These countries include Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, and Oman and have demonstrated increasing demand for scalable, lower-cost counter-drone systems. The Lviv-based facility is designed to combine real-world testing conditions with European cost structures to support scalable production for GCC regional defense demand and U.S. defense partners in the Middle East.

"The Middle East is moving decisively toward attritable, AI-enabled counter-drone systems that can be fielded at scale and at unit economics that legacy air defense platforms cannot match," said Shaun Passley, Ph.D., ZenaTech CEO. "By producing in Western Ukraine, we will be able to offer regional defense customers systems that are continuously refined against real-world threat profiles, manufactured at competitive cost structures, and designed for the volumes these missions require. That combination is what defines the next generation of layered air defense, and our goal is to be a leading Western supplier into that market."

ZenaTech management believes Western Ukraine is a strategic location for drone manufacturing and testing due to its established aerospace engineering talent base, competitive production environment, and strong ecosystem of drone innovation and rapid iteration. The region also provides proximity to European logistics corridors, supporting efficient manufacturing scale-up and export pathways for allied markets. Demand for cost-effective counter-drone capabilities across the Middle East has accelerated driven by ongoing low-cost aerial threats, expanding critical infrastructure protection requirements, and increasing adoption of AI-enabled defense systems according to multiple industry and defense analysis experts.

ZenaTech intends to expand its regional engagement across GCC and broader Middle East U.S. allied markets through direct engagement establishing relationships with sovereign defense procurement authorities and integrators, participation in defense industry exhibitions and conferences, and development of technical support capabilities, supported by its EMEA operations headquartered in Dublin, Ireland. Phoenix Aero LLC is intended to serve as the production and product-validation engine that underpins these go-to-market efforts.

Phoenix Aero LLC is expected to support the manufacturing and testing of counter-UAS solutions, including the Interceptor P-1 one-way expendable interceptor drone for low-cost, scalable aerial threat interception designed to sell for less than $5000 USD; the ZenaDrone 2000 autonomous UAV platform designed for maritime interception operations; and the IQ-Glider marine-based launch and refueling station. Together these solutions provide AI-enabled capabilities in an integrated defense system.

The Company expects to provide further updates on significant developments and milestones achieved regarding Phoenix Aero LLC over the coming quarters. ZenaTech is committed to compliance with all applicable export and trade control regulations.