GUELPH, ON / ACCESS Newswire / March 21, 2025 / Zentek Ltd. ("Zentek" or the "Company") (NASDAQ:ZTEK)(TSXV:ZEN), announces that the Canada Revenue Agency ("CRA") has completed an audit (the "Audit") on January 14, 2025 of the Company's 2018 and 2019 renunciation of Canadian exploration expenses ("CEE") in favour of subscribers of the private placements of flow-through common shares which closed on December 21, 2018 and December 20, 2019 (the "Flow-Through Financings") for aggregate gross proceeds of $4,210,000.
On February 25, 2025, the Company received a notice of reassessment from CRA in respect of its 2018 financial year resulting in a reclassification of approximately $507,000 (16.895%) 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 $59,693. The Company expects a reclassification of the renounced CEEs in 2019 as well and will report on that amount once a notice of reassessment in respect of the Company's 2019 financial year is received.
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 expected to be approximately $527,000.
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 significantly increase the bacterial and viral filtration efficiency for surgical masks and aims to do the same for HVAC (heating, ventilation, and air conditioning) systems. Zentek's ZenGUARD™ production facility is in Guelph, Ontario.
For further information:
Investorrelations@zentek.com
Ryan Shacklock
Senior VP, Strategy & Business Development
Email: rshacklock@zentek.com
Phone: 306-270-9610
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
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