| 15. RELATED PARTY TRANSACTIONS |
15.RELATED PARTY TRANSACTIONS
The following are the related parties and the relationships with whom the Company had transactions / balances during 2025 and 2024.
| Related party
| Nature of relationship
|
| Epazz, Inc.
| Entity owns majority voting right
|
| Epazz R&D
| Entity controlled by Dr. Shaun Passley
|
| Ameritek Ventures, Inc.
| Entity in which Epazz Inc & Shaun Passley owns majority voting stock
|
| GG Mars Capital, Inc.
| Entity controlled by Vivienne Passley, a family member of Dr. Shaun Passley
|
| Vivienne Passley
| President of GG Mars Capital, Inc. and family member of Dr. Shaun Passley
|
| Star Financial Corporation
| Entity controlled by Fay Passley, a family member of Dr. Shaun Passley
|
| Fay Passley
| President of Star Financial Corporation and family member of Dr. Shaun Passley
|
| Jennings Family Investments, Inc.
| Entity controlled by Mary B. Kluber, a family member of James Sherman, Chief Financial Officer
|
| LoneStella, LLC
| Entity controlled by Jacob Sherman, a family member of James Sherman, Chief Financial Officer
|
| Jacob Sherman
| Family member of James Sherman, Chief Financial Officer
|
| Propal Investments, LLC
| Lender whose loan was personally guaranteed by James Sherman, Chief Financial Officer and director
|
| Marie Pindling and Olga Passley
| Family members of Dr. Shaun Passley
|
| Dr. Shaun Passley
| Chief Executive Officer, Chairman and significant shareholder
|
| James A. Sherman
| CFO, board member
|
| Craig Passley
| Board member, Shaun Passley's family member
|
| Paul J. Piekos
| Board member
|
| Thomas W. Burns
| Board member
|
| Neville Brown
| Board member
|
Transactions with Related Parties
| Related Party
| Particulars
| 2025 (CAD)
| 2024 (CAD)
|
| Epazz Inc
| Advances made to Epazz, Inc. for future services
| 10,701,840
| 10,015,900
|
| Epazz Inc
| Programming and support fees charged against advances
| 2,812,530
| 222,010
|
| Epazz Inc
| Wages and benefits charged against advances
| 1,360,843
| 325,607
|
| Epazz Inc
| Product Development Costs
| 0
| 1,033,465
|
| Epazz Inc
| Interest Income on Notes Receivable
| 27,348
| 27,348
|
| Dr. Shaun Passley
| Stock based compensation (preferred stock issuance)
| 2,423,174
| 0
|
| James A. Sherman
| Stock based compensation (Common stock issuance)
| 70,210
| 68,564
|
| Craig Passley
| Stock based compensation (Common stock issuance)
| 140,420
| 68,564
|
| Paul J. Piekos
| Stock based compensation (Common stock issuance)
| 28,083
| 27,425
|
| Thomas W. Burns
| Stock based compensation (Common stock issuance)
| 28,083
| 27,425
|
| Neville Brown
| Stock based compensation (Common stock issuance)
| 28,083
| 27,425
|
| Yvonne V. Rattray
| Stock based compensation (Common stock issuance)
| 28,083
| 27,425
|
| Dr. Shaun Passley
| Stock based compensation (Common stock issuance)
| 140,420
| 339,225
|
| Dr. Shaun Passley
| Wages and benefits
| 125,704
| 0
|
| James A. Sherman
| Wages and benefits
| 139,760
| 0
|
| GG Mars Capital, Inc.
| Amount drawn from line of credit
| 6,557,480
| 2,434,063
|
| Star Financial Corporation
| Amount drawn from line of credit
| 8,772,024
| 2,129,987
|
| Jennings Family Investments, Inc.
| Amount drawn from line of credit
| 44,369,045
| 4,847,745
|
| LoneStella, LLC
| Amount drawn from line of credit
| 4,358,005
| 539,438
|
| GG Mars Capital, Inc.
| Revolving Line of credit converted into shares
| 7,290,819
| 4,023,891
|
| Star Financial Corporation
| Revolving Line of credit converted into shares
| 9,620,428
| 2,912,440
|
| Jennings Family Investments, Inc.
| Revolving Line of credit converted into shares
| 44,648,463
| 3,635,817
|
| LoneStella, LLC
| Revolving Line of credit converted into shares
| 5,014,499
| 0
|
| Propal Investments, LLC
| Loan Principal repaid during the year
| 552,180
| 143,850
|
| GG Mars Capital, Inc.
| Finance Cost Interest, accretion
| 244,998
| 181,853
|
| Star Financial Corporation
| Finance Cost Interest, accretion
| 170,677
| 127,037
|
| Jennings Family Investments, Inc.
| Finance Cost Interest, accretion
| 503,130
| 157,181
|
| LoneStella, LLC
| Finance Cost Interest, accretion
| 25,903
| 113
|
| Epazz R&D
| Wages and benefits
| 744,693
| 0
|
| Related Party
| Particulars
| 2025 (Nos)
| 2024 (Nos)
|
| Epazz Inc*
| Stock issued (common control transaction)
| 2,000,000 common stock
| 11,700,000 prefered stock
45,000 super voting stock
1,400,000 common stock
|
| Dr. Shaun Passley*
| Stock issued (common control transaction)
| 1,000,000 Common Stock
| 3,500,000 prefered stock
10,000 super voting stock
200,000 common stock
|
| Ameritek Ventures, Inc.
| Stock issued (common control transaction)
| -
| 750,000 prefered stock
5,000 super voting stock
1,000,000 common stock
|
| GG Mars Capital, Inc.
| Warrants exercised
| 200,000 Warrants
| 200,000 warrants
|
| Jennings Family Investments, Inc.
| Warrants exercised
| 200,000 warrants
| -
|
| LoneStella, LLC
| Warrants exercised
| 350,000 warrants
| -
|
*Approval for these transactions from minority shareholders will be taken in the upcoming shareholders meeting on May 28, 2026
Balance Outstanding with Related Parties
| Related Party
| Particulars
| 2025
| 2024
|
| Epazz Inc
| Short term advances to affiliates outstanding
| 9,095,545
| 1,918,918
|
| Epazz Inc
| Long term advances to affiliates outstanding
| 15,216,049
| 13,639,055
|
| Epazz Inc
| Note receivable Outstanding
| 341,850
| 341,850
|
| GG Mars Capital, Inc.
| Balance outstanding for revolving line of credit (Notes Payable)
| 526,140
| 992,798
|
| Star Financial Corporation
| Balance outstanding for revolving line of credit (Notes Payable)
| 850,182
| 1,394,839
|
| Jennings Family Investments, Inc.
| Balance outstanding for revolving line of credit (Notes Payable)
| 4,105,476
| 3,921,087
|
| LoneStella, LLC
| Balance outstanding for revolving line of credit (Notes Payable)
| 2,347
| 539,556
|
| Propal Investments, LLC
| Balance outstanding for Loan
| 0
| 575,000
|
| GG Mars Capital, Inc.
| Convertible debenture balance
| 248,636
| 163,972
|
Stock & Warrants held by Related Parties
| Related Party
| Particulars
| 2025
| 2024
|
| Epazz Inc
| Number of Common shares held
| 8,367,301
| 6,367,301
|
| Epazz Inc
| Number of Preferred shares held
| 11,700,000
| 11,700,000
|
| Epazz Inc
| Number of Super voting shares held
| 45,000
| 45,000
|
| Dr. Shaun Passley
| Common shares held
| 6,168,205
| 5,136,459
|
| Ameritek Ventures, Inc.
| Common shares held
| 1,583,333
| 1,583,333
|
| GG Mars Capital, Inc.
| Common shares held
| 2,984,864
| 1,706,802
|
| Marie Pindling
| Common shares held
| 6,927
| 6,927
|
| Olga Passley
| Common shares held
| 6,927
| 6,927
|
| James A. Sherman
| Common shares held
| 405,788
| 389,915
|
| Star Financial Corporation
| Common shares held
| 3,345,000
| 1,400,495
|
| Craig Passley
| Common shares held
| 153,327
| 121,581
|
| Paul J. Piekos
| Common shares held
| 54,981
| 48,632
|
| Thomas W. Burns
| Common shares held
| 54,981
| 48,632
|
| Neville Brown
| Common shares held
| 20,981
| 14,632
|
| Yvonne V. Rattray
| Common shares held
| 27,741
| 21,392
|
| Lone Stella LLC
| Common shares held
| 1,135,000
| -
|
| Jennings Family Investments, Inc.
| Common shares held
| 35,00,000
| 721,755
|
| Jennings Family Investments, Inc.
| Preferred Shares held
| 200,000
| 200,000
|
| Lone Stella LLC
| Preferred Shares held
| 200,000
| 200,000
|
| Dr. Shaun Passley
| Preferred shares held
| 3,620,000
| 3,500,000
|
| Ameritek Ventures, Inc.
| Preferred shares held
| 750,000
| 750,000
|
| GG Mars Capital, Inc.
| Preferred shares held
| 200,000
| 200,000
|
| Star Financial Corporation
| Preferred shares held
| 200,000
| 200,000
|
| Dr. Shaun Passley
| Super voting shares held
| 10,000
| 10,000
|
| Ameritek Ventures, Inc.
| Super voting shares held
| 5,000
| 5,000
|
| GG Mars Capital, Inc.
| Warrants held
| 355,396
| 555,396
|
| Star Financial Corporation
| Warrants held
| 549,088
| 549,088
|
| Jacob Sherman
| Warrants held
| 9,728
| 9,728
|
| Jennings Family Investments, Inc.
| Warrants held
| 300,000
| 500,000
|
| LoneStella, LLC
| Warrants held
| 210,885
| 560,885
|
| Propal Investments, LLC
| Warrants held
| 41,666
| 41,666
|
Management Services Agreement
The Company entered into a management services agreement with Epazz on November 18, 2018 including amendments, pursuant to which Epazz provides management services to ZenaTech, including for labor, office space, hosting, travel, banking, and business development and drone research and development services. The Company agreed to pay Epazz a 30 percent (previous year 20% markup on all expenses incurred in providing the services to ZenaTech. The agreement has a 20-year term. However, the agreement may be terminated at any time with the mutual consent of the parties. All funds due from Epazz, Inc. represent advances for programming, support, management fees, drone research and development on the statement of net income or loss. Epazz assists the Company through its drone facility in Pakistan.
Advance to Affiliate for Future Services
As operation process ZenaTech advances funds to Epazz, Inc. These funds relate to the Management Services Agreement with Epazz detailed in the section above and are restricted for the use and benefit of ZenaTech. Funds advanced to Epazz are designed to be consumed through services provided by Epazz for the benefit of ZenaTech. The Company has the right to enforce repayment of these funds from Epazz.
Under this agreement, the Company is required to prepay for services and the terms of the prepayments made by the Company to Epazz is based on an estimate to the services that will be required from Epazz by the Company based on historical use and the Company's proposed plans. The Company estimates the amount of work that will be required from Epazz for a period and prepays Epazz for the services. The prepayments are recorded in the financial statements of the Company as an asset in accordance with IFRS as described below. The purpose of these transactions is to ensure there is a sufficient number of services reserved from Epazz to ensure the Company's needs are met during a period to minimize the risk of disruption to the Company's business.
The Company estimates the value of services required by Epazz based on the expected requirements for a future period and delivers the estimated funds to Epazz, which deposits the funds in an account strictly for the benefit of the Company. While there are no internal policies
in this regard, management has the knowledge and expertise regarding the proposed activities that will be undertaken and can estimate the related costs. The audit committee of the board is kept aware of the estimates and discusses them with the board. Given the long-standing and beneficial relationship between the Company and Epazz, management does not believe a lower cost can be obtained from a third party for the services provided and believes using a third party creates greater risk of delivery of appropriate services.
The Company is using the management service agreement as opposed to establishing our own facility in offshore locations because it is very time-consuming, the cost would be much greater, it is difficult to establish entities in foreign countries and establishing banking relations is difficult, and hiring foreign personnel which speak different languages would cause communication issues. Furthermore, the foreign market would see ZenaDrone as a start-up company versus Epazz which has been well established in the offshore market for over a decade.
The Company increased the number of contractors through Epazz during the second part of the previous year ended December 31, 2024. The Company made these changes since the drone products are transitioning from development projects to manufacturing. The additional contractors include manufacturing technicians.
Through management service agreement there is a new manufacturing facility in Lahore, Pakistan. Epazz leased the facility, did leasehold improvements and purchased all the equipment, tools, vehicles, supplies and materials needed to begin to manufacture the drones. These are upfront investments, which the Company prepaid as services which will be expensed monthly as the contractor uses the equipment and facilities to produce the drones.
The total advances to Epazz for future services were $24,225,607 as of December 31, 2025. Of this amount $9,095,545 was included in current assets and $15,216,049 was included in the long-term assets. The current amount is expected to be provided in services by Epazz within a twelve (12) month period based on the current projected needs of the Company. The long-term amount will be paid back in services or cash.
The table below summarizes the changes in the advance and note to affiliates for the year ended December 31, 2025.
|
| Activity
|
| Short-term
|
| Long-term
|
| Note Receivable
|
|
|
|
| Type
|
| Advance ($)
|
| Advance ($)
|
| /Affiliates ($)
| Total ($)
|
|
Balances as of December 31, 2024
|
|
|
| 1,918,918
|
| 15,864,209
|
| 341,850
| 18,124,977
|
|
Additions to the advance to affiliates during the period
|
|
|
|
|
|
|
|
|
|
|
Adv. to Epazz, Inc. during 2025
|
|
|
| –
|
| 10,615,853
|
| –
| 10,615,853
|
|
Transfer from long-term to current
|
| (A)
|
| 11,350,000
|
| (11,350,000)
|
|
|
|
|
Total additions during the period
|
|
|
| 11,350,000
|
| (734,147)
|
| –
| 10,615,853
|
|
Less, services provided by Epazz, Inc. during the period
|
|
|
|
|
|
|
|
|
|
|
Programming and support fees
|
| (A)
|
| 2,812,530
|
| –
|
| –
| 2,812,530
|
|
Wages and benefits
|
| (A)
|
| 1,360,843
|
| –
|
| –
| 1,360,843
|
|
Product development costs
|
| (B)
|
| –
|
| –
|
| –
| –
|
|
Total services provided during the year
|
|
|
| 4,173,373
|
| –
|
| –
| 4,173,373
|
|
Balances as of December 31, 2025
|
|
|
| 9,095,545
|
| $15,130,062
|
| 341,850
| 24,567,457
|
|
Activity type:
(A)Operating expense
(B)Long-term asset for drone development.
The current amount is expected to be provided in services by Epazz within a twelve (12) month period based on the current projected needs of the Company. The The Company is planning for a ramp-up period for the manufacturing of the drones. Therefore, the Current asset amount will most likely increase.
The table below summarizes the changes in the advance and note to affiliates for the year ended December 31, 2024.
|
| Activity
|
| Short-term
|
| Long-term
|
| Notes
|
|
|
| Type
|
| Advance
|
| Advance
|
| Receivable
|
|
|
|
|
|
|
|
|
| from Affiliates
|
|
Balances as of December 31, 2023
|
|
| $
| 2,500,000
| $
| 4,623,155
| $
| 341,850
|
|
Additions to the advance to affiliates during the year
|
|
|
|
|
|
|
|
|
|
Advances to Epazz, Inc. during the year
|
| (A)
|
| 1,000,000
|
| 9,015,900
|
| –
|
|
Total additions during the year
|
|
|
| 1,000,000
|
| 9,015,900
|
| –
|
|
Less, services provided by Epazz, Inc. during the year
|
|
|
|
|
|
|
|
|
|
Programming and support fees
|
| (A)
|
| 222,010
|
| –
|
| –
|
|
Wages and benefits
|
| (A)
|
| 325,607
|
| –
|
| –
|
|
Product development costs
|
| (B)
|
| 1,033,465
|
| –
|
| –
|
|
Total services provided during the year
|
|
|
| 1,581,082
|
| –
|
| –
|
|
Balances as of December 31, 2024
|
|
| $
| 1,918,918
| $
| 13,639,055
| $
| 341,850
|
|
From time-to-time the Company has received and repaid loans from Epazz, Inc., Shaun Passley and his immediate family members to fund operations. These related party debts are fully disclosed in Note 15 below. ZenaTech has back-up lines of credit from related parties and others with an available spending limit of $32,800,000 to cover the repayment of the current portion of long-term debt, should it need it.
|