Zentek Receives CRA Notice of Reassessment for 2019

Rhea-AI Summary

Zentek (NASDAQ:ZTEK) received a Canada Revenue Agency notice of reassessment dated October 8, 2025 related to the company's 2019 year and two flow-through financings that closed Dec 21, 2018 and Dec 20, 2019 for gross proceeds of $4,210,000.

CRA reclassified approximately $199,000 (16.467%) of renounced amounts as non-CEE, producing a Part XII.6 tax assessment of $22,481.89. Subscribers will be contacted by CRA about reduced deductions and reassessments.

Under subscription agreements, Zentek must indemnify affected subscribers within 20 business days, with a maximum aggregate indemnity exposure of $427,000.

Positive

• Maximum indemnity cap disclosed: $427,000
• Indemnification timing defined: within 20 business days
• Reassessment amount quantified: $199,000 (16.467%)

Negative

• Part XII.6 tax assessed of $22,481.89
• Potential cash outflow up to $427,000 due to indemnities
• Subscribers face CRA reassessments reducing claimed deductions

Insights

Tax & Corporate Finance Analyst

CRA reassessed part of 2019 flow-through renunciations; limited tax and indemnity exposure disclosed.

The reassessment reclassified approximately $199,000 of renounced amounts, representing 16.467% of the renunciations, and triggered a Part XII.6 tax assessment of $22,481.89. The company confirms contractual indemnities to subscribers and a maximum aggregate indemnity exposure of $427,000.

This affects the mechanics of past flow-through financings and creates a near-term cash obligation if subscribers claim indemnity within the agreed window. Key dependencies include the number of subscribers who seek indemnification and the timing of their claims; the company must settle indemnities within twenty business days per the agreements. Monitor any subscriber reassessments and company cash or reserve movements over the next weeks to months, and watch for formal disclosures that quantify actual indemnity payments and any related accounting adjustments in the upcoming reporting period.

GUELPH, ONTARIO / ACCESS Newswire / November 21, 2025 / Zentek Ltd. ("Zentek" or the "Company") (NASDAQ:ZTEK)(TSXV:ZEN), announces that, further to its press release dated March 21, 2025 regarding the completion by the Canada Revenue Agency ("CRA") of an audit (the "Audit") of the Company's 2018 and 2019 renunciations of Canadian exploration expenses ("CEE") in favour of subscribers to private placements of flow-through common shares which closed on December 21, 2018 and December 20, 2019 for aggregate gross proceeds of $4,210,000 (the "Flow-Through Financings"), it has received a notice of reassessment from the CRA in respect of its 2019 financial year in connection with the Flow-Through Financings.

On October 8, 2025, the Company received a notice of reassessment from CRA in respect of its 2019 financial year resulting in a reclassification of approximately $199,000 (16.467%) of the amounts renounced (the "Reclassified Expenses") on the basis that the Reclassified Expenses did not meet the definition of CEEs, as defined for income tax purposes. As a result, Part XII.6 tax payable under section 211.91 of the Income Tax Act, related to form T101 was assessed for $22,481.89.

Subscribers of the Flow-Through Financings will be contacted directly by the CRA regarding a reassessment of deductions claimed in connection with the Reclassified Expenses. Pursuant to the terms of the subscription and renunciation agreements (the "Subscription Agreements") entered into by the Company and the subscribers in connection with the Flow-Through Financings, the reduction in renounced CEEs will be made on a pro rata basis among all subscribers of the same financing.

Furthermore, pursuant to the Subscription Agreements, the Company has agreed to indemnify the subscribers within 20 business days for tax attributable to disallowed renunciations of CEEs. The Company invites subscribers of the Flow-Through Financings who have received notices of reassessment from CRA to contact fts@zentek.com as soon as possible to exercise their right of indemnification and for more information about next steps. The maximum aggregate quantum of the Company's liability with respect to this indemnification obligation from the Flow-Through Financings is $427,000.

About Zentek Ltd.

Zentek is an ISO 13485:2016 certified intellectual property technology company focused on the research, development and commercialization of novel products seeking to give the Company's commercial partners a competitive advantage by making their products better, safer, and greener.

Zentek's patented technology platform ZenGUARD™ is shown to have enhanced viral filtration efficiency for surgical masks and HVAC (heating, ventilation, and air conditioning) systems. Zentek's ZenGUARD™ production facility is in Guelph, Ontario.

Zentek has a global exclusive license to the Aptamer-based platform technology developed by McMaster University which is being jointly developed by Zentek and McMaster for both the diagnostic and therapeutic markets.

For further information:

Investorrelations@zentek.com
Ryan Shacklock
Phone: 306-270-9610
Email: rshacklock@zentek.com

To find out more about Zentek, please visit our website at www.Zentek.com. A copy of this news release and all material documents in respect of the Company may be obtained on Zentek's SEDAR+ profile at http://www.sedarplus.ca/.

Forward-Looking Statements

This news release contains forward-looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Although Zentek believes that the assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Zentek disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Zentek Ltd.

View the original press release on ACCESS Newswire

FAQ

What did Zentek (ZTEK) disclose about the CRA reassessment on November 21, 2025?

Zentek disclosed a CRA reassessment for 2019 reclassifying $199,000 (16.467%) of renounced amounts and a Part XII.6 tax assessment of $22,481.89.

How much is Zentek’s maximum indemnity exposure related to the 2018 and 2019 flow-through financings?

The company disclosed a maximum aggregate indemnity exposure of $427,000.

Will Zentek pay subscribers after CRA reassessments and within what timeframe?

Yes; under the subscription agreements Zentek agreed to indemnify affected subscribers within 20 business days after they exercise their right.

How much of the flow-through renunciations were reclassified by CRA for 2019?

CRA reclassified approximately $199,000, representing 16.467% of the amounts renounced for 2019.

What immediate tax was assessed on Zentek from the CRA reassessment?

A Part XII.6 tax assessment of $22,481.89 was recorded for the 2019 year.