Moore Stephens LLP, the independent auditors of Bio-Treat Technology, has highlighted the existence of material uncertainties in its report on the company’s financial statements for year ending June 30, which may cast significant doubt to the ability of the group to continue as going concerns.

As at June 30, the group’s liabilities exceeded its assets by RMB620 million ($120.8 million). This includes an outstanding loan in default of HK$239.4 million ($40 million) due to Precious Wise Group, a former shareholder of the company, and an outstanding loan amount in default of HK$37.9 million ($6.3 million) due to Datasino Group, a related party of Precious Wise.

Bio-Treat has also effected full and final settlement of all the company’s outstanding payment obligations with convertible bondholders who are demanding immediate redemption of the zero coupon bonds during the current financial year and enforcing a share charge over the group’s shareholding in World Pioneer Investments Limited as part of the deal.

Moreover, the group has recognised impairment losses amounted to RMB40 million ($7.8 million) and RMB191.3 million for its Hubei and Suqian plants respectively, resulting in net carrying amounts of RMB43.9 million and RMB24.8 million respectively as at June 30.