Zentek Ltd — financial distress indicators
Financial-health summary
Zentek Ltd's reported numbers place it in the 'Weak' financial-health band (distress score 64/100). The main indicators are severe working-capital shortfall, losses in each of the last 3 years and revenue collapse. Independently, the Ohlson accounting model puts its 1-year failure probability at 99% and the market-implied (Merton) default probability is 0.1%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Current ratio is 0.64 (current assets cover 64% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Revenue changed -81% year over year.
A >30% sales drop typically breaches leverage covenants and starves fixed-cost coverage.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 4.22 → model probability 99%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Last price $0.52.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
📰 Recent news scan
- Zentek Ltd. Begins Trading on OTCQX Best MarketYahoo Finance · 2026-09-02
- Zentek Approved for Trading on the OTCQX Best MarketYahoo Finance · 2026-09-01
- Zentek Corrects Day of Week for OTC Markets Trading Start DateYahoo Finance · 2026-08-31
- Zentek Provides Update on Nasdaq ListingYahoo Finance · 2026-08-28
- Zentek Awarded Government of Canada Standing Offer for HVAC FiltersYahoo Finance · 2026-08-20
- Zentek Files Provisional Patent Application for Absorption-Based EMI Shielding Coating Made from Albany GraphiteYahoo Finance · 2026-08-17
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Zentek Ltd's financial-health indicators show?
As of 2026-10-08, Zentek Ltd's public financial data places it in the 'Weak' band with a distress score of 64/100, driven by severe working-capital shortfall, losses in each of the last 3 years and revenue collapse. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Zentek Ltd's financial distress score?
64/100 ('Weak'). Ohlson O-score 4.22 (model 1-year failure probability 99%). Merton distance-to-default 3.25 σ (model default probability 0.1%).
What works in Zentek Ltd's favour?
Cash on hand covers all debt (net-cash balance sheet).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Healthcare & MedTech companies with distress indicators
- Adagio Medical Holdings, Inc. (ADGM)Very weak 100/100
- DataMEDS AI, Inc. (MEDS)Very weak 100/100
- OneMedNet Corporation (ONMD)Very weak 100/100
- Profusa, Inc. (PFSA)Very weak 100/100
- Picard Medical, Inc. (PMI)Very weak 100/100
- Synergy CHC Corp. (SNYR)Very weak 100/100
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.