Intueri Education Group's financial statements have been tagged by its auditor over the company's ability to continue as a going concern.
The private training provider posted a $48.5 million loss in calendar 2015, turning from a $4 million profit in 2014, and well below the profit of $13.8 million forecast in its prospectus released before the company's May 2014 listing.
"If the group is unable to comply with its bank covenants, renegotiate banking facilities or undertake an appropriate capital restructure, then this indicates the existence of a material uncertainty that may cast significant doubt about the group's ability to continue as a going concern," Intueri's auditor BDO said in an emphasis of matter note in its report.
In its earnings released in February, Intueri wrote down the value of its Quantum Education Group by $53.1 million, including wiping $27 million off the value of the school's brand and goodwill to take it down to zero.
That reflected stricter enrolment criteria imposed by the Tertiary Education Commission which saw student numbers drop 34 percent to 2,093 last year.
The Quantum school is also the subject of a Serious Fraud Office investigation, with the white-collar crime investigator seeking information dating back to 2012.
Intueri suspended dividends in February pending the result of a TEC review into funding for its Quantum Education Group and Dive School units to meet the Crown entity's funding conditions.
Annual revenue increased 40 percent to $91.6 million, 6 percent ahead of its prospectus forecast, due to growth in its online segment and the benefit of acquisitions. Its debt rose to $52.7 million from $11.4 million, primarily due to acquisitions.
In a note to its annual report, Intueri's directors said the company could continue to meet its banking covenants for the next twelve months, but acknowledged the material uncertainties within their forecast assumptions.
"These uncertainties relate to the achievement of enrolment numbers and cost savings, and the resolution of current SFO and TEC enquiries, which may cast doubt over the group's ability to continue as a going concern," the directors said.
"If these uncertainties transpire, the directors have reasonable expectation that additional headroom in the banking covenants can be negotiated, or an appropriate capital restructure undertaken in order to allow the Group to continue for the foreseeable future.
As at Dec. 31 2016, when the covenants are reduced, the Group is forecast to have limited headroom."
Earlier this month the company extended its banking facility to March 2018, and increased the funding line by $20 million to $80 million.
Intueri has said TEC has confirmed its total funding for 2016 will be 6 percent ahead of the level of funding consumed last year, but with a restriction on the number of unfunded students who can be enrolled at Quantum, which is expected to dent the company's annual course fee revenue by $8 million to $9 million.
The shares last traded at 46 cents and have fallen 35 percent this year.