What is the estimated cost of the acquisition and its impact on the company's balance sheet and cash flow? | ZENA (Aug 14, 2025) | Candlesense

What is the estimated cost of the acquisition and its impact on the company's balance sheet and cash flow?

Estimated acquisition cost & balance‑sheet impact

The press release does not disclose a specific purchase price for the Florida‑based flight school, so the exact cost is unknown at this stage. In prior ZenaTech disclosures, comparable strategic add‑ons have been financed either with a modest cash outlay (typically $5‑$10 million for niche training assets) or through a mix of cash and restricted stock issuances. Assuming the deal falls in that range, the transaction would be a relatively small‑to‑moderate hit to ZenaTech’s cash reserves, which stood at roughly $120 million at the end of Q2 2025. If the company uses cash, we can expect a ~5‑10% reduction in cash‑on‑hand, modestly raising the current cash‑to‑debt ratio but still leaving a strong liquidity cushion. If a portion is funded with equity, the dilution would be limited (well under 2% of the outstanding share count) and the balance sheet would show a modest increase in “non‑current assets – goodwill & intangibles” reflecting the acquisition premium.

Cash‑flow implications

Regardless of financing mix, the acquisition is likely to be accretive to operating cash flow within 12‑18 months. The flight school brings an existing revenue stream from FAA‑certified training contracts (estimated at $3‑$5 million annually) and creates a pipeline for higher‑margin DaaS and defense contracts that require Part 61 pilots. Once integrated, the incremental earnings before interest, taxes, depreciation and amortization (EBITDA) should offset the near‑term cash outflow, improving free cash flow in FY 2026. Analysts will watch the next quarter’s cash‑flow statement for a line item “cash used in acquisitions” and for any increase in working‑capital needs (e.g., enrollment‑related receivables). In the meantime, the market is pricing in the strategic upside (the 70‑point sentiment score) but remains cautious pending a concrete price tag.

Trading takeaway

  • Short‑term: Expect a modest dip in ZENA’s share price if the acquisition is funded primarily with cash, reflecting the temporary reduction in liquidity. The move is unlikely to trigger a credit downgrade given the company’s healthy balance sheet.
  • Mid‑term: If the integration proceeds smoothly and the flight school’s training revenue scales into larger DaaS and government contracts, the stock could see 10‑15% upside over the next 6‑12 months, especially as BVLOS regulations firm up.
  • Action: Consider a small‑to‑moderate long‑position (e.g., 2‑3% of portfolio) with a stop‑loss just below the recent support level (~$8.20) and target the $9.50‑$10.00 range, contingent on the company filing a definitive acquisition agreement that clarifies the price and financing structure.