Biopack Environmental (PINK:BPAC)

On June 1, 2011, the People’s Court of Guandong Jiangmen Pengjiang District held a hearing relating to our landlord’s claim for unpaid rent for our factory plus penalty interest and other claims. The landlord has made a claim for payment of overdue rent in the amount of RMB 1,236,000, penalty interest in the amount of RMB 1,067,930 and a claim for potential loss of income in the amount of RMB 618,000, for a total amount claimed of RMB 2,921,930 (approximately $451,379). At the hearing, we were informed that the court intends to issue a judgment on June 14, 2011.

If a settlement with the landlord with respect to this matter is not reached by then, we expect that our factory assets will be seized and the process of selling them by auction to satisfy the claim will begin on June 14, 2011. We anticipate the enforcement date will be effective 7 to 10 days from June 14, 2011. We understand that the court will randomly select a valuation company and an auction company to assist it in this process and that this auction proceeding will last two to three months. Once the assets are sold, the court will decide on the distribution of the proceeds from the auction proceeding.

On July 9, 2010, Biopack Environmental Limited (“Biopack”), a wholly-owned subsidiary of Starmetro Group Limited, which is our wholly-owned subsidiary, entered into a share purchase agreement with Well Talent Technology Limited (“Well Talent”), a company incorporated in the British Virgin Islands, whereby Well Talent will purchase:

•  Al of the issued and outstanding shares of Roots Biopark Limited (“RBL”), which wholly owns Jiangmen Roots Biopack Ltd., and Roots Biopack (Intellectual Property) Limited (“RBIPL”);
  
• The shareholder’s loan in the amount of HK$26,017,413.91 (approximately US$3,348,444) advanced by Biopack to RBL and the shareholder’s loan of HK$193,442.56 (approximately US$24,896) advanced by Biopack to RBIPL.

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