 503% jump over the prior year, and pushed first-half revenue to $3.38 million, up 251% year-over-year. The gains were fueled largely by the rapid scaling of its DaaS segment-now bolstered by eight acquisitions across the U.S.-while its enterprise SaaS business continued to generate stable recurring income.

CEO Shaun Passley, Ph.D., called the quarter "transformative," noting that the company's aggressive entry into drone services is producing "substantial revenue growth" without abandoning the stability of its software business. Cash reserves climbed to $10.29 million by June 30, up from $3.75 million at year-end, giving the company balance sheet flexibility to pursue its expansion roadmap.

Building a Nationwide Drone Services Network

ZenaTech's acquisition strategy is not simply about buying revenue-it's about creating a turnkey, vertically integrated drone platform. The company's latest and largest deal, the purchase of Cardinal Civil Resources in August, underscores this approach. Cardinal brings a decade-long track record in land surveying and engineering across Virginia, North Carolina, and South Carolina, with marquee clients including the U.S. Department of Transportation. The deal strengthens ZenaTech's Southeast U.S. footprint and aligns neatly with the proposed FAA framework to normalize Beyond Visual Line of Sight (BVLOS) operations, a regulatory shift that could expand drone use in large-scale infrastructure projects.

With eight DaaS acquisitions completed toward a mid-2026 goal of 25, the company is positioned to serve government, defense, and commercial customers without requiring them to invest in hardware, pilots, maintenance, or regulatory compliance. As Passley describes it, the model offers "pay-per-use and subscription-based drone services for multiple applications-from mapping and inspections to precision agriculture and inventory management."

Defense as a Growth Catalyst

While commercial adoption is a core driver, ZenaTech is equally focused on defense applications-a market segment now entering a policy-driven expansion cycle in the U.S. This year, the company has:

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Submitted applications for Green UAS certification for its IQ Nani and IQ Square drones-key steps toward achieving Blue UAS status, which unlocks DoD procurement eligibility.

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Launched Zena AI Inc., a defense-focused AI development center.

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Partnered with Eagle Point Funding to navigate U.S. defense R&D programs and secure contracts from agencies such as the DoD, Air Force, and DARPA.

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Upgraded membership in AUVSI to join its Defense and Air Advocacy Committees, positioning ZenaTech alongside major players like Skydio and Anduril in shaping drone policy and procurement standards.

Recent executive orders and defense policy directives have accelerated funding and streamlined certification for NDAA-compliant, U.S.-made drones-changes Passley calls "a historic turning point" for domestic drone manufacturing. In response, ZenaTech is tripling its Phoenix manufacturing footprint to enable full U.S. production of its defense and commercial drone lineup.

Product Portfolio Designed for Mission-Critical Use

ZenaTech's hardware portfolio spans multiple operational tiers:

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ZenaDrone 1000: A medium-sized VTOL capable of lifting ~40 kg, designed for BVLOS operations, inspections, and precision agriculture. In defense contexts, it has completed paid trials with the U.S. Air Force and Navy Reserve for delivering critical supplies such as blood in the field.

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IQ Square: A rugged VTOL optimized for surveying, infrastructure inspections, and reconnaissance in high-risk environments. The drone's Green UAS certification process is underway.

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IQ Nano: A compact, obstacle-avoiding indoor drone for GPS-denied environments, ideal for warehouse inventory and security in both commercial and military contexts.

These platforms integrate AI-driven cameras, LiDAR, and thermal sensors, enabling real-time intelligence, mapping, and analytics for customers without requiring in-house technical expertise.

Positioned for Sustained Growth

The second half of 2025 is set to benefit from full-period contributions of recent acquisitions, further rollout of drone surveying technology, and potential defense contract wins. Management has articulated a clear path toward sustainable profitability, even as operating expenses rise to support scaling.

Passley remains confident: "The demand for drone technology and software solutions is growing rapidly, helped in the U.S. by new Government policy directives, and we are uniquely positioned to capture market share in both commercial and defense sectors."

For investors, ZENA's story is not just about riding a favorable macro trend-it's about a company actively shaping the market through strategic acquisitions, policy engagement, and rapid operational scaling. With record revenue growth, a diversified client base, and an expanding presence in both defense and commercial applications, ZenaTech Inc. (Nasdaq: ZENA) stands out as a small-cap drone equity with unusually high leverage to the sector's long-term tailwinds.

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