U.S. Defense Secretary Fast-Tracking Drone Production a Massive Win for Drone Stocks

7/11/25 11:20:00 AM ET

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NEW YORK, July 11, 2025 /PRNewswire/ -- On Thursday U.S. Defense Secretary Pete Hegseth announced breaking developments for the Drone Manufacturing Industry by issuing new orders to fast-track drone manufacturing operations, cutting red tape by calling for extensive reforms to Pentagon drone-buying practices. Hegseth announced he was signing memos to rescind restrictive policies regarding drone production and deployment. The memos state that the Defense Secretary plans to delegate authorities to procure and operate drones, deemed "vital" technology. Shares of drone manufacturers jumped in the premarket today following yesterday's announcement. The announcement is part of a broader push to accelerate unmanned warfare capabilities and reclassify small drones as consumable assets rather than high-value aircraft. In an article issued by Fox News: "Hegseth orders commanders to treat small drones as consumable weapons rather than high-end aircraft. As part of an aggressive push to outpace Russia and China in unmanned warfare, "the Department's bureaucratic gloves are coming off," Hegseth wrote. "Lethality will not be hindered by self-imposed restrictions... Our major risk is risk-avoidance." In a pair of memos first obtained by Fox News Digital, Hegseth rescinded legacy policies that he believes restricted innovation. For the first time, commanders with the rank of colonel or captain can independently procure and test drones, including 3D-printed prototypes and commercial-off-the-shelf systems, as long as they meet national security criteria. Active Companies in the Drone Industry today include ZenaTech, Inc. (NASDAQ:ZENA), AgEagle Aerial Systems Inc. (NYSE:UAVS), Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), Red Cat Holdings, Inc. (NASDAQ:RCAT), Unusual Machines, Inc. (NYSE:UMAC).

Hegseth announced the policy changes in a video recorded on the front lawn of the Pentagon. A quadcopter delivered a memo announcing the policy changes, which Hegseth then signed. "While our adversaries have produced millions of cheap drones, before us we were mired in bureaucratic red tape," he said in the video, which he posted from his official X account. "Not anymore." The memo lists three broad goals: bolstering the U.S. drone manufacturing base, delivering thousands of low-cost systems to military units over the next few years and integrating drone operations into training programs. "Next year I expect to see this capability integrated into all relevant combat training, including force-on-force drone wars," Hegseth wrote in the memo.

ZenaTech (NASDAQ:ZENA) Reacts to 'Unleashing U.S. Military Drone Dominance' Memo — A Game-Changing Policy Directive for ZenaDrone - ZenaTech, Inc. (FSE: 49Q) (BMV:ZENA) ("ZenaTech"), a business technology solution provider specializing in AI (Artificial Intelligence) drones, Drone as a Service (DaaS), Enterprise SaaS, and Quantum Computing solutions, today reacts to the July 10, 2025 new policy directive from Secretary of Defense Pete Hegseth, 'Unleashing U.S. Military Drone Dominance.' ZenaTech confirms that under this policy directive, its entire portfolio of ZenaDrone drones qualify as Group 1–2 expendable assets and are now enabled for direct purchases by field commanders for both training and real-world missions, and they no longer need Green or Blue UAS (Unmanned Aerial System) certification.

The policy directive, which he called drones "the biggest battlefield innovation in a generation," mandates the rapid acquisition, deployment, and operational use of small, low-cost Group 1 and 2 drones. The directive now treats them as expendable commodities rather than durable assets, which the Company anticipates will streamline bureaucracy, encourage innovation including the use of prototypes and commercial off-the-shelf systems, to ensure the US military can outpace adversaries by rapidly scaling drone capabilities on the battlefield. This memo also marks a paradigm shift, placing battlefield acquisition authority in the hands of frontline commanders, not procurement offices.

"The new policy directive is a game-changer for our company and the entire small drone industry. By removing traditional UAS certification barriers for Group 1 and 2 drones, it empowers us to deliver our cutting-edge and affordable solutions directly to frontline operators, accelerating innovation and battlefield impact like never before'" said ZenaTech CEO Shaun Passley. "This means field commanders can buy our rugged, mission flexible drones directly for training, exercises, real-world missions, or even prototypes. We are now accelerating our manufacturing and defense business development efforts to meet the urgent demand and help the US military maintain its drone dominance."

Key Implications:

- Rapid Field Acquisition – ZenaDrone bypasses bureaucratic delays, available immediately to frontline units.

- Prototype-Friendly Deployment – Early-stage versions can be purchased and tested in operational contexts.

- Consumable Classification – Group 1 and 2 drones are now treated like expendable commodities rather than durable assets therefore inexpensive, replaceable, and low administrative burden.

- Multi-Mission Utility – Ready for ISR (Inspection, Surveillance and Reconnaissance) missions, counter-drone roles, and more.

Timelines from the Memo:

- By Sept 1: Each service branch to build "experimental formations" tailored to small UAS.

- By end of FY 2026: All squads equipped with low-cost, expendable drones.

- By 2027: Full integration of UAS into major training events across the Department of Defense.

The company's portfolio of defense drone offerings include:

The ZenaDrone 1000, a medium-sized VTOL (Vertical Takeoff and Landing) capable of lifting ~40 kg with AI-enabled autonomy, secure communications via its proprietary DroneNet system, and rugged construction. Designed for ISR- inspection, surveillance, and reconnaissance applications, it has undergone paid trials with both the US Air Force and Navy Reserve for critical cargo delivery (e.g., blood).
The IQ Square, a VTOL drone (starting size 40"×40") engineered for line-of-sight land surveys, infrastructure inspections, and defense reconnaissance tasks.
The IQ Nano, a compact indoor drone (starting size 20″×20″), built to operate in GPS-denied environments like warehouses or military infrastructure for inventory management and security applications, it features obstacle avoidance, and AI-driven drone swarms or fleets.
Drone as a Service (DaaS) offering will be tailored specifically for US defense and government agency use. The DaaS model accelerates government adoption by simplifying procurement and deployment, giving defense customers flexible, scalable, AI-powered drone solutions aligned with evolving mission needs

Continued… Read this full release and additional news for ZENA by visiting: https://www.zenatech.com/newsroom/

Other developments in the drone/UAV industry include:

AgEagle Aerial Systems Inc. (NYSE:UAVS), a leading provider of advanced drone and aerial imaging solutions, this week announced the sale of a RedEdge-P™ Dual to Shizuoka University for researchers looking into the effect environmental factors have on Japan's diverse Alpine forests on the country's main island of Honshu.

"Ground observations are precise, but do have limits," said Professor Atsuhiro Iio, professor of Agriculture, Forest Science and Bioresource Sciences at Shizuoka University in Japan. "Drone-based multispectral cameras like the MicaSense RedEdge-P Dual can effectively and easily scan large areas of forest. By augmenting our ground observations with data from this ten-band camera, we can identify tree species with unique defense mechanisms to droughts, disease and invasive fauna. Monitoring forest status with multispectral imaging allows us to better understand and predict how forests function under global warming and severe drought. This approach has broad applicability, not only to Japanese forests, but also to forest ecosystems around the world."

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is an American company that develops and fields transformative and affordable products and platforms for national security needs. It is involved in various technological areas, such as unmanned systems, C5ISR, satellite communications, warfighter training, and combat systems.

The company has made notable strides in the military drone industry. In April this year, Kratos announced that its Unmanned Systems Division successfully demonstrated electronic warfare capabilities for the XQ-58 Valkyrie. The unmanned combat aerial vehicle is able to fly in concert with two F-35 fighter jets and deliver integrated electronic attacks.

Kratos Defense & Security Solutions declared its financial results for Q2 2024 on August 7. The company posted a revenue of $300.1 million during the quarter, exceeding its estimated range of $265 million to $280 million. This was driven by better-than-expected performances across most of its business segments, especially the unmanned systems, turbine technologies, microwave products, and C5ISR businesses. It generated around $17.4 million of the overall revenue from delivery on an international Middle Eastern drone program, which was initially slated for Q3.

Red Cat Holdings, Inc. (NASDAQ:RCAT), a drone technology company integrating robotic hardware and software for military, government, and commercial operations, last month issued a statement of support for a series of executive orders from the White House that advance U.S. leadership in uncrewed aircraft systems (UAS) and reinforce the resilience of America's domestic industrial base.

The executive actions are expected to remove regulatory barriers and modernize federal approval processes to prioritize U.S.-manufactured drones. Additional provisions include expanded detection and mitigation authority, and streamlined regulations to accelerate the deployment of UAS across federal and commercial sectors.

Unusual Machines, Inc. (NYSE:UMAC), a leader in drone technology and component manufacturing, this week announced the appointment of Tim Manton, CPA, as Corporate Controller, reporting to Chief Financial Officer Brian Hoff. Manton brings more than 15 years of experience in financial operations, M&A, and reporting across high-growth and acquisition-driven companies.

"Tim brings strong financial acumen and experience critical to dynamic, scaling environments," said Hoff. "His background in M&A, systems integration, and financial oversight makes him a valuable addition as we sharpen our focus on execution and operational efficiency."

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