UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 20-F



(Mark One)

|☐ | Registration statement pursuant to section 12(b) or (g) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------------



or



|☒ | Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended June 30,

2015



or



|☐ | Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------



or



|☐ | Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
|- | -------------------------------------------------------------------------------------------



Date of event requiring this shell

company report



From the transition period from _________ to

__________



Commission file number 001-36136



BlueNRGY Group Limited

(Exact Name of Registrant as specified

in its charter)



|Australia                                        |  | Level 1132 Martin PlaceSydney NSW 2000

Australia
|------------------------------------------------ |  | -------------------------------------------------
|(Jurisdiction

of Incorporation or Organization) |  | (Address

of Principal Executive Offices)        



Richard Pillinger

Chief Financial Officer

BlueNRGY Group Limited

Level 11

32 Martin Place

Sydney NSW 2000

Tel: +61 (0)2 8069 7970

E-mail: Richard.pillinger@bluenrgy.com

(Name, Telephone, E-mail and/or facsimile

number and Address of Company Contact Person)



Securities

registered or to be registered pursuant to Section 12(b) of the Act.



|Ordinary Shares no par value |  | Not Applicable                        
|---------------------------- |  | --------------------------------------
|(Title of Each Class)        |  | (Name of Exchange On Which Registered)



Securities registered or to be registered

pursuant to Section 12(g) of the Act.



None

(Title of Class)



Securities for which there is a reporting

obligation pursuant to Section 15(d) of the Act.



None

(Title of Class)



Indicate the number

of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by

the annual report.



As of June
30, 2015, 409,925,825 ordinary shares, no par value, were issued and outstanding.



Indicate by check

mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes   ☐     No   ☒



If this report is

an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13

or 15(d) of the Securities Exchange Act of 1934.     Yes   ☐     No   ☒



Indicate by check

mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),

and (2) has been subject to such filing requirements for the past 90 days.     Yes   ☐     No   ☒



Indicate by check

mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File

required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding

12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes   ☐     No   ☒



Indicate by check

mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions

of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



|Large accelerated filer  ☐ | Accelerated filer  ☐ | Non-accelerated

filer  ☒
|-------------------------- | -------------------- | -------------------------



Indicate by check mark which basis of

accounting the registrant has used to prepare the financial statements included in this filing



|US GAAP  ☐ |  | International Financial Reporting Standards as issued by the

International Accounting Standards Board  ☒ | Other  ☐
|---------- |  | --------------------------------------------------------------------------------------------------------- | --------



If “Other”

has been checked in the previous question, indicate by check mark which financial statement item the registrant has elected to

follow.   Item 17 ☐    Item 18 ☐



If this is an annual

report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act

of 1934).     Yes   ☐     No   ☒













|FORWARD-LOOKING STATEMENTS |     
|-------------------------- | ----
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| | Item | 7.   | Major Shareholders and Related Party Transactions          | 93 
| | ---- | ---- | ---------------------------------------------------------- | ---
| |      |      |                                                            |    
| |      | 7.A  | Major Shareholders                                         | 93 
| |      |      |                                                            |    
| |      | 7.B  | Related Party Transactions                                 | 93 
| |      |      |                                                            |    
| |      | 7.C  | Interests of Experts and Counsel                           | 95 
| |      |      |                                                            |    
| | Item | 8.   | Financial Information                                      | 95 
| |      |      |                                                            |    
| |      | 8.A  | Consolidated Statements and Other Financial Information    | 95 
| |      |      |                                                            |    
| |      | 8.B  | Significant Changes                                        | 96 
| |      |      |                                                            |    
| | Item | 9.   | The Offer and Listing                                      | 99 
| |      |      |                                                            |    
| |      | 9.A  | Offer and Listing Details                                  | 99 
| |      |      |                                                            |    
| |      | 9.B  | Plan of Distribution                                       | 101
| |      |      |                                                            |    
| |      | 9.C  | Markets                                                    | 101
| |      |      |                                                            |    
| |      | 9.D  | Selling Shareholders                                       | 101
| |      |      |                                                            |    
| |      | 9.E  | Dilution                                                   | 101
| |      |      |                                                            |    
| |      | 9.F  | Expenses of the Issue                                      | 101
| |      |      |                                                            |    
| | Item | 10.  | Additional Information                                     | 101
| |      |      |                                                            |    
| |      | 10.A | Share Capital                                              | 101
| |      |      |                                                            |    
| |      | 10.B | Memorandum and Articles of Association                     | 101
| |      |      |                                                            |    
| |      | 10.C | Material Contracts                                         | 102
| |      |      |                                                            |    
| |      | 10.D | Exchange Controls                                          | 102
| |      |      |                                                            |    
| |      | 10.E | Taxation                                                   | 104
| |      |      |                                                            |    
| |      | 10.F | Dividends and Paying Agents                                | 110
| |      |      |                                                            |    
| |      | 10.G | Statement by Experts                                       | 110
| |      |      |                                                            |    
| |      | 10.H | Documents on Display                                       | 111
| |      |      |                                                            |    
| |      | 10.I | Subsidiary Information                                     | 111
| |      |      |                                                            |    
| | Item | 11.  | Quantitative and Qualitative Disclosures about Market Risk | 111
| |      |      |                                                            |    
| | Item | 12.  | Description of Securities Other than Equity Securities     | 112
| |      |      |                                                            |    
| |      | 12.A | Debt Securities                                            | 112
| |      |      |                                                            |    
| |      | 12.B | Warrants and Rights                                        | 112
| |      |      |                                                            |    
| |      | 12.C | Other Securities                                           | 112
| |      |      |                                                            |    
| |      | 12.D | American Depositary Shares                                 | 112















|PART II  |     
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|PART III |     
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SPECIAL NOTE REGARDING FORWARD-LOOKING

STATEMENTS



The Securities and Exchange Commission

(the “SEC”), encourages companies to disclose forward-looking information so that investors can better understand a

company’s future prospects and make informed investment decisions. Except for the historical information contained in this

annual report on Form 20-F (this “Report”), the statements contained in this Report are “forward-looking statements”

which reflect our current view with respect to future events and financial results.



Words such as “may,” “anticipate,”

“estimate,” “expects,” “projects,” “intends,” “plans,” “believes”

and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify

forward-looking statements. Forward-looking statements represent management’s present judgment regarding future events and

are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in

the forward-looking statements. These risks include, but are not limited to, risks and uncertainties regarding enactment of the

approved share consolidation and the Company’s ability to regain and maintain compliance with the NASDAQ listing rules, as

well as risks and uncertainties relating to litigation, government regulation, economic conditions, markets, products, competition,

intellectual property, services and prices, key employees, future capital needs, dependence on third parties and other factors.

Please also see the discussion of risks and uncertainties under “Risk Factors” contained in Item 3.D. of this Report.



In light of these assumptions, risks

and uncertainties, the results and events discussed in the forward-looking statements contained in this Report might not occur.

Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this

Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements,

whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to us

or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred

to in this document.













PART I



ITEM  1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not applicable.



ITEM  2.     OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.



ITEM  3.     KEY INFORMATION



3.A.            Selected Financial Data



The following consolidated statement of operations data as

of June 30, 2015, 2014 and 2013 and for the three years ended June 30, 2015, 2014 and 2013 and summary consolidated balance sheet

data as of June 30, 2015 and 2014 and for the two years ended June 30, 2015 and 2014 are derived from the audited consolidated

financial statements of BlueNRGY Group Limited included elsewhere in this Report.



Our historical results are not necessarily indicative of

the results that may be expected for any other future period. Unless otherwise specified, all amounts are presented in Australian

Dollars (A$).



You should read the selected consolidated financial data

set forth below in conjunction with Item 5 “Operating and Financial Review and Prospects” and our audited consolidated

financial statements and notes thereto included elsewhere in this Report.



Consolidated Statements of Operations Data:



Amounts in A$(000) except as noted





|                                                                                                                     |  |  |  |  |  | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  | ------------
|For the year ended June 30                                                                                           |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|Revenues from continuing operations                                                                                  |  |  |  |  |  |             
|Other income                                                                                                         |  |  |  |  |  |             
|Cost of raw materials, consumables used, and contractors                                                             |  |  |  |  |  |             
|Employee benefit expenses                                                                                            |  |  |  |  |  |             
|Amortisation and depreciation                                                                                        |  |  |  |  |  |             
|Impairment of asset                                                                                                  |  |  |  |  |  |             
|Other expenses                                                                                                       |  |  |  |  |  |             
|Net finance income/(costs)                                                                                           |  |  |  |  |  |             
|Loss from continuing operations before income tax                                                                    |  |  |  |  |  |             
|Income tax benefit/(expense)                                                                                         |  |  |  |  |  |             
|Loss from continuing operations                                                                                      |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|Profit/(loss) from discontinued operations                                                                           |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|Net profit/(loss) for the period                                                                                     |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|Other comprehensive income                                                                                           |  |  |  |  |  |             
|Items that may be reclassified to profit or loss                                                                     |  |  |  |  |  |             
|Changes in the fair value of available-for-sale financial assets                                                     |  |  |  |  |  |             
|Exchange differences on translation of foreign operations                                                            |  |  |  |  |  |             
|Other comprehensive loss for the period, net of tax of $ Nil (2014- 

$ Nil)                                         |  |  |  |  |  |             
|Total comprehensive profit/(loss) for the period                                                                     |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|                                                                                                                     |  |  |  |  |  |             
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |  |  |  |  |             
|Basic loss per share                                                                                                 |  |  |  |  |  |             
|Diluted loss per share                                                                                               |  |  |  |  |  |             
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |  |  |  |  |             
|Basic earnings/(loss) per share                                                                                      |  |  |  |  |  |             
|Diluted earnings/(loss) per share                                                                                    |  |  |  |  |  |             





1







Consolidated Balance Sheet Data:



|                        |  | 2015 |        |  | 2014       | 
|----------------------- |  | ---- | ------ |  | ---------- | 
|Amounts in A$(000)      |  |      |        |  | (restated) | 
|Current assets          |  |      | 3,657  |  |            | 
|Non-current assets      |  |      | 16,442 |  |            | 
|Total Assets            |  |      | 20,099 |  |            | 
|                        |  |      |        |  |            | 
|Current liabilities     |  |      | 8,294  |  |            | 
|Non-current liabilities |  |      | 4,659  |  |            | 
|Total liabilities       |  |      | 12,953 |  |            | 
|                        |  |      |        |  |            | 
|Shareholders’ equity    |  |      | 7,146  |  |            | 



Exchange Rates



The following tables set forth, for the periods and dates

indicated, certain information regarding the rates of exchange of A$1.00 into US$ based on the 4pm market daily rate in Australia

for cable transfers in Australian dollars as certified for customs purposes by the Reserve Bank of Australia. The exchange rate

in effect on April 30, 2015, was AUD 1.00 = USD$0.8011.



|A$1.00 = US$ amount shown 
|--------------------------
|Fiscal Year ended June 30,
|2011                      
|2012                      
|2013                      
|2014                      
|2015                      



|           |  | HighRate |        |  | LowRate | 
|---------- |  | -------- | ------ |  | ------- | 
|2015 Month |  |          |        |  |         | 
|June       |  |          | 0.7799 |  |         | 
|           |  |          |        |  |         | 
|2016 Month |  |          |        |  |         | 
|July       |  |          | 0.7713 |  |         | 
|August     |  |          | 0.7397 |  |         | 
|September  |  |          | 0.7209 |  |         | 
|October    |  |          | 0.7332 |  |         | 
|November   |  |          | 0.7265 |  |         | 



(1) Averages are calculated using the average of the daily

rates during the relevant period



3.B.            Capitalization and Indebtedness



Not applicable.



3.C.            Reason for the Offer and Use of Proceeds



Not Applicable.



3.D.            Risk Factors



Our business faces significant risks. You

should carefully consider the risks described below, as well as the other information contained in this Report, including our financial

statements and related notes. If any of the following risks, as well as other risks and uncertainties that are not yet identified

or that we currently think are immaterial, actually occur, our business, financial condition and results of operations could be

materially and adversely affected. In that event, the trading price of our ordinary shares could decline, and you may lose part

or all of your investment.





2







Risks Related to our Financial Condition



We experienced operating

losses from continuing operations in fiscal years 2013, 2014 and 2015 and are continuing to experience operating losses in the

current fiscal year that cannot be sustained by our liquidity and there is uncertainty that we can continue as a going concern.



All of our continuing business

segments recorded a loss from operations and impairment of asset values for the fiscal years ended June 30, 2013 and June 30, 2014

and June 30, 2015 totaling A$2.1 million, A$22.2 million, and A$13.6 million, respectively. In November 2014 we filed for Voluntary

Administration, or VA, in Australia. Pursuant to a deed of company arrangement, or DOCA, we shed various unprofitable businesses

and compromised liabilities of approximately A$38.8 million and exited VA on January 27, 2015, referred to as the Emergence Date.

Notwithstanding the restructuring of our business through the VA process, several of our operating units, including the monitoring

business of BlueNRGY LLC acquired on the Emergence Date (as further described under Item 4.B.), have experienced operating losses

and continue to do so. Moreover, there is no assurance that the losses affecting some of our businesses can be avoided in the future

or that cash flow from our profitable businesses will be sufficient to offset such losses. In conjunction with our corporate overhead

and our debt service obligations, operating losses have depleted our liquidity to the extent that we cannot continue as a going

concern unless we can achieve one or more of the following: higher levels of operating profitably now and in the future, raising

additional debt or equity capital, deferring payment to creditors and selling assets. There is no assurance that we will have access

to sufficient funds from such initiatives on terms acceptable to our Board of Directors (the “Board”), or on any terms,

to meet our future needs.



Some of our businesses

are early in the commercialization stage and together with requirements to cover our corporate overhead will cause us to consume

cash for the foreseeable future, further straining our liquidity.



Our business development

and system development expenses for our monitoring line of business currently exceeds our revenues and it is uncertain when, if

ever, growth in revenues from this line of business will generate cash flow in excess of costs. In addition we have re-launched

our solar business in Australia and the U.S. under our own brand and will require additional working capital to fund growth to

levels that would make a meaningful contribution to our profitability. We are expanding our operations and maintenance (O&M)

services for renewable installations to cover new service territories and require investment to do so that must be recouped before

these activities contribute to our overall cash flow. Together with meeting costs of our corporate overhead, these initiatives

are likely to consume substantial cash for the foreseeable future. To the extent that our liquidity permits us to do so, our Board

has determined to continue to pursue development of the monitoring, solar installations and renewable O&M businesses and cash

will continue to be used for these purposes. Consequently, our liquidity may be depleted to the extent that we are unable to continue

as a going concern.



Our financial results

often vary significantly from period-to-period and year-to-year, and results for a particular interim period may not necessarily

be indicative of the results for the following period or full year.



Certain of our businesses

are subject to irregular revenues or seasonality that have led to, and in the future are likely to result in, significant fluctuations

in profitability and cash flow from period to period. Our climate control and large-scale solar businesses are project driven and

individual projects in either business segment can represent a meaningful percentage of our revenue, net income and cash flow in

any single accounting period. Consequently, delays associated with any single project can lead to significant shortfalls in our

expected financial performance. This volatile revenue pattern in our project-related businesses will be exacerbated by any projects

that we choose to build, own (typically at least through the project commissioning phase) and transfer (to a third-party), referred

to as BOT projects.



In addition, our Australian

solar installation business has historically experienced seasonal peaks and declines that has exacerbated our quarter-to-quarter

revenue and net income volatility. As a consequence of these dynamics, it is very difficult to identify trends in overall business

activity or profitability for the consolidated company or to anticipate future profitability based on recent results. Moreover,

the very short project implementation cycle and short lead time associated with most of our projects make other metrics of business

trajectory, such as backlog, difficult to apply. Our current and future expense levels, internal operating plans and revenue forecasts,

and operating costs are, to a large extent, fixed. As a result, we may not be able to sufficiently reduce our costs in any period

to adequately compensate for an unexpected short-term shortfall in revenues, and even a small shortfall could disproportionately

and adversely affect financial results for that period. Consequently, we could confront unanticipated liquidity shortfalls that

would jeopardize our ability to continue as a going concern.





3







All of our lines

of business are cash intensive, and operations have been, and in the future are likely to be, affected adversely if we fail to

maintain sufficient levels of liquidity and working capital.



Our solar installation

business requires continuing investment in marketing and advertising activities to generate leads to replenish or grow the sales

pipeline. Consequently, our success depends heavily on the ability to fund marketing activity. The time taken for a lead generated

from marketing and advertising activity to completion of the associated installation can vary from one month to over six months.

Both the solar installation and Parmac project businesses require us to utilize our own working capital to fund operations between

progress payments and, in the former case, through completion of projects if the projects are being constructed under the Build,

Own, and Transfer, or BOT model. The monitoring business is a net consumer of cash due largely to the requirement to fund system

development expenses necessary to provide a competitive product offering to our customers. Our O&M business requires that we

invest in staff and other operational capability when we pursue expansion to new geographic areas. We currently lack the capital

and liquidity to adequately fund all of these businesses. Additional cash will be needed to fund any growth. Consequently, our

project activities, particularly in the large-scale solar sector have been constrained, leading to losses that are ongoing and

an inability to fully capitalize on opportunities to generate revenue. We must raise additional capital, further curtail operations

in some of our lines of business or divest some of our business units to achieve profitability. Failure to do so increases the

likelihood that we will not be able to continue as a going concern and the value of our ordinary shares will decline or become

worthless.



Our growth strategy

and the future success of our company is based, in part, on pursuing acquisitions of operating companies and renewable energy projects.

If we are not successful in completing such acquisitions, or realizing the anticipated benefits from such transactions, then it

could have a material adverse effect on our results of operations and financial condition.



One of our growth strategies

is to pursue targeted acquisitions of operating companies and renewable energy projects at various stages of development. If we

are not successful in implementing such strategy and acquiring targeted companies or projects, it could have a material adverse

effect on our results of operations and financial condition. Further, we will have devoted significant time and resources in such

pursuits, without receiving commensurate benefit for our efforts. The likelihood of our acquisition strategy being successful is

greatly diminished by our lack of liquidity. In addition, even if we are able to successfully complete targeted acquisitions, if

we have misjudged the value to the Company or if we fail to successfully integrate any such assets or operations with ours, it

could have a material adverse effect on our results of operations and financial condition, and you could lose some or all of your

investment in the Company.



Applicable accounting

rules may result in positive reported earnings when our actual cash flow is negative and we lack the funds to adequately operate

the business or to grow.



International Financial

Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, such as those related to recognizing

revenue on a percentage of completion basis or from projects when control and the risks of ownership have been substantially transferred

to others, may require us to recognize revenue before payment is received. As a result, although our accounting earnings may be

positive, our cash flow may be negative and we may not have sufficient working capital to meet our ongoing requirements or fund

new business growth. Our management has not established reliable credit facilities or other mechanisms such as selling receivables

that allow us to convert receivables on incomplete projects or long-term assets into cash to overcome this problem. Consequently,

our reported earnings and financial statement net worth may not be indicative of our ability to meet contractual obligations or

to sustain the Company as a going concern. There can be no assurance that we will have access to working capital from credit or

equity markets that is sufficient to meet our needs as we grow.





4







Our indebtedness

to lenders and other creditors in our operating subsidiaries that were not included in the VA is significant relative to our liquidity

and we may encounter demands for payment that we cannot meet, which could have adverse consequences for our business and future

prospects.



Our convertible notes,

installment notes and other liabilities payable by our corporate parent and many of our subsidiaries as of the end of our fiscal

year 2014 were extinguished pursuant to the DOCA. As of September 30, 2015, however, we had total outstanding debt (excluding current

trade balances and accruals and Redeemable Preference Shares) at our operating subsidiaries of approximately A$1.6 million. At

our corporate parent and operating subsidiaries where there is an excess of current liabilities over current assets, the excess

is approximately A$5.4 million, including that portion of deferred trade obligations and debt classified as current. While we have

negotiated to satisfy this indebtedness in the future, (as further discussed below in Item 5.B.), our ability to meet our obligations

when payment is due will also depend on our cash reserves, available additional financing and ongoing operating performance, and

there can be no assurance that we will possess or be able to secure the resources to meet these obligations when they become due.



Although we are not currently

involved in litigation with any creditors, there can be no assurance that creditors who have agreed to payment terms will continue

to forbear if we cannot meet those terms. In such case we may receive demands for immediate payment that exceed our ability to

pay. Our failure to satisfy or refinance these obligations when due would have a material adverse impact on the indebted operating

subsidiaries and could jeopardize our ability or that of the affected operating subsidiaries to continue in business and could

cause us to liquidate, resulting in the total loss of value to our shareholders.



We require additional

capital to execute on current and anticipated future business opportunities and may not be able to raise the necessary capital

on acceptable terms, if at all, with the result that we may have to curtail some business activities or forego growth.



We do not have sufficient

capital to operate all of our businesses in accordance with our business plans or to ensure that we can continue as a going concern.

Consequently, we are likely to have to raise additional capital in the future through public or private debt or equity financings

by issuing additional ordinary shares or other preferred financing shares, debt or equity securities convertible into ordinary

or preferred shares, or rights to acquire these securities. We may need to raise this additional capital in order to (among other

things):



| | ● | take advantage of expansion or acquisition opportunities;                                                   
| | - | ------------------------------------------------------------------------------------------------------------
| |   |                                                                                                             
| | ● | acquire, form joint ventures with or make investments in complementary businesses, technologies or products;
| |   |                                                                                                             
| | ● | develop new products or services;                                                                           
| |   |                                                                                                             
| | ● | respond to competitive pressures;                                                                           
| |   |                                                                                                             
| | ● | respond to a difficult market climate.                                                                      



Our management expects us to issue additional

debt securities to fund ongoing operations, including solar projects and related working capital. The associated debt agreements

may contain restrictive covenants and we will be subject to additional costs related to originating such debt and for interest.

Any scheduled principal amortization will place further burdens on our cash flow. Notwithstanding the expectations of our management,

there is no assurance that debt can be raised on terms acceptable to our Board, if at all.



Our management also expects

us to issue additional equity securities to fund operations of our existing businesses, the acquisition of additional businesses

and pursuant to employee benefit plans, although our Board has not considered or approved any changes to our employee benefit plans

that are not described in this Report. We may also issue additional equity securities for other purposes. These securities may

have the same rights as our ordinary shares or, alternatively, may have dividend, liquidation, or other preferences to our ordinary

shares. The issuance of additional equity securities will dilute the holdings of existing shareholders and may reduce the price

of our ordinary shares. Because of our recent operating losses and capital deficiencies, it is likely that raising equity capital

will be difficult and costly, with the result that dilution to existing shareholders could be high. There is no assurance that

equity capital can be raised at a price acceptable to our Board or at all.





5







Notwithstanding

write-offs of goodwill and intangibles in our 2014 and 2015 fiscal years, we continue to have recorded substantial goodwill and

intangibles asset value as the result of prior acquisitions; these goodwill and intangible amounts are subject to periodic reviews

of impairment that could result in future reported losses and that may limit our ability to raise capital.



We have previously acquired

companies and assets that were retained through the VA process. The excess of the purchase price after allocation of fair values

to tangible and identifiable intangible assets for those businesses is allocated to goodwill. We conduct periodic reviews of goodwill

and intangible values for impairment. Any impairment would result in a non-cash charge against earnings in the period reviewed,

which may or may not create a tax benefit, and would cause a corresponding decrease in shareholders’ equity.



Significant impairments

of good will were recognized in conjunction with the effectiveness of the DOCA, with the result that we recorded impairments of

goodwill of A$6.2 million for our fiscal year ending June 30, 2015. Nevertheless, our assets as of June 30, 2015 were comprised

of A$14.0 million of goodwill and intangibles. In keeping with our accounting policies, the value of goodwill and intangibles will

again be reviewed as of June 30, 2016, the end of our 2016 fiscal year in light of the circumstances at the time and a further

impairment of goodwill and intangibles may be recorded if warranted by the circumstances. In the event that there is a prolonged

economic downturn in our served markets, competitive conditions become more challenging or we fail to achieve expected financial

performance in our solar PV business segment or our monitoring business in particular, we may be required to record further impairments

of goodwill in the future. Such impairment could be material and lead to a significant reduction in our stock price or make it

more difficult for us to raise needed capital.



Taxing authorities

could reallocate our taxable income among our subsidiaries, which could increase our consolidated tax liability.



We intend to conduct operations

worldwide through subsidiaries in various tax jurisdictions. If two or more affiliated companies are located in different countries,

the tax laws or regulations of each country generally will require that transfer prices and other inter-company charges be the

same as those between unrelated companies dealing at arm’s length and that contemporaneous documentation is maintained to

support such transfer prices and charges. On that basis, tax authorities could require us to adjust our transfer prices and intercompany

charges and thereby reallocate our income to reflect such revised terms, which may result in a higher tax liability to us or limit

our ability to utilize loss carry forwards and similar tax assets that are available to only some of our operating subsidiaries

and not others, and, possibly, result in two countries taxing the same income, any of which outcomes could adversely affect our

financial condition, results of operations and cash flows.



Risks Related to Our Industry and Business



Our large-scale solar

and air conditioning installation businesses often receive payments upon the achievement of contractual milestones, and any delay

or cancellation of one or more large projects could interrupt our cash flow and adversely affect our overall business.



We recognize revenue for

Parmac and a significant fraction of our large-scale solar business on a “percentage of completion” basis and, as

a result, our revenue from these installations is tied to the performance of contractual obligations, which are generally driven

by timelines for the installation of solar power and air conditioning systems at customer sites. This could result in unpredictability

of revenue and, in the short term, revenue shortfalls or declines. As with any project-related business, there is the potential

for delays within any particular customer project. Variation of project timelines and estimates may impact the amount of revenue

recognized in a particular period. In addition, certain of our customer contracts may include payment milestones at specified

points during a project. Because we must invest substantial time and incur significant expense in advance of achieving milestones

and the receipt of payment, failure to achieve milestones could adversely affect our business and cash flows.





6







Our solar business

in Australia accepts assignment of small-scale technology certificates, or STCs, in lieu of some cash payments from customers and

is exposed to risk of significant changes in market value of STCs between the date the value of STCs is agreed with our customers

and the date STCs are assigned to us.



Based on current government

policy and the average size of our small-scale installations, an average of approximately 25% of the revenue from small-scale solar

projects we sell is in the form of small-scale technology certificates, or STCs. The secondary market in which we typically sell

registered STCs is thin, with few purchasers or market makers. When we quote a customer for the price of a residential installation,

we agree to a value for the STC portion of the revenue with the customer. On completion of an installation and completion of STC

registration, our practice is generally to assign registered STCs to one of our solar PV equipment suppliers at a negotiated value

in lieu of cash payment. The value attributed to the STCs by our suppliers is based on market price at the time of assignment to

them. There can be a delay of up to three months between agreeing to a value for STCs with our customers and completion of registration

and assignment of STCs to one of our suppliers; during this time we are exposed to changes in the market price of STCs. The magnitude

of this financial risk is affected by the volatility of STC prices and can be significant. Our management has determined that it

is not cost effective to hedge the financial exposure to STCs that we hold and therefore we do not do so.



If solar projects

developed under our BOT or BOO models are not sold to buyers quickly after completion and commissioning, we are exposed to significant

risk of illiquidity and we may incur diminished profits or losses due to deterioration in market prices for such projects and the

costs of the credit currently available to us to finance these projects.



We typically expect to

complete projects initiated under the BOT model within one to three months from the commencement of construction. However, our

limited experience in selling a 5MW portfolio of such projects in Europe in November 2012 demonstrates that closing a sale of commissioned

projects can take six months or more. When we complete a project under the BOT model or the build, own, and operate, or BOO, model,

we are fully exposed to changes in project value from the period between our commitment to undertake such a project and the time

we reach an agreement to sell such project at a set price (for BOT projects) or the carrying value of the project is impaired (for

BOO projects such as the Chatham Island Project).



Market conditions and value

for completed large-scale solar projects are subject to significant fluctuations as a result of factors such as changes in relative

currency values, market interest rates, institutional demand for projects generating fixed cash flows and idiosyncratic political

and regulatory changes that affect investors’ perceptions of project risk. Moreover, based on our previous experience, the

cost of capital needed to finance our BOT projects can significantly reduce our expected profitability if holding periods are protracted.

The combination of exposures to changes in project values and the cost of financing BOT and BOO projects could cause us to incur

significant losses on such projects in the future and the necessity to tie up capital in such projects between commitment and sale

(or throughout the holding period for BOO projects) could strain the Company’s limited liquidity.



We are highly dependent

on our senior management and technical personnel and if we are unable to retain key personnel and attract and train highly

qualified personnel, particularly in regions or lines of business where we are expanding, the quality of our services may decline

and we may not successfully execute our growth strategies or achieve sustained profitability.



Our success depends in

large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced employees, including

technical personnel and members of our executive management. Qualified senior executives and technical employees are generally

in great demand and may be unavailable in the time frame required to satisfy the Company’s and customers’ requirements.

All of our most senior executive managers, including William Morro - Executive Chairman and Managing Director, Richard Pillinger

- Chief Financial Officer, Linton Coombs – Managing Director of Parmac, Peter Maros – Senior Vice President & Managing

Director of U.S. Renewable Solutions and Emmanuel Cotrel – Senior Vice President and founder of our monitoring and data analytics

business, are at-will employees. The absence of contractual financial incentives to continue their employment with the Company

increases the chances that they could be successfully recruited for alternative employment. We have no internal successors for

any of these executives and, if any of them departed, we would have to undertake a search for a replacement. There is no assurance

that a qualified replacement could be timely found or engaged on terms acceptable to our Board. While we currently have available

technical expertise sufficient to operate our business as currently configured, expanding into new jurisdictions, significantly

increasing our scale and further developing our monitoring technology will necessitate employing additional highly skilled technical

personnel. We expect competition for such personnel to increase as the market for solar and other renewable power systems and post-installation

monitoring and management expands worldwide.





7







There can be no assurance

that we will be able to attract and retain sufficient numbers of highly skilled executives or technical employees in the future.

The loss of such personnel, and executive management in particular, or our inability to hire or retain sufficient personnel at

competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.



We do not generally

have long-term agreements or repeat business opportunities with our major project customers and if our management is unable to

identify and win new customers and projects we cannot maintain or grow revenue in this line of business.



Our solar PV and Parmac

projects are generally not sold pursuant to long-term agreements with customers, but instead are sold on a one-time contract basis

often in a competitive bidding process. We typically contract to perform large projects with no assurance of repeat business from

the same customers in the future. Our experience is that customers may cancel or reschedule awards for solar PV and Parmac projects

on relatively short notice. Cancellations or rescheduling of customer orders could result in the delay or loss of anticipated sales

without allowing sufficient time to reduce, or delay the incurrence of, our corresponding inventory and operating expenditures.

In addition, changes in forecasts or the timing of orders from these or other customers expose us to the risks of supply shortages

or excess purchase commitments for inventory. This, in addition to the non-repetition of larger projects and the possibility that

we may fail to obtain new projects could cause our revenues to decline, and, in turn, our operating results to suffer. Our monitoring,

operations and maintenance services provided to the renewable energy and climate control markets are generally delivered under

annual or multi-year contracts that have the potential to mitigate volatility from our project businesses. However, the scale of

our service businesses is not yet sufficient to have a significant impact on our overall revenue or profitability and there is

no assurance that we will be successful in expanding these activities or realizing meaningful economic benefits from recurring

revenue.



Unlike some of our

competitors, we do not have established and reliable sources of financing on which our customers can rely to finance their solar

and climate control projects and as a result we are at a competitive disadvantage and our sales and profits may suffer.



We do not have contractual

relationships with financing sources in any of the jurisdictions in which we undertake contracts for solar PV or climate control

installations that can be relied on to provide debt or equity financing for our prospective customers who require such financing

in order to commit to projects or engage our services. In the small-scale solar business in Australia financing is now generally

available in the market and to our customers, but we may be at a disadvantage relative to energy distribution companies and other

large competitors who can offer prospective financing to a broader range of customers or on better terms than us. The availability

of financing for large-scale solar systems and climate control systems in the markets we serve is specific to the particulars of

the installation and customer financial strength and varies widely. In any case, the availability of financing for large-scale

system installations is generally less than for residential systems. The consequence is that we are forced to compete for large-scale

projects largely on price or from the limited universe of buyers who can self-finance or who have their own sources of financing

for such projects. As a result, the growth of our large-scale solar and climate control business focused on the provision of engineering,

procurement, and construction, or EPC, services has been slow and irregular in all of the markets we serve, and there is no assurance

that this will change or that our large-scale EPC businesses will achieve consistent profitability.



Our large-scale solar,

wind and major climate control projects are subject to lengthy sales cycles that adversely affect the predictability of results

from sales and marketing efforts and make our financial forecasts unreliable and revenue recognition irregular.



Factors specific to our

customers have an impact on our sales cycles. Our equity fund, commercial, and government customers may have longer sales cycles

due to the timing of periodic budgeting requirements typical for projects requiring significant capital expenditures. Other customers

may delay projects because of cyclical conditions in their industries or because of idiosyncratic liquidity or profitability issues.

Lengthy and challenging sales cycles may mean that our sales and marketing efforts seldom result in rapid increases in revenue

and delays may have adverse effects on our operating results, financial condition, cash flows, and stock price.





8







We sometimes act

as general contractor for our customers in connection with the installation of solar power and HVAC systems and we are subject

to risks associated with construction, bonding, cost overruns, delays, and other contingencies, which could have a material adverse

effect on our business and results of operations.



When we act as a general

contractor for our customers in connection with the installation of solar power and HVAC systems, costs are estimated at the time

of entering into the sales contract for a particular project, and these costs are reflected in the overall price that charged to

customers for the project. These cost estimates may not accurately reflect all costs incurred by subcontractors, suppliers and

other parties engaged by us on our projects. In addition, qualified, licensed subcontractors are often required to install some

of the systems. Shortages of such skilled labor could significantly delay a project or otherwise increase our costs. Should miscalculations

in planning a project or defective or late execution occur, we may not achieve the expected margins necessary to cover our costs.

Also, many systems customers require performance bonds issued by a bonding agency. Due to the general performance risk inherent

in construction activities, it is sometimes difficult for us to secure suitable bonding agencies willing to provide performance

bonding. In the event we are unable to obtain the requisite bonding, we will be unable to bid on, or enter into, sales contracts

for the projects. Delays in receiving solar or climate control system components, other construction delays, unexpected performance

problems or other events, including our own design and project management deficiencies, could cause us to fail to meet project

schedule or performance criteria, resulting in unanticipated and severe revenue and earnings losses and financial penalties. We

may be financially responsible for delays caused by factors outside of our control, including inclement weather, failure of suppliers

to timely meet orders or transportation providers to make timely deliveries. We operate in multiple countries that have unique

permitting requirements, which, if not met, may cause delays. The occurrence of any of these events could have a material adverse

effect on our business and results of operations.



A portion of our

revenues is generated by construction contracts for new or renovated buildings, and, thus, a decrease in construction activity

could reduce our construction contract-related sales and, in turn, adversely affect our revenues.



Some of our solar-related

revenues and most of our HVAC project revenues are generated from the design and installation of systems in newly constructed and

renovated buildings, plants and residences. Our ability to generate revenues from such construction contracts depends on the number

of new construction starts and renovations, which should correlate with the cyclical nature of the construction industry and be

affected by general and local economic conditions, changes in interest rates, lending standards and other factors.



In our installation

and EPC businesses, we are highly dependent upon suppliers for the components used in the systems and products we design and install

and any increases in the price of components, including as a result of the imposition of duties or tariffs, or any interruptions

to, or shortage or decline in, the quality of the components we purchase could adversely affect our business.



Key components used in

all of our solar, wind and energy efficiency/climate control systems are purchased from third party manufacturers, many of which

are located in countries other the system installation area. Market prices for these purchased components are subject to fluctuation.

We cannot ensure that the prices charged by our suppliers will not increase because of changes in market conditions or other factors

beyond our control. An increase in the price of components used in our systems could result in an increase in costs to our customers

and could, as a result, have a material adverse effect on our revenues and demand for our products and services. Interruptions

in our ability to procure needed components for our systems, whether due to discontinuance by suppliers, delays or failures in

delivery, shortages caused by inadequate production capacity or unavailability, or for other reasons, would adversely affect or

limit our sales and growth. There is no assurance that we will be effective in selecting qualified manufacturers on acceptable

terms in the future and, if we are able to do so, there can be no assurance that product quality from those suppliers will continue

to be acceptable, which could lead to a loss of sales and revenues.





9







Problems with product

quality and performance on projects we develop or install may damage our market reputation and cause our revenue and operating

results to decline, particularly in the small-scale solar market.



Our solar PV and climate

control businesses involve the sale of systems that have long lifetimes (up to 20 years or more in the case of key components in

solar PV systems). Our monitoring systems for those projects must work over similar time periods. In general, the manufacturers

of components in the systems we sell are warranting those components and we offer limited warranties on system design and installation

workmanship for such components; for example, up to 5 years on installation workmanship for small-scale solar systems we sell in

Australia. Under real-world operating conditions, which may vary by location and design, as well as installation, air particulate,

soiling and weather conditions, a typical system installation may perform in a different way than under standard test conditions

or design assumptions. If the systems we have sold perform below expectations or have unexpected reliability problems, we may suffer

reputational damage, even if the problems are caused by operating conditions or defects of components produced by other manufacturers.

The significance of this would be magnified if those suppliers fail to fully meet their warranty obligations. We could suffer additional

reputational damage, even though we bear no direct responsibility for the component performance. In such a situation, if it were

to occur, we might be unable to gain new customers and our plans to grow and maintain the small-scale solar business at a profitable

scale could be thwarted.



One of our former subsidiaries,

divested in our VA process previously sold inverters produced by, or under license from, Oelmaier, a German company that is no

longer in business. Our subsidiary discontinued sales of the Oelmaier inverters in 2012 due to problems with product design and

licensor support, but many customers made warranty claims prior to our VA and more are likely to continue to do so. As a result

of the VA process we no longer have any subsidiaries which have obligations to service any Oelmaier warranty claims and as such

we have no provision for previously sold Oelmaier products recorded at June 30, 2015, however, there can be no assurance about

when or whether we will be able to overcome the negative market impact associated with the Oelmaier-licensed products and it may

continue to dampen our sales in Australia for the foreseeable future.



While our legal obligations

to address future warranty claims was extinguished under the DOCAs that defined our Reorganization Plans (refer to Item 4.A. under

the heading “Voluntary Administration and Deed of Company Arrangement”), and we structured the Draker acquisition

to limit legal obligations related to warranties provided by Draker, Inc. (refer to Item 4.A. under the heading “Recent

Acquisitions”) market pressures may require us to expend resources to address warranty claims related to the legacy solar

customer base if we are going to grow the scale of our related businesses. Post VA, we do not have any reserves for addressing

Oelmaier warranty claims and it is not possible to estimate the impact that acting or failing to act with respect to such claims

may have on the growth or profitability of our small-scale solar PV or our monitoring businesses. The possibility exists, however,

that the adverse impact on our results of operations could be significant and contribute to reducing the value of an investment

in our ordinary shares.



Unanticipated warranty

or service claims or the failure of suppliers to meet backstop warranty obligations could expose us to incur incremental expense

that could significantly lower our profitability or threaten our viability.



Except for system design

and installation workmanship deficiencies, the warranty obligations related to climate control and solar PV systems and many of

the components used in the monitoring systems we sell are contractually borne directly by the system component suppliers. Our contractual

obligations to our customers in the event of a third-party component failure are generally limited to fielding service requests

and organizingthe repair or replacement of the faulty unit with the original component’s

manufacturer for a period of time specified in the contract.In our experience, other than the costs of warranty claims

related to Oelmaier inverters that Oelmaier did not meet, the costs of such service obligations have not been material and we expense

them as incurred.



Notwithstanding the limited

contractual financial exposure that we have for system component failures, if the responsible component manufacturers fail to

fully meet their warranty obligations, we may find it to be a practical necessity to incur the expense to correct the problem

in order to preserve our market reputation for reliability and service and to maintain system sales. We have not reserved for

such a possibility and may not have the financial or other resources to respond to such a problem if and when it occurs. The result

could be adverse and unexpected profit volatility for our climate control and solar PV businesses or a loss of market acceptance

that could threaten the financial viability of this business segment altogether.





10







If we fail to effectively

manage our planned expansion, we may fail to meet our strategic objectives and our financial performance could be materially and

adversely impacted.



The further expansion of

our business into new jurisdictions is one of our strategies for growing revenues from solar system installations and renewable

system monitoring and operations and maintenance, or O&M, services sales. Such expansion is also expected to mitigate the impact

of downturns in renewable energy demand in countries in which we are currently developing solar projects, including the U.S. Undertaking

further international expansion of our solar system installation businesses is a complex task that requires, among other things

the identification of locations that are environmentally favorable for solar project development and that have suitable regulatory

and tax policies, utility cost, tariff and interconnection structures that allow renewable energy to be cost competitive (after

taking into account local subsidies) and access to cost-effective financing for project owners, among other considerations. Different

but equally complex considerations affect the expansion opportunities for our monitoring and O&M services businesses. Even

if we successfully identify suitable countries for expansion, we may be unable to extend our business into these new locations

if competitors enter the market first or are already well established. In addition, we may not have the necessary management, local

knowledge or financial resources to undertake the successful and timely development or integration of projects in additional countries.

Additionally, our ability to generate cash from existing operations may be slower than expected, or may not occur at all, resulting

in the requirement for further funding to achieve our expansion plans that exceeds our ability to raise additional capital on acceptable

terms. Our expansion plans could also be affected by cost overruns, failures or delays in obtaining government approvals of necessary

permits and our inability to establish supply chains to serve new markets and other factors.



There is no assurance that

we can effectively manage our planned expansion or achieve any expansion plans at all. If we are unable to do so, we will not be

able to take advantage of growth opportunities, execute our business strategy or respond to competitive or market pressure, any

of which could materially and adversely affect our business, results of operations, financial condition and share value.



Although we have

historically derived most of our revenues from Australia and a few other countries, we currently do business in several international

jurisdictions whose political and regulatory environments and compliance regimes differ from those of our home territory (or the

United States) and our planned expansion into new markets will subject us to additional business, financial and competitive risks.



A portion of our revenue

has been attributable to operations in countries other than Australia and the United States, including Italy, Thailand and the

United Kingdom and this is expected to extend to other countries in Europe, Asia and Latin America with the acquisition of BlueNRGY

LLC in January 2015 and the assets of Draker, Inc. in September 2015 (refer to Item 4.A. under the heading “Recent Acquisitions”).

Such activities accounted for approximately 13% and 2% of our consolidated revenue in fiscal years ended June 30, 2015 and June

30, 2014, respectively. Risks associated with our operations in foreign areas include, but are not limited to:



| | ● | political, social and economic instability, war and acts of terrorism;                                                 
| | - | -----------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                        
| | ● | potential seizure, expropriation or nationalization of assets;                                                         
| |   |                                                                                                                        
| | ● | damage to our equipment or violence directed at our employees, including kidnappings and piracy;                       
| |   |                                                                                                                        
| | ● | increased operating costs;                                                                                             
| |   |                                                                                                                        
| | ● | complications associated with repairing and replacing equipment in remote locations;                                   
| |   |                                                                                                                        
| | ● | repudiation, modification or renegotiation of contracts, disputes and legal proceedings in international jurisdictions;
| |   |                                                                                                                        
| | ● | limitations on insurance coverage, such as war risk coverage in certain areas;                                         
| |   |                                                                                                                        
| | ● | import-export quotas;                                                                                                  
| |   |                                                                                                                        
| | ● | confiscatory taxation;                                                                                                 





11







| | ● | work stoppages or strikes;                                                               
| | - | -----------------------------------------------------------------------------------------
| |   |                                                                                          
| | ● | unexpected changes in regulatory requirements;                                           
| |   |                                                                                          
| | ● | wage and price controls;                                                                 
| |   |                                                                                          
| | ● | imposition of trade barriers;                                                            
| |   |                                                                                          
| | ● | imposition or changes in enforcement of local content laws;                              
| |   |                                                                                          
| | ● | the inability to collect or repatriate currency, income, capital or assets;              
| |   |                                                                                          
| | ● | foreign currency fluctuations and devaluation; and                                       
| |   |                                                                                          
| | ● | other forms of government regulation and economic conditions that are beyond our control.



Part of our strategy is

to prudently and opportunistically acquire businesses and assets that complement our existing products and services, and to expand

our geographic footprint. If we make acquisitions of businesses or assets in other countries, we may increase our exposure to the

risks discussed above. Governments in some foreign countries have become increasingly active in regulating and controlling the

implementation of renewable energy projects, the sale of power generated from such projects in their countries and the processing

of information from or about such generating assets. In some areas of the world, this governmental activity has adversely affected

the amount of activity undertaken by renewable energy developers and may continue to do so. Some countries, such as China, restrict

the storage or export outside their borders of data related to energy generation. Operations in developing countries can be subject

to legal systems that are not as predictable as those in more developed countries, which can lead to greater risk and uncertainty

in legal matters and proceedings. In some jurisdictions we are subject to foreign governmental regulations favoring or requiring

the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from,

a particular jurisdiction. These regulations may adversely affect our ability to compete. Additionally, our operations in some

jurisdictions may be significantly affected by union activity and general labor unrest. There can be no assurance that we can avoid

such factors having a material adverse effect on our results of operations or financial condition.



Our operations are

subject to multiple tax regimes, and changes in legislation or regulations in any one of the countries in which we operate could

negatively and adversely affect our operating results.



Our operations are carried

out in several countries across the world, and our tax filings are therefore subject to the jurisdiction of a significant number

of tax authorities and tax regimes, as well as cross-border tax treaties between governments. Furthermore, the nature of our operations

means that we routinely have to deal with complex tax issues (such as transfer pricing, permanent establishment or similar issues)

as well as competing and developing tax systems where tax treaties may not exist or where the legislative framework is unclear.

In addition, our international operations are taxed on different bases that vary from country to country, including net profit,

deemed net profit (generally based on turnover) and revenue-based withholding taxes based on turnover.



Our management determines

our tax provision based on our interpretation of enacted local tax laws and existing practices and uses assumptions regarding the

tax deductibility of items and recognition of revenue. Changes in these assumptions and practices could significantly impact the

amount of income taxes that we provide for in any given year and could negatively and adversely affect the result of our operations.





12







We face common international

trade and supply chain risks for our installation businesses, including delay or complete disruption of supply, logistics cost

volatility, exchange rate fluctuations and changes in policies and tariffs, that could trigger an unexpected adverse impact on

operational and financial performance.



Most of the components

in our products are produced in places other than that where the products and systems are used or installed. For example, currently,

all the solar modules for our solar PV systems are produced in China and must be shipped to installation sites in Australia, the

United States, Europe and other jurisdictions where we operate. Key components for our energy efficiency businesses are manufactured

in Europe, the United States or in Asia, even though we sell these systems primarily in Australia. Consequently, order lead times

may be long and we and our customers are subject to substantial expense and delays that can accompany long-distance shipping,

inventory management and design and specification of customized orders. Currency exchange rates can also shift between the time

of ordering and delivery, sometimes resulting in us incurring higher costs. If mistakes in component order fulfillment occur,

extended time can be required to remediate the problem and could lead to delays in completing projects, recognizing revenue or

receiving cash flow. Sometimes we must rely on a single source of supply for key components and if a sole-source supplier fails

to deliver on time it could impair our ability to perform and subject us to delays and penalties.



Licenses and permits

are required to operate in some jurisdictions, and the loss of or failure to renew any or all of these licenses and permits or

failure to comply with applicable laws and regulations could prevent us from either completing current projects or obtaining future

projects and, thus, materially adversely affect our business.



We are subject to various

national, state, and local laws and regulations in the various countries in which we operate and we may be required to make significant

capital expenditures to comply with laws and the applicable regulations and standards of governmental authorities and organizations.

Moreover, the cost of compliance could be higher than anticipated. In addition, we are subject to compliance with the U.S. Securities

Act, Exchange Act and Foreign Corrupt Practices Act in addition to certain international conventions and the laws, regulations

and standards of other foreign countries in which we operate. It is also possible that existing and proposed governmental conventions,

laws, regulations and standards, including those related to climate and emissions of “greenhouse gases,” may in the

future add significantly to our operating costs or limit our activities or the activities and levels of capital spending by our

customers.



In addition, many aspects

of our operations are subject to laws and regulations that relate, directly or indirectly, to the renewable industry or to public

health and safety. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and

even criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit our

operations. The application of these requirements, the modification of existing laws or regulations or the adoption of new laws

or regulations curtailing production activity could materially limit our future contract opportunities, materially increase our

costs or both.



Our international

growth strategy may prove to be disruptive and divert management resources with adverse effect on our financial condition or performance.



Our international growth

strategy involves complex transactions and presents financial, managerial and operational challenges, including diversion of management

attention from existing businesses, difficulty with integrating personnel and financial and other systems, increased expenses,

including compensation expenses resulting from newly hired employees, the assumption of unknown liabilities and potential disputes.

We could also experience financial or other setbacks if any growth strategies incur problems of which we are not presently aware.



We may incur significant

costs and delays in our attempt to implement our international expansion strategy, particularly when we form joint ventures or

make acquisitions.



We currently develop and

install large-scale solar PV systems or offer performance monitoring and O&M services for such systems, targeting the markets

in North America, the Eurozone, Thailand and various Pacific island nations. However, the Company intends to undertake and provide

life-cycle services to project developments in other international markets. New geographic markets may have different characteristics

from the markets in which we currently sell products, and our success will depend on our management’s ability to properly

address these differences. These differences may include:



| | ● | differing regulatory requirements, including tax laws, trade laws, labor regulations, tariffs, export quotas, customs duties or other trade restrictions;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                          
| | ● | limited or unfavorable intellectual property protection;                                                                                                 
| |   |                                                                                                                                                          
| | ● | risk of change in international political or economic conditions;                                                                                        





13







| | ● | fluctuations in the value of foreign currencies and interest rates;                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                        
| | ● | difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act;
| |   |                                                                                                                                                                        
| | ● | potentially longer sales cycles;                                                                                                                                       
| |   |                                                                                                                                                                        
| | ● | higher volume requirements;                                                                                                                                            
| |   |                                                                                                                                                                        
| | ● | warranty expectations and statutory obligations; and                                                                                                                   
| |   |                                                                                                                                                                        
| | ● | cost, performance and compatibility requirements.                                                                                                                      



In addition, we have and

will continue to pursue acquisitions and joint ventures to facilitate our expansion into new products and services and into new

geographic markets. For example, we acquired Green Earth Developers, LLC (“GED”), a Georgia limited liability company,

in July 2014 and BlueNRGY LLC, a Florida limited liability company in January 2015 and the assets of Draker, Inc. in September

2015. Whether the mechanism we use for expanding our business is through internal development or acquisition, failure to develop

and introduce new products successfully, to generate sufficient revenue from these products to offset associated marketing and

installation costs, or to otherwise effectively anticipate and manage the risks and challenges associated with expansion into new

product and geographic markets, could adversely affect our revenues and our ability to achieve or sustain profitability.



The Company has experienced

significant turnover of members of our Board and among members of our top management and we may lack sufficient continuity or experience

in these key positions to ensure success of the business.



Subsequent to July 1, 2014

through the date of this Report, we have experienced the following changes among members of our Board and among members of our

top management:



Effective July 18, 2014

Todd Barlow resigned from the Board. Prior to his resignation Mr. Barlow served as a non-executive director.



Effective August 5, 2014,

Ms. Luisa Ingargiola was appointed as a non-executive member of the Board and resigned on October 23, 2014 due to concerns that

she could not give adequate time to both her role with another publicly-traded company and her role with the Board.



Effective October 4, 2014,

Mr. Jeffrey A. Tischler was appointed the Company’s Chief Financial Officer and resigned on November 12, 2014.



As of November 14, 2014,

Mr. Gerard McGowan was: suspended as the Company’s Managing Director pursuant to Article 18 of the Company’s Constitution.

Following the commencement of our VA process, the Administrator terminated the Contractor Agreement pursuant to which we procured

the services of Mr. McGowan as our Chief Executive Officer and Mr. McGowan resigned as a member of our Board on December 30, 2014.



In December, 2014 our CEO

of International Operations, James Greer, and our Senior Vice President of Wind and Off Grid Solutions, Patrick Lennon, was terminated

by the Administrator.



Effective January 27, 2015,

the two then-existing members of the Board, William C. Morro and Carlo Botto, by unanimous resolution, appointed John H. Chapple,

Yves-Regis Cotrel, and John F. Donohue as members of the Board, subject to receipt of their written consent to serve in such capacity.

The appointment of Mr. Cotrel and Mr. Donohue became effective on January 27, 2015 and that of Mr. Chapple on February 2, 2015.

With the exception of Mr. Botto, who has been employed by companies serving the power generation and energy trading sectors throughout

his career, our directors have limited experience in the renewable energy sector. Subsequently, on June 16, 2015 and July 31, 2015

respectively, John Chapple and John Donohue resigned due to concerns that they could not give adequate time to their other business

commitments and to their role with the Board.





14







Effective June 5, 2015,

Donald Reed, the senior executive officer and a former owner of GED resigned. Effective September 1, 2015 he was replaced by Peter

Maros, who was also appointed a Senior Vice President and Managing Director of U.S. Renewable Solutions.



We anticipate that additional

directors and executive managers with relevant experience and qualifications will be appointed in the future, however, our corporate

history and weak financial condition may make it more difficult or impossible for us to attract suitable executives or independent

directors. Consequently, there can be no assurance that we will be successful in making appointments to our management and Board

that can ensure our success.



If we fail to retain and

attract executives and Board members with the capabilities to meet the significant challenges we face in all of our markets and

lines of business, we may not meet the requirements for listing on the NASDAQ Capital Market or any other national U.S. stock market,

our stock price could decline or become completely illiquid and our shareholders could face a total loss of their investment.



We are subject to

litigation that could have an adverse effect on our business and operating results.



In December 2014, a class

action securities suit, referred to as the Texas Action, was filed in a federal court in the Eastern District of Texas against

the Company and various current and past officers and directors, namely Mr. William Morro, Mr. Carlo Botto, Mr. Richard Pillinger,

Mr. Todd Barlow, Mr. Gerard McGowan and Mr. James Greer. Mr. Morro, formerly a non-executive independent director currently serves

as Chairman of the Company’s Board and its Managing Director (the Australian entity equivalent of a CEO); Mr. Botto continues

as a non-executive member of the Board; and Mr. Pillinger is the Company’s CFO. The other parties to the lawsuit are no longer

associated with the Company. On August 13, 2015 the Texas Action was amended to include the Company’s subsidiary, CBD Energy

(USA) Limited.



In December 2014, a different

lawsuit was filed in New York State Supreme Court, referred to as the New York Action, by one of the holders of Series B Preferred

Shares against the Company and Messrs. Morro, Botto, and McGowan. A settlement with Mr. Botto and Mr. Morro was reached pursuant

to which the New York Action was withdrawn. However, the settlement imposes no restrictions on the plaintiff with respect to reinstating

the New York action against Mr. McGowan or other previously unnamed parties at any time in the future.



We believe that the claims

against the Company related to the Texas and New York Actions are extinguished pursuant to the DOCA but litigation against our

subsidiary, CBD Energy (USA) Limited, prior and current officers and directors may continue, causing us to incur expenses related

to these matters. In addition, plaintiffs in the Texas and New York Actions, or other parties bringing a claim against us related

to events arising prior to our VA, including, among others, the Administrator of Secured Energy Bonds Plc in the UK, may not recognize

or accept the limitations on the Company’s liability imposed by the DOCA. Consequently, the Company may have to incur expenses

to enforce the terms of the DOCA and such expenses could be significant. It is also possible that courts in jurisdictions where

we do business or have assets, other than Australia, may not recognize or accept the limitations on our liability under the DOCA

or may rule in favor of parties who assert claims against our subsidiaries domiciled or operating in such foreign jurisdictions.

In such a case, we, or our foreign subsidiaries, could become burdened with liabilities for which we do not have a provision on

our balance sheet and we may incur significant unforeseen defense costs.



In addition, the numerous

operating hazards inherent in our business increase our exposure to litigation, which may involve, among other things, contract

disputes, personal injury, environmental, employment, warranty and product liability claims, tax and securities litigation, patent

infringement and other intellectual property claims and litigation that arises in the ordinary course of business.



Our management cannot predict

with certainty the outcome or effect of any claim or other litigation matter. Litigation may have an adverse effect on us because

of potential negative outcomes such as monetary damages or restrictions on future operations, the costs associated with defending

the lawsuits, the diversion of management’s resources and other factors. Given our weak financial condition, a requirement

to pay significant monetary damages or to restrict our business could jeopardize our viability as a going concern and could trigger

illiquidity or a loss in value of our stock.





15







Our internal controls

over financial reporting and other matters do not currently meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley

Act, and failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could

have a material adverse effect on our business and investor’s willingness to buy or hold our stock.



Our internal controls

over financial reporting do not currently meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that

we will eventually be required to meet. As soon as practicable, we intend to address deficiencies in our internal controls over

financial reporting and to establish enhanced formal policies, processes and practices related to financial reporting and to the

identification of key financial reporting risks and assessment of their potential impact and linkage of those risks to specific

areas and activities within our organization that are applicable to our business. Additionally, we will need to further document

our internal control procedures to satisfy the requirements of Section 404, which requires annual management assessments of the

effectiveness of our internal controls over financial reporting and, when available exemptions as an emerging growth company under

the JOBS Act or other applicable exemption is no longer available, a report by our independent registered public accounting firm

addressing these assessments. Although we have not yet tested our internal controls in accordance with Section 404, we have material

weaknesses in our internal control over financial reporting. The material weaknesses include, but may not be limited to inadequate

accounting oversight, policies, procedures, and controls specific to complex debt agreements, taxation computations and the application

of accounting estimates for the recognition of impairment allowances for good will and intangibles and investments held by the

company. We cannot conclude, in accordance with Section 404, that we do not have other material weaknesses in our internal controls

or a combination of other significant weaknesses that could result in the conclusion that we have a material weakness in other

aspects of our internal controls.



As a result of these
material weaknesses and as a result of the concerns raised by the Company’s previous independent registered public
accounting firm as described in the Company’s October 24, 2014 Report of Foreign Private Issuer on Form 6-K (the “October
6-K”), the Company’s financial statements for the fiscal years ended June 30, 2012 and June 30, 2013 have been restated.
We have been implementing new accounting policies and procedures and review controls since Mr. Morro became our Managing Director
following our emergence from VA. We acknowledge that additional resources, as well as the completion of a comprehensive review
of the design and operating effectiveness of our controls relating to financial reporting, will be necessary in the future to
fully remedy weaknesses in our financial reporting process. Further, if not fully remediated, these control deficiencies could
continue to impact the reliability of our financial statements. As a public entity, we will be required to complete our initial
assessment in a timely manner, subject to the exemption from auditor attestation requirements that is accorded to us as an emerging
growth company under the JOBS Act. Until we cease to be an emerging growth company or our exemption from auditor attestation expires,
we intend to avail ourselves of the exemption.



If we are not able to implement

the requirements of Section 404 in a timely manner or with adequate compliance, we or our independent registered public accounting

firm may not be able to certify as to the adequacy of our internal controls over financial reporting when we are required to have

them do so. Matters impacting our internal controls may cause us to be unable to prevent fraud or report our financial information

on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable

stock exchange listing rules. There could also be a negative reaction in the financial markets due to a loss of investor confidence

in us and the reliability of our financial statements. Confidence in the reliability of our financial statements could also suffer

if we and our independent registered public accounting firm were to report a material weakness in our internal controls over financial

reporting. This could materially adversely affect the Company and lead to a decline in the price of our registered equity securities.





16







As a publicly-traded

company in the United States, we incur significant costs, and our management is required to devote substantial management time

and attention to our public reporting obligations.



As a publicly-traded

company in the United States, we incur significant legal, accounting and other expenses. In addition, new and changing laws, regulations

and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer

Protection Act and the rules and regulations thereunder, as well as under the Sarbanes-Oxley Act, the Jumpstart Our Business Startups

Act of 2012 (the “JOBS Act”) and the rules and regulations of the SEC, and the NASDAQ Stock Market, have resulted

in a significant amount of time that our Board and management must devote to our compliance with these rules and regulations.

We expect these rules and regulations to continue to divert management time and attention from our product development and other

business activities and complying with them will require us to divert some of our limited management and financial resources from

the execution of our business development strategy. This could slow our growth and delay our achievement of profitability and

adversely impact our stock price.



We are an “emerging

growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies”

will make our ordinary shares less attractive to investors.



We are an “emerging

growth company,” as defined in the JOBS Act, and we are taking advantage of certain exemptions and relief from various reporting

requirements that are applicable to other public companies that are not “emerging growth companies.” In particular,

while we are an “emerging growth company” (i) we will not be required to comply with the auditor attestation requirements

of Section 404(b) of the Sarbanes-Oxley Act, (ii) we will be exempt from any rules that may be adopted by the Public Company Accounting

Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements,

(iii) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements

and (iv) we will not be required to hold nonbinding advisory votes on executive compensation or shareholder approval of any golden

parachute payments not previously approved. In addition, the JOBS Act provides that an emerging growth company can delay its adoption

of any new or revised accounting standards, but we have irrevocably elected not to avail ourselves of this exemption and, therefore,

we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.



We may remain an “emerging

growth company” until as late as June 30, 2019 (the fiscal year-end following the fifth anniversary of the completion of

our initial public offering), though we may cease to be an “emerging growth company” earlier under certain circumstances,

including (i) if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of any June 30,

in which case we would cease to be an “emerging growth company” or (ii) if our gross revenue exceeds $1 billion in

any fiscal year.



The exact implications

of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies, and we cannot assure

you that we will be able to take advantage of all of the benefits of the JOBS Act, particularly whether or not all of the exemptions

will apply to foreign private issuers. In addition, investors may find our ordinary shares less attractive if we rely on the exemptions

and relief granted by the JOBS Act. If some investors find our ordinary shares less attractive as a result, there may be a less

active trading market for our ordinary shares and our share price may decline and/or become more volatile.



Deteriorations in

global political, economic and market conditions could negatively impact our business.



The Company’s operations

are affected by global political, economic and market conditions. The recent economic downturn generally reduced the availability

of liquidity and credit to fund business operations worldwide. As regards the renewable energy sector in particular, this currently

being acutely felt in Europe, where renewable developments are not growing at historical rates and the situation is likely to worsen

if the downturn is prolonged. This dynamic has adversely affected our customers, suppliers and lenders and has caused us to largely

withdraw from pursuing the solar PV business in Europe. Because of the large installed base of projects in Europe, however, we

still consider this a promising, albeit mature and highly competitive, market for our monitoring and O&M services businesses.



Further, such conditions

and uncertainty about future economic conditions may make it challenging for us to obtain equity and debt financing to meet our

working capital requirements, forecast our operating results, make business decisions, and identify risks that may affect our business,

financial condition and results of operations.



If we are unable to timely

and appropriately adapt to changes resulting from the difficult macroeconomic environment, and declining levels of incentives available

in countries where we continue to operate, then we are likely to experience a reduction in demand for our products and services

and consequently will experience a material adverse effect on our operations and sales and on our financial condition generally.





17







The renewable energy

sectors we serve depend on the availability of rebates, tax credits and other financial incentives and government policies, the

reduction or elimination of which is imminent or already occurring and is likely to reduce the demand for our services in jurisdictions

where we currently operate, including the U.S.



Many U.S. states, including

California, Massachusetts, Nevada, New Jersey and North Carolina, and other countries such as the United Kingdom, Australia and

Italy, offer substantial incentives to offset the cost of solar power or wind generation systems. These incentives can take many

forms, including direct rebates, state tax credits, system performance payments and feed-in tariffs, and Renewable Energy Credits,

referred to as RECs. However, there can be no assurance that these incentives will continue to be available in any or all of the

jurisdictions in which we operate and, in many places, government policies and regulations will reduce or soon eliminate such

incentives. For example, in Australia the number of RECs received per KW installed has been reduced continuously and

the number of credits received for 5kW and smaller systems was reduced from a 5 multiplier in 2010 to a 1 multiplier

beginning in January 2013. In North Carolina the state tax credit applicable to solar projects will no longer be available after

2015 and the U.S. federal tax credit applicable to solar projects is scheduled to be reduced from 30% to 10% effective December

31, 2016. It is possible, and should be considered likely that the surviving incentives in Australia and the U.S. will ultimately

be phased out altogether. In Italy and other European countries, minimum user prices for solar electricity production and feed-in

tariffs are subject to reduction annually for new applications and are subject to unannounced change; subsequent, unpredictable

decrees will redefine rates for solar power plants commissioned thereafter. A reduction in or elimination of such incentives could

substantially increase the cost or reduce the economic benefit to owners of renewable power generation projects, resulting in

significant reductions in demand for new renewable installations. Our sales and margins could be disproportionally adversely affected

because of our weak competitive position.



All sectors served

by the Company are highly competitive, with low barriers to entry and intense price competition, which could negatively impact

our results and may prevent us from achieving sustained profitability. In addition, the Company does not have significant market

share in any sector we serve and we may lose business to larger companies that are better able to achieve cost efficiencies, respond

to customer needs or weather a decline in market conditions.



In general, the industries

in which our businesses operate are highly competitive and fragmented, subject to rapid change and have low barriers to entry.

Most of our businesses have the attributes of general contracting businesses where projects are open to competitive bidding and

new customer acquisition is a constant challenge because a low percentage of customers are repeat purchasers of our products and

services. Even our services businesses, i.e. system performance monitoring and O&M services are often subject to a competitive

bid process initially and then on an annual basis or after a short multi-year period. In particular, contracts for large projects

are traditionally awarded on a competitive bid basis, with pricing often being the primary factor in determining which qualified

contractor is awarded a job, although each contractor’s technical capability, safety performance record and reputation for

quality also can be key factors in the determination. Small-scale solar and energy efficiency segments and the O&M services

we offer do not generally require us to utilize proprietary technology and the capital required to undertake individual projects

is small and available to many competitors. Many other renewable energy system developers / installers, providers of climate control

and energy efficiency solutions and monitoring and O&M services providers are larger than us and have resources that are significantly

greater than ours. These competitors may be able to better withstand industry downturns, compete on the basis of price, and acquire

new equipment and technologies, all of which could affect our revenues and profitability. These competitors compete with us both

for customers and for acquisitions of other businesses.



In particular, with respect

to the solar PV segment, we may, in the future, compete for potential customers with solar system installers and servicers, electricians,

roofers, utilities and other providers of solar power equipment or electric power. Also with respect to the performance monitoring

business we are competing for potential customers with other data storage and software providers, manufacturers of components

such as solar panels, inverters and wind turbines, large system integrators and providers of O&M services and utilities. Some

of these competitors have significantly greater financial, technical and marketing resources and greater name recognition than

we have. We believe that our ability to compete depends in part on a number of factors outside of our control, including:





18







| | ● | the ability of competitors to hire, retain and motivate qualified technical personnel;                       
| | - | -------------------------------------------------------------------------------------------------------------
| |   |                                                                                                              
| | ● | the ownership by competitors of proprietary tools to customize systems to the needs of a particular customer;
| |   |                                                                                                              
| | ● | the price at which others offer comparable services and equipment;                                           
| |   |                                                                                                              
| | ● | the extent of our competitors’ responsiveness to client needs;                                               
| |   |                                                                                                              
| | ● | risk of local economy decline; and                                                                           
| |   |                                                                                                              
| | ● | the evolution of installation or monitoring technology.                                                      



Competition in the provision

of O&M services to the renewable power industry may increase in the future, partly due to the low barriers to entry, as well

as from other alternative energy resources now in existence or developed in the future. Increased competition could result in

price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel. There can

be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete

effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be

adversely affected.



Our proprietary monitoring

business, which we believe to have great strategic importance for the Company, is still immature and if it does not function as

planned or rapidly gain more market acceptance, our ability to penetrate this market may be limited or foreclosed by our competitors,

our liquidity will be strained and the value of our shares may be severely impaired.



The first commercial version

of our monitoring system software was released in February 2015 and was deployed to only a few institutional customers on a trial

basis when we acquired the monitoring platform of Draker, Inc. in September 2015. We are now in the process of harmonizing the

BlueNRGY and Draker monitoring software to better serve the market and build on the more established base of U.S. customers served

by the Draker system. Nevertheless, our software services are not mature and the roll-out of the system to a broad spectrum of

users will require that we hire additional personnel to effectively and efficiently integrate the data feeds from a larger universe

of sources than is currently possible. Because of the uncertainties about our ability to win customers and earn revenue, and the

expectations that development and marketing costs will accelerate, we are unable to determine when, or if, the monitoring business

will become cash positive. This uncertainty is magnified by the competitive dynamics of the monitoring services market. There are

numerous competitors developing or marketing monitoring systems with at least some characteristics similar to ours. A few of these

competitors currently offer robust systems with features and capabilities similar or superior to those we are able to provide.

Despite the proliferation of renewable power generating systems worldwide, asset ownership is beginning to concentrate and we believe

that the market for monitoring services may be largely locked up by a small number of competitors within a few years. Primarily

for this reason, we are investing aggressively, within the limitations of our liquidity, to accelerate system development and deployments.

If we cannot capture meaningful market share quickly, we may be foreclosed from pursuing much of the available revenue from this

sector and we may not realize a return on investment in the development of our monitoring system or related acquisitions.



We do not carry business

interruption insurance, and any unexpected business interruptions could adversely affect our business.



Our operations are vulnerable

to interruption by earthquake, fire, power failure and power shortages, hardware and software failure, floods, computer viruses,

and other events beyond our control. In addition, we do not carry business interruption insurance to compensate us for losses that

may occur as a result of these kinds of events, and any such losses or damages incurred by us could disrupt our solar integration

projects and other operations without reimbursement. Because of our limited financial resources, such an event could threaten our

viability to continue as a going concern and lead to dramatic losses in the value of our ordinary shares.





19







The renewable energy

sectors we serve are notable for the pace of technological change and our operations could be adversely affected if we fail to

keep pace with such changes; and changes in technology could make it difficult for us to be competitive with our available technology

and prevent us from achieving sustained profitability.



We develop renewable energy

projects and are offering services to participants in the renewable energy markets. In part because of the large amounts of capital

deployed in the sector and the global growth, the renewable energy sector is becoming increasingly competitive. To meet our clients’

needs, we must continually source, qualify and offer updated technology for the projects and services we provide. We are at a

competitive disadvantage in doing so because of our small scale, weak financial condition and unprotected know-how and proprietary

technology. In addition, rapid and frequent technology and market demand changes can render the existing technologies known and

used by us obsolete, requiring substantial new capital expenditure or negatively impacting our market share. Any failure by us

to anticipate or to respond adequately to changing technology, market demands and client requirements could adversely affect our

business and financial results.



Solar and wind energy

are, in some jurisdictions, more expensive sources of energy than the wholesale cost of conventional alternatives and recent drops

in the price of conventional energy sources and other factors affecting energy costs may negatively impact demand for renewables

and reduce our revenues and profitability.



We believe that an end

customer’s decision to purchase or install renewable power generation systems is primarily driven by the cost and return

on investment resulting from such installations. Fluctuations in economic and market conditions that affect the prices of conventional

and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil fuels, could cause the demand

for solar power systems to decline, which would have a negative impact on our profitability. Other factors that could have a negative

effect on our rapidly evolving business include, but are not limited to:



| | ● | changes in utility electric rates or net metering policies;                                                
| | - | -----------------------------------------------------------------------------------------------------------
| |   |                                                                                                            
| | ● | increases in the installed costs of solar or wind power due to changes in tariffs, taxes and subsidies; and
| |   |                                                                                                            
| | ● | adverse customer experience with performance and reliability of renewable power installations as they age. 



If demand for solar or

wind power products fails to develop sufficiently or declines, we might not be able to generate enough revenue to sustain profitability.

In addition, demand for solar power products in the markets and geographic regions we target may not develop or may develop more

slowly than we anticipate.



Overcapacity and

financial distress among manufacturers of wind and solar power generation equipment is commonplace and also occurs to a lesser

extent among climate control equipment manufacturers; if OEM or component suppliers for systems we install fail to meet warranty

obligations to our customers, or backstop warranty commitments to us, our business and profitability could be impaired.



Many large and well-known

manufacturers of solar PV panels, wind turbines and related equipment necessary to implement functioning systems, such as inverters,

have failed in recent years, including two of our significant past suppliers, Solon and Oelmaier. Others have been financially

weakened, possibly including some of our current suppliers. The climate control sector is more mature and failures of equipment

manufacturers are less common, but they do occur from time to time. Our solar PV, wind and climate-control installations are covered

by warranties from these component suppliers, which they may not be able to meet. While, we do not generally have direct warranty

obligations related to components produced by these suppliers we could suffer reputational damage if the component manufacturers

default on their warranty obligations.



In all of our system installation

businesses, if we fail to meet warranty obligations of our suppliers who fail to do so we may face precipitous declines in our

sales. We believe this to be particularly the case in the residential solar segment in Australia and the U.S. (if we re-launch

a residential business in the U.S.). In both markets we believe the importance of reputation as a provider of reliable systems

is a critical factor in the sustainability the business. However, taking on warranty obligations for suppliers who default could

place a financial burden on us that we are unable to meet. Either course of action could render our business non-viable.





20







Existing regulations,

and changes to such regulations, may present technical, regulatory, and economic barriers to the purchase and use of wind and solar

power products, which may significantly reduce demand for such systems and could harm our business.



Installations of solar

power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning,

environmental protection regulation, utility interconnection requirements for metering, and other rules and regulations. In the

jurisdictions in which we operate, we attempt to keep up-to-date with these requirements on a national, state, and local level,

and must design, construct and connect systems to comply with varying standards. Some jurisdictions have ordinances that prevent

or increase the cost of installation of our solar power systems. In addition, new government regulations or utility policies pertaining

to solar and wind power systems are unpredictable and may result in significant additional expenses or delays and, as a result,

could cause a significant reduction in demand for solar and wind generation systems and our post-installation services. For example,

there currently exist metering caps in certain jurisdictions such as Queensland that effectively limit the aggregate amount of

power that may be sold by solar power generators into the power grid. Certain jurisdictions have passed ordinances that limit

noise or threats to wildlife to levels that would preclude installation of cost-effective wind generation capacity. Moreover,

in certain markets, the process for obtaining the permits and rights necessary to construct and interconnect a power system to

the grid requires significant lead time and may become prolonged, and the cost associated with acquiring such permits and project

rights may be subject to fluctuation.



Our business benefits

from the declining cost of solar panels and other components, and our financial results would be harmed if this trend reversed

or did not continue.



The declining cost of solar

panels and the raw materials necessary to manufacture them has been a key driver in the pricing of our solar energy systems and

customer adoption of this form of renewable energy. If solar panel and raw materials prices do not continue to decline or increase,

our growth could slow and our financial results would suffer. In a the past we have purchased a significant portion of the solar

panels used in our solar energy systems from manufacturers based in China, some of whom benefit from favorable foreign regulatory

regimes and governmental support, including subsidies. If this support were to decrease or be eliminated, if internal Chinese demand

for panels increases to a level that exports are reduced, or if tariffs and import restrictions above current levels were to be

imposed by U.S. or European governments, it could lead to higher prices for panels (or other components), reducing demand and margins.

A similar adverse impact on our results would occur if our access to specialized technology from Chinese manufacturers is restricted

or becomes more expensive.



If potential owners

of solar PV systems are unable to secure financing on acceptable terms as a result of financial crisis, rising rates or other factors,

we could experience a reduction in demand for installation of our solar PV systems and may be unable to sell projects developed

under our BOT model or owned or operated under our BOO model.



Many owners of solar PV

systems depend on financing to purchase their systems. Moreover, in the case of debt financed projects, even if lenders are willing

to finance the purchase of these systems, an increase in interest rates or a change in tax incentives could make it difficult for

owners to secure the financing necessary to purchase a solar PV system on favorable terms, or at all. In addition, we believe that

a significant percentage of owners purchase solar PV systems as an investment, funding the initial capital expenditure through

a combination of upfront cash and financing. Difficulties in obtaining financing for solar PV installations on favorable terms,

or increases in interest rates or changes in tax incentives, could lower an investor’s return on investment in a solar PV

installation, or make alternative power generation systems or other investments more attractive relative to solar PV systems based

on our product platform. Any of these events could result in reduced demand for our systems, which could have a material adverse

effect on our financial condition and results of operations.





21







Public opposition

to development of solar and wind farms, particularly in the U.S., Europe and more recently in Australia, is expected to make it

more difficult to obtain the necessary permits and authorizations for such projects and will reduce development opportunities available

to us.



Over the last few years,

public disfavor of solar and wind farms in certain European countries that have historically allowed such projects (e.g.,

Spain and Italy) has been manifested in changes in government policies. In the opinion of our management, the public opposition

in Europe has been triggered by concerns that scarce farm land was being displaced by such solar and wind power installations

and that the cost of the power supplied from ground-based systems was unjustified and not economically sustainable. Moreover,

the significant displacement of farmland and the costs of power supplied from ground-mount projects appears to have been caused

by excessively high feed-in tariff rates set by regulators. Key policy changes observed include reductions of subsidies applicable

to ground-based solar installations relative to other types of projects and changes in permitting regulations that make ground-based

installations difficult or practically impossible to start. Consequently, the number of economically feasible projects in these

high-potential regions has declined and the near-term opportunities for us to pursue large-scale solar projects in these proven

markets have diminished rapidly. If this occurs in other jurisdictions such as the U.S. and Australia where land is plentiful,

it could significantly diminish project opportunities and our potential for growth.



Regulations applicable

to the U.S. market may exacerbate competitive pressures for solar PV development and reduce margins, making it harder for us to

grow profitably in the United States.



In certain U.S. jurisdictions

government regulations or utility policies pertaining to solar power systems are unpredictable and have the potential to cause

significant additional expenses or delays for projects of all sizes. Also, some jurisdictions have imposed regulations that effectively

limit the aggregate amount of power that may be sold by solar power generators into the power grid. In addition, the United States

has imposed tariffs on Chinese-manufactured solar panels that have disrupted established supply relationships and increased costs.

Collectively, these and similar factors may constrain implementation of U.S. solar energy systems and opportunities to sell our

monitoring and O&M services relative to expectations. Our management expects these dynamics to increase competitive pressures

among system developers and service providers that could lead to reduced pricing and profits. Our solar development and servicing

initiatives in the United States may not succeed or be profitable as a result.



In our solar PV and

climate control businesses we depend on a small number of suppliers for key components used in our products and systems with the

result that we risk disruption in supply and may be constrained in negotiating competitive prices, lead times and other trade terms.



Our businesses focused

on system design and installation provide the preponderance of our revenue. Nevertheless, our small scale and weak financial condition

have compelled us to obtain key components required by these businesses, and also our monitoring business, from a small number

of suppliers who would offer us credit terms. We believe that our commercial relationship with our suppliers in each of our business

segments is good, but prior to and during the period when we were operating under VA, we had difficulty making timely payments

on a consistent basis to many of these suppliers. Our historical inability to make timely payments has led to curtailment of shipments

to us by suppliers, even after our emergence from VA and has reduced our recent revenues and increased our supply costs. Because

of our continuing weak financial condition and limited liquidity, we may face the same issue in the future. We do not maintain,

or expect to be able to maintain, sufficient inventories to allow us to buffer the consequences of supply interruptions. Although

alternative suppliers exist for most of the components we sell in our solar installation and climate control businesses, new suppliers

may not be willing to ship to us on customary trade terms, or at all, due to our financial condition. Sometimes we are in a position

of having only one source of component supply. The sudden loss of any of our current primary component supply relationships could

cause a delay in order fulfillment and be disruptive to our operations and lead to financial losses.



It is critical to the growth

of our revenue that our products be high quality while offered at competitive pricing. Any constraints that we face in being able

to negotiate with our suppliers may prevent us from being able to offer systems to customers on competitive terms or to do so profitably.



In addition, we are currently

subject to fluctuations in market prices for the components that we purchase. We cannot ensure that the prices charged by our suppliers

will not increase because of changes in market conditions or other factors beyond our control. An increase in the price of components

used in our systems could result in an increase in costs to our customers and could have a material adverse effect on our revenues

and demand for our products.





22







Interruptions in our ability

to procure needed components for our systems, whether due to discontinuance by our suppliers, delays or failures in delivery,

shortages caused by inadequate production capacity or unavailability, financial failure, manufacturing quality, or for other reasons,

would adversely affect or limit our sales and growth. There is no assurance that we will continue to be able to find qualified

sources for components on acceptable terms and, if we do, there can be no assurance that product quality will continue to be satisfactory,

which could lead to a loss of sales and revenues.



The termination of

our right to use of the Westinghouse® brand to market solar installations was triggered by our VA and necessitates that we

rebrand and re-launch our small-scale solar offerings in Australia and the U.S.; we have elected to do so under our own BlueNRGY

brand and this process, if unsuccessful or more costly than we anticipate, could severely and adversely affect the viability of

our solar business and the ability of the Company to continue as a going concern.



We began marketing PV solar

systems solely under the Westinghouse® brand in Australia and New Zealand in April 2013 and in the U.S. in July 2014 and continued

to do so until we received notice of termination of the license agreement with Westinghouse Electric Corporation in December 2014.

This action forced us to immediately cease marketing and sales efforts for small-scale solar altogether and, following our emergence

from VA, to develop a new website, marketing materials and business plans to re-launch this business under an alternative brand

at great expense and with much lost time. We have determined to apply our own BlueNRGY brand to the small-scale solar business

beginning in Australia. Unlike the Westinghouse brand, which has wide consumer recognition in both the U.S. and Australia, the

BlueNRGY brand is substantially unknown. It is therefore unclear whether or not the BlueNRGY brand will gain enough market acceptance

to drive sales as we expect at a cost that allows this line of business to be profitable. If not, our revenues and margins could

be severely adversely affected to the potential detriment of our overall business. If the brand is accepted by consumers, our failure

to effectively execute the roll-out of branded product or satisfy requirements of the initial orders may increase our costs or

cause our re-launch to be scaled back or cancelled. Any of these adverse outcomes could create a window of opportunity for the

continued growth of competitors utilizing similar technology and could foreclose us from reentering these markets with a small-scale

solar offering altogether. Because the BlueNRGY brand is our own, any costs necessary to protect and defend our exclusive rights

to the brand must be borne entirely by us and, if significant, could further impair our liquidity.



Risks Related to our Ordinary Shares



We have never paid

a dividend on our ordinary shares and do not intend to do so in the foreseeable future, and consequently, investors’ only

opportunity to realize a return on their investment in the Company is through the appreciation in the price of and sale of our

ordinary shares.



We do not anticipate paying

cash dividends on our ordinary shares in the foreseeable future and intend to retain all earnings, if any, for our operations.

If we decided to pay dividends at some future time, we may not have sufficient funds legally available to do so. Even if funds

are legally available for distribution, we may be unable to pay any dividends to our shareholders because of limitations imposed

by our credit agreements or a lack of liquidity. Accordingly, our shareholders may have to sell some or all of their ordinary shares

in order to generate cash flow from their investment. Our shareholders may not receive a gain on their investment when they sell

their ordinary shares and may lose some or all of their investment. Any determination to pay dividends in the future on our ordinary

shares will be made at the discretion of our Board and will depend on our results of operations, financial conditions, contractual

restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our Board deems relevant.



We require additional

capital to fund our businesses, and the sale of additional shares or other equity securities would result in dilution to our shareholders;

such sales, or the perception that such sales may occur, may also depress our share price.



We require additional

cash resources to fund our business plan and to continue operating as a going concern. The Company may sell additional equity

to obtain needed funds and the use of such funds could include:



| | ● | funding losses and paying existing creditors;                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                     
| | ● | expanding into new product markets and geographies;                                                                                                 
| |   |                                                                                                                                                     
| | ● | acquiring complementary businesses, products, services or technologies;                                                                             
| |   |                                                                                                                                                     
| | ● | hiring additional technical and other personnel for purposes of business development, research and other activities consistent with our strategy; or
| |   |                                                                                                                                                     
| | ● | otherwise pursue strategic plans and respond to competitive pressures.                                                                              





23







We may also issue additional

equity securities for other purposes including for compensation of employees, directors consultants and for employment benefit

plans. These securities may have the same rights as our ordinary shares or, alternatively, may have dividend, liquidation, or other

preferences to our ordinary shares. The issuance of additional equity securities will dilute the holdings of existing shareholders

and may reduce the price of our ordinary shares.



There are no assurances

that equity financing will be available in amounts or on acceptable terms, if at all. If financing is not available to us on acceptable

terms, if and when needed, we will be unable to fund our operations or expand our business. In any such event, our business, financial

condition and results of operations could be materially harmed, and we may be unable to continue as a going.



Our financing needs

may require us to obtain additional debt financing to fund losses, future capital expenditures and to meet working capital requirements,

which may be obtained on terms that are unfavorable to the Company and/or our shareholders.



We will require additional

financing in the future in connection with execution of our growth strategy, to fund future capital expenditures, working capital

and losses. Additional debt financing may include conditions that would restrict our freedom to operate our business, such as

conditions that:



| | ● | increase our vulnerability to general adverse economic and industry conditions;                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                              
| | ● | require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital, growth and other general corporate purposes; and
| |   |                                                                                                                                                                                                                                              
| | ● | limit our flexibility in planning for, or reacting to, changes in our business and our industry.                                                                                                                                             



The incurrence of additional

indebtedness could require acceptance of covenants that, if violated, could further restrict our operations or lead to acceleration

of the indebtedness that would necessitate winding up or liquidation of the Company. In addition to the foregoing, our ability

to obtain additional debt financing may be limited and there can be no assurance that we will be able to obtain any additional

financing on terms that are acceptable, or at all.



Rule 144 may not

be available for public resales of our securities.



Rule 144 under the
Securities  Act, permits the resale, subject to various terms and conditions, of limited amounts of restricted securities
after they have been  held for six months. The SEC prohibits the use of Rule 144 for resale of securities issued by issuers
that have been at any time  previously a shell company. It is our view that in 1999 we were a shell company. We were
originally formed on August 18, 1989 in  Australia as London Securities Limited, a corporation subject to the laws of
Australia, specifically, the Australian Corporations  Act. Our ordinary shares were first listed on the Australian Stock
Exchange, or ASX, in 1989. Following our inception, we began  acquiring energy generation assets and on December 19, 1996,
changed our name to Asia Pacific Infrastructure Limited. We were,  however, suspended from trading on ASX on October 8, 1998.
In calendar year1999 we had nominal non-cash assets and we had nominal  operations. We resumed trading on ASX on April 18,
2000.





24







The SEC prohibits the

use of Rule 144 for resale of securities issued by shell companies (other than business transaction related shell companies) or

issuers that have been at any time previously a shell company. The SEC has provided an important exception to this prohibition,

however, if the following conditions are met: the issuer of the securities that was formerly a shell company has ceased to be

a shell company; the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange

Act; the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during

the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form

8-K reports; and at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC

reflecting its status as an entity that is not a shell company. We believe that, upon the filing of this Report, we will have

met all of these requirements. In our two most recent fiscal years, however, we have not filed our Annual Report on Form 20-F

in a timely fashion. If we do not file our Annual Report for the fiscal year that will end on June 30, 2016 on time, Rule 144

would not be available for the resale of our restricted ordinary shares which would materially reduce the ability to sell such

shares.



Our ordinary
shares have only recently commenced trading in the United States on the OTC Markets, trading is thin and the market price
of our shares is volatile, conditions that individually or in combination may render our shareholders unable to sell the ordinary
shares at or near “ask” prices, or at all; consequently, if our shareholders need to sell their shares to raise money
or otherwise desire to liquidate their shares they could incur substantial losses.



Although we have
applied to list our ordinary shares on the NASDAQ Capital Market, there is no assurance that our NASDAQ listing application will
be approved or that an active public market for our ordinary shares will develop or be sustained. Our ordinary shares have only
began trading on the OTC Markets on September 10, 2015 following a nine-month suspension and delisting from the NASDAQ
Capital Market and it is not clear if an active market for our shares will develop. Since trading recommenced on the OTC Markets,
highest trading volume recorded in a single day through December 4, 2015 was 75,475 shares, representing a total value of shares
traded on such day of $8,310. This lack of an active market means that the number of persons interested in purchasing ordinary
shares at or near bid prices at any given time may be relatively small or nonexistent. This situation is attributable to a number
of factors, including the fact that many of our shareholders are located in Australia and lack the capability or knowledge to
trade in the U.S. markets, were issued unregistered shares, pursuant to the DOCA or in private placement transactions following
our emergence from VA, that are not currently eligible to trade in the U.S. market, the Company’s history of losses and
the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and
others in the U.S. investment community that generate or influence sales volume. Even if we came to the attention of such persons,
they tend to be risk-adverse and may be reluctant to follow an unproven company such as ours or purchase or recommend the purchase
of our shares until such time as our business has demonstrated viability and we become larger and more seasoned. As a consequence,
there may continue to be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared
to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without
an adverse effect on our stock price. There are no assurances that a broader or more active public trading market for our ordinary
shares will develop or be sustained, or even that current trading levels experienced on the OTC Markets will be sustained.



The market price and trading volume

of our ordinary shares may be volatile and may be affected by variability in the Company’s performance from period to period

and economic conditions beyond management’s control.



The market price of our ordinary shares

may be highly volatile and could be subject to wide fluctuations. This means that our shareholders could experience a decrease

in the value of their ordinary shares regardless of our operating performance or prospects. The market prices of securities of

companies operating in the renewable energy sector have often experienced fluctuations that have been unrelated or disproportionate

to the operating results of these companies. In addition, the trading volume of our ordinary shares may fluctuate and cause significant

price variations to occur. If the market price of our ordinary shares declines significantly, our shareholders may be unable to

resell our ordinary shares at or above their purchase price, if at all. There can be no assurance that the market price of our

ordinary shares will not fluctuate or significantly decline in the future.





25







Some specific factors that could negatively

affect the price of our ordinary shares or result in fluctuations in their price and trading volume include:



| | ● | actual or expected fluctuations in our operating results;
| | - | ---------------------------------------------------------



| | ● | actual or expected changes in our growth rates or our competitors’ growth rates;
| | - | --------------------------------------------------------------------------------



| | ● | our inability to raise additional capital, limiting our ability to continue as a going concern;
| | - | -----------------------------------------------------------------------------------------------



| | ● | changes in market prices for our product or for our raw materials;
| | - | ------------------------------------------------------------------



| | ● | changes in market valuations of similar companies;
| | - | --------------------------------------------------



| | ● | changes in key personnel for us or our competitors;
| | - | ---------------------------------------------------



| | ● | speculation in the press or investment community;
| | - | -------------------------------------------------



| | ● | changes or proposed changes in laws and regulations affecting the renewable energy industry as a whole;
| | - | -------------------------------------------------------------------------------------------------------



| | ● | conditions in the renewable energy industry generally; and
| | - | ----------------------------------------------------------



| | ● | conditions in the financial markets in general or changes in general economic conditions.
| | - | -----------------------------------------------------------------------------------------



In the past, following periods of volatility

in the market price of the securities of other companies, shareholders have often instituted securities class action litigation

against such companies. If we were involved in a class action suit, it could divert the attention of senior management and, if

adversely determined, could have a material adverse effect on our results of operations and financial condition.



If we do not meet the initial

listing standards of the NASDAQ Capital Market (or, once listed, the continued listing standards in the future), the Company’s

stock will not trade on a national exchange and liquidity and share price may suffer.



Our ordinary shares
are currently only traded on the OTC Markets. Although we have applied for listing of our ordinary shares for trading on
the NASDAQ Capital Market and believe that listing on NASDAQ will result in a more active public market and liquidity for our
ordinary shares than is observed on the OTC Markets, there can be no assurance that this is will be the case or that our
NASDAQ listing application will be approved. There may be significant consequences associated with our ordinary shares trading
on the OTC Markets rather than a national exchange. The effects of not being able to list our ordinary shares on a national
exchange include:



| | ● | limited release of the market price of our securities;
| | - | ------------------------------------------------------



| | ● | limited news coverage;
| | - | ----------------------



| | ● | limited interest by investors in our securities;
| | - | ------------------------------------------------



| | ● | volatility of our ordinary share price due to low trading volume;
| | - | -----------------------------------------------------------------



| | ● | increased difficulty in selling our securities in certain states due to “blue sky” restrictions; and
| | - | ----------------------------------------------------------------------------------------------------



| | ● | limited ability to issue additional securities or to secure additional financing.
| | - | ---------------------------------------------------------------------------------



Even if our shares are approved for

listing the NASDAQ Capital Market or any other national exchange, there is no assurance that the Company will be able to continue

to meet all necessary requirements for such listing; therefore, there is no assurance that our ordinary shares will continue to

trade on a national securities exchange. At any time when our shares do not trade on a national exchange, liquidity may be reduced

and our stock price could decline.





26







We are in the process of effecting

a 1-for-80 reverse share consolidation which could adversely affect the market liquidity of our ordinary shares, impair the value

of your investment and harm our business.



Our shareholders and Board have approved

a 1-for-80 share consolidation and, subject to receipt of requisite regulatory approval we expect this to be implemented shortly

following the filing of this Annual Report on Form 20-F. There are a number of risks associated with the pending share consolidation.

The history of similar share consolidation for companies in like circumstances is varied, and we cannot predict whether:



| | ● | the market price per share of our ordinary shares after the share consolidation will result in a sustained rise in proportion

to the reduction in the number of shares of our ordinary shares outstanding before the share consolidation, i.e., that the post-

consolidation market price of our ordinary shares will equal or exceed the pre-split price multiplied by the split ratio;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the share consolidation will result in a per share price that will attract brokers and investors who do not trade in lower

priced stocks;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the share consolidation will result in a per share price that will increase our ability to attract and retain employees and

other service providers;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the market price per share will equal or exceed the price required to qualify for initial listing or remain in excess of the

US$1.00 minimum bid price as required by NASDAQ following initial listing;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | or we will otherwise meet the requirements of NASDAQ for continued inclusion for trading on the NASDAQ Capital Market.
| | - | ----------------------------------------------------------------------------------------------------------------------



In addition, the share consolidation

will reduce the number of shares available in the public float and this may impair the liquidity in the market for our ordinary

shares on a sustained basis, which may in turn reduce the value of our ordinary shares. We may in the future undergo one or more

additional share consolidations. If we issue additional shares in the future, it will likely result in the dilution of our existing

shareholders.



As a foreign private

issuer, we follow certain home-country corporate governance practices that afford less protection to holders of our ordinary shares

than would be available to U.S. issuers listed on NASDAQ.



As a foreign private issuer,

we follow certain home-country corporate governance practices and intend to continue to do so in lieu of certain NASDAQ requirements,

even if we are successful in regaining our NASDAQ listing. Australian law does not require us to follow NASDAQ requirements, including

with respect to the composition of our Board and nominations committee and executive sessions, having a majority of our Board be

independent, establishing a nominations committee or holding regular executive sessions where only independent directors are present

and the requirement to obtain shareholder approval in all circumstances where we issue shares constituting more than 20% of our

outstanding shares. (Refer to Item 16G “Corporate Governance”.)



Such Australian home-country

practices may afford less protection to holders of our ordinary shares than would be available to our shareholders if we were

incorporated in the United States, governed by U.S. law and subject to all applicable NASDAQ regulations for U.S. issuers.



We are a “foreign

private issuer” under the rules and regulations of the SEC and are thus exempt from a number of rules under the Exchange

Act and will be permitted to file less information with the SEC than a company incorporated in the United States.



As a “foreign private

issuer” under the Exchange Act, we are exempt from certain rules under the Exchange Act, and will not be required to file

periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered

under the Exchange Act, or to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information.

In addition, we are exempt from certain disclosure and procedural requirements applicable to proxy solicitations under Section

14 of the Exchange Act. Our officers, directors and principal shareholders are exempt from the reporting and “short-swing”

profit recovery provisions of Section 16 of the Exchange Act. Accordingly, there may be less publicly available information concerning

us than there is for a company domiciled in the United States, and such information may not be provided as promptly as it is currently

provided by companies domiciled in the United States. Although not anticipated, if we lose our status as a foreign private issuer,

we will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements

with the SEC as if we were a company incorporated in the United States. The costs incurred in complying with these additional requirements

could be substantial.





27







Because we are organized

under the laws of Australia, U.S. investors may face difficulties in protecting their interests, and their ability to protect their

rights through the U.S. federal courts may be limited.



It may be difficult to

bring and enforce suits against us because we are organized under the laws of Australia. Some or all of our directors will reside

in various jurisdictions outside the United States. As a result, it may be difficult for investors to effect service of process

within the United States upon our non-U.S. directors, or enforce judgments obtained in the United States courts against us or our

non-U.S. directors. In addition, there is some doubt as to whether the courts of Australia and other countries would recognize

or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions

of the federal or state securities laws of the United States or would hear actions against us or those persons based on those laws.

We have been advised by our legal advisors in Australia that the United States and Australia do not currently have a bilateral

arrangement providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. Consequently,

a party seeking to enforce a judgment of a U.S. court must rely on common law principles for recognition and enforcement. Some

remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws,

may not be allowed in Australia courts as contrary to that jurisdiction’s public policy. Therefore, a final judgment for

the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not based

solely on United States federal or state securities laws, would not automatically be enforceable in Australia. Similarly, those

judgments may not be enforceable in countries other than the United States.



A large fraction

of our shares are held by a few shareholders, some of whom are members of our Board and management. As these principal shareholders

substantially control our corporate actions, our other shareholders may face difficulty in exerting influence over matters not

supported by these principal shareholders.



Our principal shareholders
include affiliates of W.H. Soul Pattinson and certain affiliates, referred to as WHSP, ESOL B.V., Mr. Y-R Cotrel, Mr. Emmanuel
Cotrel, and Mr. Morro (the latter three are officers and/or directors of the Company) and they collectively control over 50.8%
of our outstanding ordinary shares as of December 4, 2015.



These shareholders, acting

individually or as a group, could exert control over matters such as electing directors, amending our certificate of incorporation

or bylaws, and approving mergers or other business combinations or transactions. In addition, because of the percentage of ownership

and voting concentration of these principal shareholders and their affiliated entities, elections of our Board may be within the

control of these shareholders and their affiliated entities. While all of our shareholders are entitled to vote on matters submitted

to our shareholders for approval, a concentration of shares and voting control presently lies with these principal shareholders

and their affiliated entities. As such, it would be difficult for shareholders to propose and have approved proposals not supported

by these principal shareholders and their affiliated entities. There can be no assurance that matters voted upon by our officers

and directors in their capacity as shareholders will be viewed favorably by all shareholders of the Company. The stock ownership

of our principal shareholders and their affiliated entities may discourage a potential acquirer from seeking to acquire our ordinary

shares, which, in turn, could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.



A significant portion of our total

outstanding shares will become eligible to be sold into the market in the near future, which could cause the market price of our

ordinary shares to drop significantly, even if our business is doing well.



Sales of a substantial number of our

ordinary shares in the public market, or the perception in the market that the holders of a large number of our ordinary shares

intend to sell shares, e.g. the preponderance of our shareholders who are located in Australia or holders of large blocks of previously

restricted shares, including those issued in conjunction with the DOCA, could reduce the market price of our ordinary shares. While

a significant portion of our outstanding shares are currently restricted as a result of securities laws, they will become eligible

to be sold at various times shortly after the date of this Annual Report on Form 20-F or immediately following effectiveness of

the resale registration statement that we are obligated to file within 30 days following the issuance of our audited financial

statements for our fiscal year ending June 30, 2015 and included herein. Sales of such shares could cause the market price of our

ordinary shares to drop significantly.





28







Our Constitution grants to our Board the

authority to issue a preferred stock without further approval by our shareholders, which could adversely affect the rights of the

holders of our ordinary shares



Our Board has the power

to fix and determine the relative rights and preferences of preferred stock. Our Board also has the power to issue preferred stock

without further shareholder approval, subject to the provisions of our Constitution and the Act. As a result, our Board could

authorize the issuance of new series of preferred stock that would grant to holders thereof certain preferred rights to (i) our

assets upon liquidation: (ii) receive dividend payments ahead of holders of ordinary shares; (iii) and the redemption of the shares,

together with a premium, prior to the redemption of our ordinary shares. In addition, our Board could authorize the issuance of

new series of preferred stock that is convertible into our ordinary shares, which could decrease the relative voting power of

our ordinary shares or result in dilution to our existing shareholders



Research analysts

do not currently publish research about our business, limiting information available to shareholders, and if this continues to

be the case, or if analysts do publish unfavorable commentary or downgrade our ordinary shares, it could adversely affect our stock

price and trading volume.



The trading market for

our ordinary shares will depend, in part, on the research and reports that research analysts publish about us and our business

and industry. The price of our ordinary shares could decline if one or more research analysts downgrade our stock or if those analysts

issue other unfavorable commentary or cease publishing reports about us or our business. If one or more of the research analysts

ceases coverage of the Company or fails to publish reports on us regularly, demand for our ordinary shares could decrease, which

could cause our stock price or trading volume to decline.



We may be classified

as a foreign investment company for U.S. federal income tax purposes, which could subject U.S. investors in our ordinary shares

to significant adverse U.S. income tax consequences.



Depending upon the value

of our assets, which may be determined based, in part, on the market value of our ordinary shares, and the nature of our assets

and income over time, we could be classified as a “passive foreign investment company,” or “PFIC,” for

U.S. federal income tax purposes. Based upon our current income and assets and projections as to the value of our ordinary shares,

we do not presently expect to be a PFIC for the current taxable year or the future taxable years. While we do not expect to become

a PFIC, if, among other matters, our market capitalization is less than anticipated or subsequently declines, we may be a PFIC

for the current year or future taxable years. The determination of whether we are or will be a PFIC will also depend, in part,

on the composition of our income and assets, which will be affected by how, and how quickly, we use our liquid assets. Because

PFIC status is a factual determination made annually after the close of each taxable year, including ascertaining the fair market

value of our assets on a quarterly basis and the character of each item of income we earn, we can provide no assurance that we

will not be a PFIC for the current taxable year or any future taxable year.



If we are classified as

a PFIC in any taxable year during which a U.S. holder holds our ordinary shares, a U.S. holder would be subject to special rules

generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S. holder could derive

from investing in a non-U.S. corporation that doses not distribute all of its earnings on a current basis. Further, if we are classified

as a PFIC for any year during which a U.S. holder holds our ordinary shares, we generally will continue to be treated as a PFIC

for all succeeding years during which such U.S. holder holds our ordinary shares.





29







Risks Related to Takeovers



Australian takeovers

laws may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our ordinary shares,

which could constrain our share price and reduce investor returns.



We are incorporated in

Australia and are subject to the takeovers laws of Australia, including the Australian Corporations Act 2001, or the Corporations

Act. Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest in a company’s

issued voting shares if the acquisition of that interest will lead to a person’s voting power in such company increasing

from 20% or below to more than 20%, or increasing from a starting point that is above 20% and below 90%. Australian takeovers laws

may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our ordinary shares. This

may have the ancillary effect of entrenching our Board and may deprive, limit our shareholders’ strategic opportunities to

sell their ordinary shares and may restrict the ability of our shareholders to obtain a premium from such transactions.



Our Constitution

and applicable Australian laws and regulations may adversely affect our ability to take actions that could be beneficial to our

shareholders.



As an Australian company

we are subject to different corporate requirements than a corporation organized under the laws of the United States. Our Constitution,

as well as the Corporations Act, set forth various rights and obligations that are unique to Australian companies. These requirements

operate differently than from many U.S. companies and may limit or otherwise adversely affect our ability to take actions that

could be beneficial to our shareholders.



ITEM  4.     INFORMATION ON THE COMPANY



4.A.            History and Development of the Company



We were originally formed on August 18, 1989 in Australia as London

Securities Limited, a corporation subject to the laws of Australia, specifically, the Australian Corporations Act. Following our

inception, we began acquiring energy generation assets. Subsequently, we undertook major adjustments in strategic focus and changed

our name in 1996. We were suspended from trading on ASX on October 8, 1998. In calendar year1999 we had nominal non-cash assets

and we had nominal operations. We resumed trading on ASX on April 18, 2000 (shortly after changing our name again). We adopted

the name CBD Energy Limited on December 6, 2002. Operating as CBD Energy Limited, we reemphasized development of energy-related

businesses and undertook new initiatives to acquire installation and service contractors delivering energy-efficient commercial-scale

climate control systems. We entered VA on November 14, 2014 and our corporate organization and liabilities were restructured pursuant

to the DOCA. As further described below under the heading “Voluntary Administration and Deed of Company Arrangement,”

we emerged from the VA on January 27, 2015 having retained a strategic focus on delivering and managing renewable energy generation

and energy-efficient climate-control systems. On March 20, 2015 the Company name was changed to BlueNRGY Group Limited.



Our ordinary shares were listed on the Australian
Stock Exchange from 1989 through (other than the 18 months mentioned above) January 31, 2014, when we voluntarily delisted them
in connection with our U.S. listing. Our ordinary shares traded on the OTC Markets from February 10, 2014 until June 13,
2014 under the ticker symbol CBDNF, and began trading on the NASDAQ Capital Market on June 13, 2014. However, trading in our ordinary
shares was suspended on November 14, 2014 following commencement of the VA process. Our ordinary shares began trading again on
September 10 2015 in the over-the-counter market under the ticker symbol CBDEF. We are endeavoring to complete the steps necessary to relist
our ordinary shares on the NASDAQ Capital Market, but there is no assurance that we will be successful in doing so.



Voluntary Administration and Deed of Company Arrangement



On November 14, 2014, by unanimous resolution

of those members of its Board permitted to consider the matter and to vote, it was determined that the Company and three of its

Australian subsidiaries were (i) insolvent or likely to become insolvent in the future (ii) should be placed into voluntary administration

under the Australian Corporations Act 2001 (the “Act”), and (iii) appoint Said Jahani and Trevor Pogroske from Grant

Thornton as joint and several administrators, referred to in the singular as “Administrator”, pursuant to section 436A

of the Act. Three of our Australian subsidiaries also entered VA contemporaneously, CBD Solar Labs Pty, Westinghouse Solar Pty

Ltd and KI Solar Pty Ltd, which, together with the Company are referred to as the VA Companies. The Company’s other subsidiaries

continued to operate or were liquidated outside the VA process.





30







On December 24, 2014, DOCAs approved by requisite

vote of creditors were signed for two of the VA Companies, specifically the Company and one of its subsidiaries, Westinghouse

Solar Pty Ltd; the DOCAs were amended by deed of variation on January 27, 2015 following another vote of creditors and, as amended,

are sometimes referred to as the Reorganization Plans. Among other things, the Reorganization Plans stipulate that: (i) creditor

claims and contingent liabilities of the reorganized companies were extinguished; (ii) executory contracts of the reorganized

companies were terminated; (iii) through the operation of deeds managed by the Administrator, referred to as Deed Funds, creditors

of the reorganized companies would receive from the Company US$1.0 million in cash and newly-issued Company ordinary shares; (iv)

a secured creditor of the reorganized Companies, Washington H. Soul Pattinson and Company Ltd, referred to as WHSP, would retain

the rights to proceeds derived from certain company assets or receivables and would receive convertible preferred shares issued

by two Company subsidiaries; (v) the terms of our Series B Preferred Shares would be amended; (vi) we would consummate the acquisition

of BlueNRGY LLC, referred to as the BN Acquisition, through new issuance of additional ordinary shares to the BlueNRGY LLC shareholders

(further described below under the heading “Recent Acquisitions”) and (viii) we would sell newly issued ordinary

shares to investors at a minimum issue price per share equal to or greater than US$0.03637 and having an aggregate value at least

sufficient to make the US$1.0 million payment to the Deed Funds, and (ix) the Administrator would retain ownership of all subsidiaries

(not previously liquidated) other than specified subsidiaries.



The Reorganization Plans became effective on

January 27, 2015, when the required conditions of the DOCAs were satisfied. At that time, the Company and its subsidiary, Westinghouse

Solar Pty Ltd, emerged from VA, supervision by the Administrator ceased and management of the Company by the Board resumed in accordance

with its Constitution.



The foregoing summary description of the Reorganization

Plans is qualified in its entirety by the copies of the DOCAs, and deeds of variation, that were filed with our report on Form

6-K/A dated January 29, 2015.



As a result of the Reorganization Plans, significant
changes were made to the Group’s Net Asset/Equity position and to the number of ordinary shares on issue (refer to Item
8.B. under the heading “Issuance and Repurchase of Ordinary Shares and Other Equity-Linked Securities”).



Recent Acquisitions



In conjunction with our Reorganization Plans, we acquired 100% of

the equity interests of BlueNRGY LLC, a U.S. company specializing in data acquisition, analysis and management related to the performance

of geographically distributed energy generation systems and providing related operations and maintenance, or O&M, services.

At the time of the BN Acquisition, BlueNRGY LLC was a development-stage company serving a small number of customers in Europe and

Asia. Subsequently it has expanded the scope of its operations to include customers with U.S. and Australian generating assets.

Consideration paid to the BlueNRGY LLC shareholders and shares issued to key executives and Directors of the Group as part of the

transaction comprised in aggregate 150,162,640 of our ordinary shares. Based on the issuance of our ordinary shares to investors

in a contemporaneous private placement at US$0.03785 per share, the value of our shares issued to the BlueNRGY LLC shareholders

was US$5.7 million. BlueNRGY LLC has its principal offices in Fort Lauderdale, FL.



On September 16, 2015, we acquired, through a newly formed

U.S. subsidiary, the monitoring platform, accounts receivable, inventory, plant, property and equipment and certain other assets

of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including the Draker name, trademark, and all copyrights

then owned by the Sellers. Immediately subsequent to the transaction, referred to as the Draker Transaction, our acquisition subsidiary

changed its name to Draker Corporation and the names of the Sellers were changed to delete the “Draker” name. With

the exception of the Seller’s secured indebtedness to the Vermont Economic Development Authority (“VEDA”), Draker

Corporation did not assume Seller’s liabilities. As a result of the Draker Transaction, we are supplying monitoring services

to Seller’s customers while we negotiate and document continuing service agreements at more than 2,000 sites in the Americas,

Japan and Europe. As a result of the Draker transaction, we believe we are one of the leading independent companies providing equipment

and monitoring services to measure the performance of solar PV generation installations in the U.S.





31







On July 3, 2014, through our wholly-owned subsidiary CBD Acquisition

Holdings, Inc., we acquired all of the outstanding equity interests of Green Earth Developers LLC, referred to as GED, a solar

and electrical EPC contractor based in North Carolina. The acquisition was intended to bolster our ability to capitalize on large-scale

solar PV project opportunities in the U.S. market. At the time of the acquisition, GED had a track record of successfully completing

projects of 1MW – 5MW in size and GED remains active in this market.



In December 2012 we acquired a 50% ownership interest in J Carpenter

Electrical Services LTD (subsequently renamed Westinghouse Solar UK Limited) and in June 2013 we increased our ownership interest

to 100%. Although this subsidiary continued to operate through the VA process, due to changes in market conditions and business

prospects in the U.K. we discontinued operations of this subsidiary in October 2015 and we are currently in the process of completing

its orderly wind-down.



Recent Divestitures/Liquidations



Pursuant to the VA process that commenced on November 14, 2014

and the Reorganization Plans effective on January 27, 2015, we divested or liquidated the following subsidiaries and they are

no longer part of our corporate organization:



|Subsidiary                                      |  | Jurisdiction ofIncorporation |  | Principal Activity                                                         |  | %Owned
|----------------------------------------------- |  | ---------------------------- |  | -------------------------------------------------------------------------- |  | ------
|Aso-Tech Pty Ltd                                |  | Australia                    |  | Inverter provider                                                          |  | 67    
|Remote Area Power Systems Pty Ltd               |  | Australia                    |  | Energy storage                                                             |  | 100   
|CBD Labs Pty Ltd                                |  | Australia                    |  | Energy storage                                                             |  | 100   
|KI Solar Pty Ltd                                |  | Australia                    |  | Solar                                                                      |  | 100   
|eco-Kinetics Group Pty Ltd                      |  | Australia                    |  | Solar                                                                      |  | 100   
|eco- Kinetics Pty Ltd                           |  | Australia                    |  | Solar                                                                      |  | 100   
|eco- Kinetics NSW Pty Ltd                       |  | Australia                    |  | Solar                                                                      |  | 100   
|eco- Kinetics Victoria Pty Ltd(ACN 135 159 527) |  | Australia                    |  | Solar                                                                      |  | 100   
|eco- Kinetics Northern Territory Pty Ltd        |  | Australia                    |  | Solar                                                                      |  | 100   
|eco- Kinetics South Pacific Ltd                 |  | Fiji                         |  | Solar                                                                      |  | 100   
|eco- Kinetics New Zealand Ltd                   |  | New Zealand                  |  | Solar - Dormant                                                            |  | 100   
|eco-Kinetics Energy Systems Pty Ltd             |  | Australia                    |  | Solar - Dormant                                                            |  | 100   
|eco-Kinetics Netherlands Cooperatief UA         |  | Netherlands                  |  | Solar                                                                      |  | 100   
|eco-Kinetics Netherlands Holding BV             |  | Netherlands                  |  | Solar                                                                      |  | 100   
|Greenway Pacific Pty Ltd                        |  | Australia                    |  | Dormant                                                                    |  | 70    
|CBD Solar Labs Pty Ltd                          |  | Australia                    |  | PV Plant                                                                   |  | 100   
|Eco-Kinetics Europe Limited                     |  | United Kingdom               |  | Solar                                                                      |  | 100   
|CBD Solar Pty Ltd                               |  | Australia                    |  | Solar                                                                      |  | 100   
|National Solar Installations Pty Ltd            |  | Australia                    |  | Solar                                                                      |  | 100   
|CBD Adjungbilly Pty Ltd                         |  | Australia                    |  | Special purpose vehicle                                                    |  | 100   
|Energy Bonds Plc                                |  | United Kingdom               |  | Single-purpose entity formed to raise funding through issue of retail bond |  | 100   
|Secured Energy Bonds Plc                        |  | United Kingdom               |  | Single-purpose entity formed to raise funding through issue of retail bond |  | 100   





32







In August 2013, we sold our subsidiary, Capacitor Technologies Pty

Ltd. (“CapTech”), for total consideration of A$1.8 million.



On April 16, 2013, we sold our interests in Larkden Pty Ltd including

the energy storage patents held by Larkden in a transaction that released approximately A$2.0 million of cash to us. The sale price

of the patents was A$2.75 million of which A$0.25 million was received in cash at the time of sale. The first tranche of the balance of the payments of A$2.5 million was paid

on the anniversary of the sale in 2015. The remaining two tranches are scheduled to be received in three tranches on the anniversaries

of the sale in 2016 and 2017. All three tranches were assigned to WHSP pursuant to our Reorganization Plans.



Our principal office is located at Level 11, 32 Martin Place, Sydney,

NSW 2000, Australia. Our telephone number is +61 (0)2 8069 7970. Our website address is bluenrgy.com Information on our website

and websites linked to it do not constitute part of this Report. Process can be served in the United States at our United States

office address – BlueNRGY Group Limited, 110 E Broward Ave, Suite 1900, Fort Lauderdale, FL 33301.



4.B.            Our Business



Overview



We are an Australian corporation operating in the global renewable

energy and energy-efficiency sectors. Our businesses provide technology and services that allow owners of renewable generation

assets to maximize power production and return on investment throughout the lifecycle of this long-lived class of assets. In some

regions where we operate, most notably in Australia and the U.S., this includes the application of our engineering know-how and

extensive data resources to design and install efficient new renewable systems and to upgrade, retrofit and optimize existing

facilities. In Australia, we also deliver differentiated products and services that are designed to allow electricity consumers

to reduce power costs and increase efficiency of their climate control and other systems. In recent years we have expanded the

scope of operations throughout Australia and to Asia, Europe and the United States. The scope of our activities was curtailed

by the VA process described in Item 4.A.under the heading “Voluntary Administration and Deed of Company Arrangement”,

but we continue to conduct business through multiple subsidiaries operating in the aforementioned regions. Our continuing activities

are divided among the following lines of business:



| | ● | Monitoring & Performance Analytics                                                                                                                                                              
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| | ● | Solar Photovoltaic (or PV) System Design & Installation                                                                                                                                         
| |   |                                                                                                                                                                                                 
| |   | ●                                                                                                                                                                                               
| |   |                                                                                                                                                                                                 
| |   | ●                                                                                                                                                                                               
| |   |                                                                                                                                                                                                 
| | ● | O&M and Facilities Management for Renewable Systems (including our Chatham Island generating assets formerly included in our Remote Area Power Systems (“RAPS”) unit prior to emergence from VA)
| |   |                                                                                                                                                                                                 
| | ● | Energy Efficiency/Technology Solutions (and RAPS prior to our emergence from VA)                                                                                                                





33







Prior to the VA process, we were also actively developing wind projects,

but our involvement with wind generation systems is now, and is expected to continue to be, limited to providing data management

and maintenance services. We are no longer pursuing new project developments in this sub-sector of the renewable energy industry.



In conjunction with effecting our Reorganization Plans, we acquired

BlueNRGY LLC, a company focused on the collection and application of performance data from distributed renewable power generation

facilities. We augmented these capabilities with the Draker transaction establishing us one of the leading independent providers

of solar monitoring and data analytics in North America. We currently receive and compile operating performance and other pertinent

data from more than 2GW of solar PV installations in the Americas, Australia, Asia and Europe. Our system monitoring and control

solutions, and those of Draker in particular, have gained wide acceptance for their reliability, durability and accuracy.



Over the past five years, we actively diversified our solar PV business

geographically in order to capitalize on high expected demand for new renewable energy generation. Since emergence from the VA

process, we have focused our expansion initiatives in specific U.S. states because we have limited resources to extend our services

to multiple markets and we believe chosen markets have a combination of sustainable government policy framework and favorable renewable

energy targets and incentives all of which create opportunity for an experienced solar development business to grow rapidly and

profitably. Including the experience of our GED subsidiary, acquired in July 2014, we have completed or are currently constructing

large-scale solar PV installations in the United States with nameplate capacity of more than 50MW and an additional 20MW in Australia

and other international markets. We are actively pursuing additional projects and during our 2016 fiscal year we expect to re-launch

sales of small-scale solar systems to consumers and to commercial customers under our BlueNRGY brand. In Australia we have designed

and installed more than 17,000 small-scale systems.



BlueNRGY’s renewable O&M business is currently small,

but profitable, and we intend to scale it rapidly, aided in part by demand from monitoring customers who want the benefit of applying

our data-driven processes for maximizing the financial performance of their projects. In addition our O&M management unit now

oversees our own small portfolio of renewable generation assets, including the Chatham Project, which is discussed further below.



In our energy efficiency and technology

solutions business segment we are currently active only in the Australia region where strong incentives exist for end-users to

employ energy efficiency measures to reduce cost and/or comply with government regulations. Included in this business segment is

our Melbourne Australia based HVAC contracting subsidiary. Historically, this segment of our business also included our CapTech

Division, which was divested in August 2013 and our RAPS division, which developed and operated wind and solar power generation

systems on Chatham and King Island respectively and held interests in the Larkden energy storage technology. The Larkden Technology

was divested in April 2013 and our interests in King Island were divested during the VA. Following our emergence from VA, management

of our continuing interests in the Chatham Project is being handled in our O&M unit described above.



Our wind project development business was historically confined

to Australia and was active during our 2012 to 2014 fiscal years when we believed the regulatory framework, our experience and

the local presence of our executive management gave us an opportunity to compete successfully. We developed and, until we entered

the VA process, managed the construction of a 107MW, approximately A$290 million wind farm at Taralga in New South Wales. As developer,

we negotiated a long-term energy off-take agreement with Energy Australia, Australia’s largest energy retailer, and then

sold the project to an affiliate of Banco Santander, who managed completion of the project following our emergence from VA and

the commissioning of the Project during the second calendar quarter of 2015. While we retained a 10% interest in project equity

returns, the proceeds payable from that ongoing participation were assigned to WHSP pursuant to the terms of the Reorganization

Plans. New development activities in the wind segment were curtailed upon emergence from VA, but we retained core competencies

in the wind sector that we believe will have application in our Data Management and Performance Analytics business.





34







Our Industry



The renewable energy industry, which includes energy derived from

wind, solar and renewable biological resources, has grown rapidly throughout the world in recent years. This has been a result

of the convergence of several factors including government policies favoring the use of renewable resources over carbon-based alternatives,

technological advances that have reduced the cost of energy derived from renewable resources and increases in the costs of many

fossil fuels in most countries. Evidencing these trends is the level of investment by renewable energy sector, as shown in the

table below:



Figure 1 - Global Investment in Clean Energy by Calendar Quarter(Billions of US$)







Source: Bloomberg New Energy Finance, January 6, 2015



Although aggregate investment levels in renewable energy capacity

have plateaued, installed generating capacity continues to grow rapidly because unit costs of installing renewable capacity are

declining. According to the 2013 Clean Energy Race Report published by the Pew Charitable Trust in April 2014, the Pew Report,

installed global capacity of wind and solar generation systems in G-20 countries reached 307GW and 144GW respectively at the end

of 2013 and had year-over-year growth rates compared with 2012 of 27GW and 40GW respectively. The Pew report also illustrated that

almost half of the clean energy investment in 2013 was in Asia and Oceana and the remainder was split almost evenly between the

Americas and Europe/Middle East and Africa. Given the pattern of continuing investment in the renewable sector we expect the installed

base of renewable assets to continue to cumulate rapidly





35







We are active in the solar, wind, and energy efficiency sectors

in specific geographies. In the solar market we have historically focused primarily on small-scale residential and commercial

installations in Australia, but we anticipate a shift in our revenue mix toward larger-scale commercial projects. In the U.S.

and Europe our business mix has been concentrated on larger-scale commercial and small utility-scale installations and this continues

to be our emphasis. Our activities in wind and energy efficiency have been principally in the Australian region; however, our

experience and technology establish a base for applications in other international markets.



The Solar PV Segment



As reflected in Figure 1 the solar sector has become the largest

recipient of investment capital among the renewable energy sectors. According to the Pew Report, investments in solar generating

assets attracted $97 billion of investment in the G-20 countries in 2013, 52% of the total invested in clean energy for that year.

The solar sector encompasses a wide variety of commercial activity ranging from PV solar to solar thermal concentrators, including

the monitoring and management of data pertaining to installed capacity. Progress in each of these areas of the Solar PV sector

has contributed to making solar power more cost effective over time and this trend is continuing.



Costs of energy delivered are declining to or below the level

of energy derived from traditional sources in many markets



Figure 2, shown below, illustrates the Levelized Cost of Energy,

or LCOE, for solar PV at year-end 2014 is at or below the cost of electricity in many major markets, including markets served by

us.



Figure 2: Energy Cost vs LCOE in Selected Markets - 2014







Source: 2015 Solar Outlook - Deutsch Bank





36







Over the last several years, a dramatic reduction in the cost of

solar PV systems, most notably in the modules that generate electricity, has led to reductions in the installed cost per watt of

system capacity. In May 2012, Bloomberg New Energy Finance published a white paper, “Reconsidering the Economics of Photovoltaic

Power” that reviewed the economics of solar PV in the United States. In that paper the authors concluded that solar PV costs

have been declining, and have declined dramatically in recent years – by 75%. The trajectory of the decline between 2001

and 2013 for the U.S. was charted by the Solar Energy Industry Association, or SEIA and is shown in Figure 3 below:



Figure 3: Prices and installation rates of solar PV systems in

the United States (2000 – 2013)







Source: Solar Energy Industry Association, “Solar Market Insight

Report 2013 Year in Review”



Similar dynamics are evident in other markets we serve, as illustrated

for an example system in Australia in Figure 4 below:





37







Figure 4: Reduction in solar PV modules Prices in Australia







Source: “Solar Choice,” Australian Solar PV Installation

Brokers



As the unit costs of PV Solar continue to decline and it becomes

more cost-competitive, we expect the market for solar installations to expand. We also believe that this trend will increase if

and as storage technologies evolve to cost-effectively allow electricity from renewable generation to be used after sunset or when

the wind isn’t blowing.



The convergence rate of solar energy cost with traditional

energy costs has been accelerated by rising electric power rates in key markets we serve.



In Australia, the increase in retail electricity prices has been

accelerating in recent years, more than doubling for both households and businesses since 2000, as illustrated in Figure 5.



Figure 5 Electricity price indices for households and businesses

in Australia





| |  | 
| |  | 





Source: Australia Bureau of Statistics





38







In the United States, recent retail price increases have not been

as rapid as in Australia, but, according to the U.S. Energy Information Administration, prices are more than 50% higher than in

2001 and the price trend continues to be rising, as illustrated in Figure 6 below:



Figure 6: Index of U.S. retail electricity prices









Source: U.S. Energy Information Administration



Regulatory structures that incentivize

solar installations are prevalent, important to driving demand in our markets in the near-term, but declining in importance over

the long-run.



Regulatory structures to incentivize renewable energy solar vary

by jurisdiction, and can include tariffs, grants, and Renewable Energy Certificates, or RECs, as a traded commodity for the renewable

energy markets.



Australia. Small-scale solar in Australia is incentivized

primarily by the Small-scale Renewable Energy Scheme, or SRES, under which power generators and some industrial companies are obligated

to purchase annually a number of small-scale technology certificates, or STCs, specified by the government agency responsible for

administering the SRES program. Eligible installations, such as residential and small-commercial solar systems, are credited with

a onetime allocation of STCs when completed. The regulator establishes the aggregate annual STC purchase obligation for power generators

at a level approximately equal to the supply of STCs that it expects to be created from new installations, adjusted for over or

under creation of STCs in prior years. STCs may be purchased by any person and freely traded. Consequently, an unregulated market

for STCs has developed since the inception of the program. As the experience of the government agency responsible for balancing

STC purchase obligations with supply has grown over time, market volatility, liquidity and predictability of pricing have decreased,

but the market remains thin and the number of market makers is small. STC prices are effectively capped by the right of obligated

purchasers to pay a fixed-rate penalty if they are unable to purchase sufficient STCs in the market to meet their obligations.

As the costs of solar energy have declined and the market has matured, the number of STCs credited under the SRES program for each

kW of solar capacity installed has been stepped down by the regulators and now represents less than 25% of the value of a system

at market prices for STCs. The Australian government is expected to leave the SRES program unchanged through 2020, but there is

no assurance that government policy will not change.



Large-scale renewable energy installations, which include both commercial-

and utility-scale solar systems and wind systems, receive annual credit for the energy produced and this is reflected in the issuance

of RECs. Power generators are obligated to meet targets for renewable energy generation and may do so by receiving credit in the

form of RECs for the renewable power they generate, or they may buy RECs from others who are generating power from renewable sources

in excess of their mandated requirements. Regulations recently adopted fix the large-scale renewable generation targets through

2020 at 33,000GWh, almost double the 17,000GWh of energy that is expected to be produced by large-scale renewable generation in

2015. This target creates ample opportunity for large-scale installations over the next five years that, according to the Australian

Clean Energy Council, would represent investment of more than A$10 billion over the period. There can be no assurance, however,

that government policy will remain stable and there is a possibility that renewable generation targets will be reduced.





39







United States. The regulatory incentives in the United States

include a federal income tax credit that represents approximately 30% of the value of a project. In addition, a patchwork of state-

and local-level programs exist that vary widely in structure and economic effect and may include tax credits or other deductions,

outright grants, REC programs and mandated net metering or feed-in tariff arrangements that have the effect of further subsidizing

solar installations. The magnitude of federal tax credits are due to be reduced in 2016 to 10% and the incentive programs of states

that were early promoters of solar are generally also declining in significance. Our management expects that the impending reduction

in the federal tax credit will produce a high level of activity in calendar year 2016, followed by a downturn in the pace of U.S.

solar PV installations. In general, state level incentives tend to be more favorable to residential or small-scale solar installations

and we expect this to continue to be the case.



As a result of market factors, the demand outlook for solar

installation growth is favorable in our key markets.



Research funded by the Australia Renewable Energy Agency demonstrates

the rapid and continuing growth of Solar PV in Australia.



Figure 7: Historical and projected residential capacity increases

– 2001 to 2014







Source: Australia PV Institute (APVI) Solar Map



This data supports our management’s view that that there

will be a sustainable long-term solar market in Australia, although the market is maturing and we believe that rooftop residential

penetration is now in excess of 40% in some regions.



United States. We expect demand for residential solar installations

to grow rapidly in the United States and for levels of large-scale installations to be sustained in line with the recent capacity

installation trends reported by SEIA and shown in Figure 3 above. This market opportunity creates substantial overall growth potential

for participants in the U.S. market, including us.



Competition among solar developers and installers is intense

in all of our markets and they are highly fragmented, although market-share consolidation is occurring in some markets.



The residential and small commercial solar PV market in Australia

is fragmented, with no large dominant competitors. The three major energy retailers (Origin Energy, AGL and Energy Australia) have

active installation businesses, and there are a number of significant competitors focused on residential installations. An Australian

consultancy, Sunwiz, determined the top 20 solar installation businesses in August 2012 as shown in Table 8 and we believe that

the same companies continue to hold leading market share.





40







Table 8: Sunwiz Top 20 Residential Solar PV Installers in August

2012







Source: Reneweconomy, August 2012 on-line article (http://reneweconomy.com.au/2012/solar-insights-australias-top-20-solar-companies-52223)



The U.S. residential market has some large competitors as illustrated

in Figure 9 below:



Figure 9: Market share distribution of leading U.S. residential

installers







Source: GTM Research



While still fragmented, GTM Research reported in its Q-1 2015 report

that the residential installer market is consolidating, with SolarCity and Vivint market share exceeding 50% for the first time.

Other large installers include Verengo, Sungevity and Real Goods Solar. Notwithstanding the significance of the larger competitors

and their momentum in consolidating market share, the low penetration rates for small-scale installations in the United States

are still supporting smaller competitors serving niche markets.



We believe First Solar and SunEdison to be the largest U.S. installers

of utility-scale systems. Other than Solar City, we are not aware of any installers serving the large-scale commercial sub-sector

that have accumulated meaningful market share. In the U.S., as well as in Australia, we believe that this subsector is served by

many regional companies in other industries such as roofing and general electrical contracting who have expanded their business

scope to include solar installations.





41







Large-Scale Wind



Wind energy is currently the most economic source of large-scale

renewable energy and can often be developed at scale in the regions where power is needed if the wind resource is strong. As with

other renewable energy sectors, installation of wind power generation capacity has grown rapidly over the past decade, although

wind energy investments globally have recently plateaued, as shown in Figure 1 above. As with solar, the wind sector encompasses

the design and installation of the generating system (turbines & towers) and ongoing maintenance and management.



In the Australian market, wind capacity has grown steadily, driven

by a government-mandated renewable energy target. . This target requires electricity retailers to source an annually increasing

amount of their customers’ electricity consumption from renewable sources, the largest component of which is necessarily

wind. This trend in Australia is illustrated by the figure below:



Figure 10 - Cumulative Installed Wind Capacity in Australia







Source: Calculated from data available at http://ramblingsdc.net/Australia/WindPower.html



To satisfy the recently adopted Australian renewable energy target,

the Australian Clean Energy Council estimates growth in wind capacity averaging between 500MW and 750MW per year will be required

through 2020 is required in Australia’s installed wind generation capacity. As shown in Table 11 below, there were 13 wind

projects in the advanced stage of development at year-end 2014. These represented 1,945 MW of wind generation capacity, with 14,676MW

of wind projects in a less advanced stage.





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Table 11. Major renewable electricity generation projects - November

2014







Source: Australian Bureau of Resources and Energy Economics –

Electricity Generation Major Projects Report

- 2014



To our knowledge, there are approximately 20 companies developing

and/or operating wind farms in Australia. These include the three major nongovernment utilities – AGL, Origin Energy and

Energy Australia. Within the top ten, we estimated that two companies have development pipelines of greater than 1,000MW, with

the remaining eight having pipelines in the range of 500 to 1,000 MW.



Our understanding of the wind development markets in the US and

Europe is less complete, but based on the Pew Report, we believe that there are expected to be numerous large-scale wind projects

developed in both regions over the coming years.



Monitoring & Performance Analytics





The addressable market for services targeting the data management

and operations and maintenance of renewable generation projects of any type and in any region is defined largely by the installed

generation capacity, with adjustments for differences that exist in project sizes and vertical integration among regional markets.

On a worldwide basis, as of end of 2014, we estimate that more than 640GW of renewable power generation systems are in operation,

including 226GW for Solar PV and 413GW for Wind.



Solar PV:

Distributed solar projects come in a wide variety of sizes, roughly

characterized as residential (typically rooftop), small-scale commercial (often located on rooftops or elevated structures) and

utility- or megawatt-scale. Supervisory control systems for these projects are provided by numerous specialist firms, equipment

OEMs such as the inverter companies, and a handful of large, vertically integrated organizations and utilities or independent power

producers who have developed proprietary systems. Given our current capabilities to provide data management, operations and maintenance,

the markets that are immediately relevant for our data management services and O&M services range from small-scale commercial

installations, often involving fleets of systems and the megawatt-scale installations for both small- and large-fleet owners. Very

large utility-scale projects with full-time operational personnel and project fleets owned by vertically integrated solar companies

are less likely to be customers for our current systems and services offerings than other types of projects.



United States: GTM Research has estimated that the total

addressable market for distributed solar generation O&M in the U.S., excluding utility scale project, is forecasted to be over

11GW by the end of 2015 and is estimated to represent an $803 million niche market by 2020. This includes the more than 1,100 commercial

installations analyzed by SEIA and that we believe to be representative of the geographic concentration of U.S. installations.

The ownership category and locations of these installations is illustrated in the chart below and provides perspective on the market

for O&M services for less-than-utility-scale installations:





43







Figure 12: Representative Solar PV Installations







Source: GTM Research and SEIA- US Solar Market Insight Report -

2014



We believe that competition for O&M services in this less-than-megawatt

market is highly fragmented and includes such regional firms as True South Renewables, Burke Electrical Solar, Petersen Dean, Verengo

Solar and Trinity Solar. Notable competitors serving the U.S. market (both small-scale and utility-scale) with specialized data

management systems for solar PV (both small-scale and mega-watt scale) include MeteoControl, Green Power Monitor and Also Energy.



We believe the U.S. utility-scale market includes many very large

single-site power plants and a high concentration of ownership by vertically integrated companies such as First Solar, Sun Power

and Sun Edison. While the solar installations run by these companies are currently within our addressable market and our market

share in this sub-segment is insignificant, we have recently had success in winning projects of this scale. There are, however,

many smaller megawatt-scale installations and geographically distributed fleets in the United States and the number is growing.

In addition, there has recently been significant formation and growth of special-purpose funds and operating entities (both public

and private) to invest in contracted renewable energy assets or the cash flows derived from such assets (referred to as YieldCos).

YieldCos are providing the renewable energy industry with increased access to cost-effective capital, particularly in North America,

that is driving market growth and consolidation of renewable assets into portfolios, or fleets. According to Kaye Scholer –

Investment Financing Opportunities in Alternative Energy 2015 report, six publicly-listed North American YieldCos (NRG Yield, TransAlta

Renewables, Pattern Energy, Abengoa Yield, NextEra Energy Partners and TerraForm Power) secured $3.8 billion in equity on the public

markets in 2014, more than three times the $1.1 billion reported by Clean Energy Pipeline as having been raised in 2013. Clean

Energy Pipeline also reported that the same YieldCos collectively acquired 3.8 GW of effective renewable energy capacity (defined

as the capacity of the project multiplied by the stake acquired) in 2014, a 46 percent increase over the 2.6 GW of effective capacity

acquired in 2013. The figures do not include acquisitions by other funds or independent power producers that we believe to be significant

in number and to be amassing portfolios of renewable energy projects. YieldCos and similar aggregators of renewable generation

assets, whether public or private, have requirements for enhanced data analytics delivered through a single platform and we believe

they will form an important new category of customer for our data analytics and O&M services in North America. Our management

also believes that the aggregation of renewable asset ownership by specialized owners will grow globally and will create new customers

for our services.





44







Numerous competitors for O&M services serve our addressable

utility-scale market, including True South, Suns Up Solar and Next Phase Solar, however, we are not aware that any of these companies

has significant market share. We also believe that there is considerable overlap between O&M providers servicing megawatt-scale

installations and small-scale systems.



Australia: We believe that the preponderance of solar PV

installations in Australia have been residential or were constructed by the major vertically-integrated utilities. Neither of these

categories of installation are currently addressable by us with our current capabilities to provide either monitoring or O&M

services in Australia. As the market matures and financing becomes more readily available, we believe that fleets of commercial

installations will grow and that a viable market for both our monitoring solutions and O&M services for solar PV will emerge.



Europe. Because of the evolution of policies favoring the

construction of commercial and small-utility-scale solar PV installations in Europe, we believe that there is a large universe

of solar PV installations in this region that could be targets for our data management and O&M services. However, the reduced

and declining pace of large solar PV installations in Europe in recent years limits the points of entry for us into this relatively

mature market. GTM Research has reported that the competitive framework for megawatt scale solar installations in Europe is highly

fragmented, with an aggregate fleet of 24 GW being handled by approximately 60 vendors of O&M services. If and when asset aggregation

by YieldCos or similar specialized entities accelerates in Europe, it could bolster our ability to access this market for data

analytics and O&M services.



Wind. Because data management, asset management and maintenance

contracts on wind projects typically extend for several years, we believe our best opportunities to win new business in the wind

sector are in areas where new projects are likely to be commissioned over the next several years rather than endeavoring to displace

established service providers at seasoned projects. Collectively, the pipeline projects in our targeted regions represent an attractive

market opportunity for our maintenance and data management services, but there can be no assurance that we will be successful in

garnering contracts with any of these prospective customers or projects. For Australia this opportunity is illustrated by the pipeline

information in Figure 11 above. In the last several years there has been a considerable slowdown in the pace of new U.S. wind project

construction, although, as illustrated in the chart below, many new projects were started in the fourth quarter of 2013 and are

still under construction. The Pew Report indicates that investment levels for in wind projects in Europe will continue in line

with current levels.





45







Figure 13 – Wind Capacity Under Construction







Source: American Wind Energy Association – U.S. Wind Industry

3rd Quarter Market Report



Some of the projects still under construction may be candidates

for our O&M services as they are completed and commissioned, but the pipeline of new starts is thin. In Europe, the UK represents

a bright spot for wind installations due to the prevailing policy and current feed-in-tariff structure. However the pace of new

wind installations that could represent targets for our O&M services have fallen dramatically from historical levels.



To our knowledge, most local supervisory control systems deployed

throughout the world are generally proprietary to the turbine manufacturers although a few specialist independent companies do

offer data management systems for wind installations. These companies include: Baze, BaxEnergy, Osisoft and their primary served

markets are North America and Europe.



Energy Efficiency



Our business segment targeting energy efficiency is currently focused

only on Australian businesses whose products and services have the potential to contribute to reducing the amount of energy and

related services consumed by end-users for a given activity. In Australia, powerful incentives exist for end-users to employ energy

efficiency measures to reduce cost and/or comply with government regulations. Australia has also experienced sharp increases in

electricity charges in the last five years and these are expected to continue. The country’s power cost increases have been

primarily driven by investment in regulated infrastructure and the introduction of carbon pricing and other government policy mandates

that are intended to promote the use of energy resources deemed to be more sustainable. The range of products and services associated

with energy efficiency is potentially broad, but our activity in this sector is currently limited to an HVAC contracting and servicing

business serving the Melbourne, Australia market. The following industry discussion is tailored accordingly. Major new installations

in the HVAC markets we serve are awarded primarily by competitive tender where price is a key determinate of success. Market participants

often submit tenders as part of a syndicate of contractors and opportunities are sourced through long-standing relationships with

construction general contractors. Service sales are generated from relationships with prior installation customers and through

competition on service levels. Revenue growth in the region is bounded by and highly correlated to construction activity levels

in and around Melbourne. Because of the favorable weather patterns in the region, the construction cycle is not seasonal in nature.





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The Melbourne HVAC market is regional and highly fragmented, with

the largest competitors having market shares between 5-10% (individually). These companies include AG Coombs, AE Smith, D &

E Air Conditioning, Allstaff Air Conditioning and JL Williams. Other competitors with a similar or smaller market share include:

RKH Air Conditioning, PJM Air Conditioning, Quadrant Air Conditioning and Proair Air Conditioning.



Our Competitive Strengths



We believe we demonstrate the following strengths that can differentiate

us in a competitive and fragmented market and will allow us to participate effectively in the expected growth of the renewable

energy sector:



Clear strategic focus – We have a singular

focus on management and optimization of renewable energy and energy efficiency systems over their full life cycle informed by our

database and related analytics technology. Specifically, we offer our customers post-commissioning performance system measurement,

operations and maintenance services and, selectively, system design and technology integration for new projects and system upgrades

and retrofits. This positioning allows the Company to partner effectively with a wide base of equipment and component suppliers,

project owners and financing sources. Our customers look to us to help them achieve competitive costs for systems, optimize energy

delivered or used, limit risks and maximize return on investment. We believe that our focus also positions us within the highest

value-added segment of the renewable supply chain where we can distinguish ourselves through execution, branding and the development

of proprietary technology in system data management and optimization.



Development track record - As the renewable

energy industry matures, execution experience and prior project success are increasingly important to securing bidding opportunities

and winning contract awards. Notwithstanding our restructuring in VA, we have retained core competencies in, and a solid track

record successfully developing, designing and implementing large and small-scale renewable projects in both developed countries

and remote and difficult geographies. We have also demonstrated that we can overcome the challenges of integrating renewable power

into diverse local power grids. In Australia and through our foreign subsidiaries, we have successfully installed more than 78

MW of solar capacity worldwide through November 2015, including over 17,000 residential systems. Our wind project developments

include completed systems in the Chatham Islands, off the coast of New Zealand, and the 107MW Taralga Wind Farm in Australia. In

addition, we have handled numerous complex climate control system installations with total value of more than A$250 million.



Management skills, experience and local presence

– Members of our Board and our managers have extensive knowledge of and experience in the utility and energy sectors.

We believe such knowledge and experience gives us the credibility to effectively navigate complex contracts and power purchase

agreement, or PPA, arrangements involving larger projects. We deem these larger projects to be a critical factor for our success

in providing management tools and services to participants in the renewable energy asset management sector. We also have the relevant

experience in operating and maintaining renewable systems to provide a foundation for development of this line of business from

a small but growing revenue base. We intend to augment our executive ranks through direct hires and acquisitions to ensure we have

the capabilities to fully capitalize on the market opportunities we in the growing sector we serve.



Diversified Revenue Streams – Within

our strategic focus, we benefit from being diversified across:



| | ● | technologies,

i.e. , solar / wind / biogas and energy efficiency/climate control;                                                                                                                                                                      
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                         
| | ● | products and suppliers of sub-systems or components such

as solar modules and inverters and control systems;                                                                                                                                           
| |   |                                                                                                                                                                                                                                                         
| | ● | geography, including Australia and the United States which

have robust legal systems and currencies; independent regulatory bodies; and stable policy agendas; and                                                                                     
| |   |                                                                                                                                                                                                                                                         
| | ● | types

of revenue streams, ranging from recurring revenues from data management and O&M services with contracts that typically run

for multi-year periods to project-related revenue, often with established customers who use our services repeatedly.





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Over time, and as we build scale in our businesses, we expect this

diversification to mitigate adverse impacts of volatility in exchange rates, government policy changes, technological evolution

and other risks. The breadth of our business also opens a range of opportunities for us to extend the scope of our activities to

capture new revenues and build profits in the future.



Our Business Strategies



To build, over time, a high-growth and profitable business that

takes advantage of our strengths and the opportunities in our served markets, we intend to:



Create multiple revenue streams in

different jurisdictions. We intend to continue to diversify our sources of revenue while remaining focused delivering

technology and services for the renewable energy sector. In addition to further broadening our geographic reach, we are constantly

evaluating new revenue generation opportunities in the countries and business lines in which we operate. We believe that this will

make our business more resilient and help us build scale without sacrificing operating efficiency. Our strategy of accessing multiple

complimentary markets limits risks arising from government policy changes in a single country or related to a single segment and

offers the potential to access a larger overall market. Systems, marketing, and best practices developed in one market are tailored

to other markets once they are proven.



Ensure customers access to best-in-class products and technologies.

We do not have exclusive commitments to use any specific supplier of equipment or system components. This gives us the flexibility

to shift suppliers as the relative costs, efficiency or effectiveness of products and components changes and to integrate components

and technology to optimize system design and performance. Through our proprietary data management system, we have empirical perspectives

on the performance of renewable generation system components and engineering that is generally unavailable to many service providers

and system designers. With these insights, we are selectively nurturing strong direct relationships with leading manufacturers

of best-in-class components and technology.



Deploy a flexible business development organization.

We are striving to implement standardized project design methodologies, management processes and execution objectives across geographies

and lines of business in which we operate. This allows cross utilization of our business development resources and facilitates

using a small executive team to efficiently and rapidly respond to evolving demand for efficient generation and climate-control

systems suitable for varying regulatory and business environments.



Capture high-margin opportunities not targeted by traditional

installers and developers. We have developed expertise in solar, wind, energy storage and energy efficiency that gives

us unique and complimentary capabilities to provide integrated sustainable and cost-effective generation and climate control solutions

for the residential, commercial and utility markets. When possible, we try to sell systems and services directly to end-users,

generally asset owners.. In such cases, we have the opportunity to price our installations based on the maximum economic benefit

provided, thereby capture the highest available margins. Over time, where market conditions and regulations permit, we are positioning

ourselves to be able to offer customers the opportunity to acquire energy from renewable sources at competitive pricing thorough

so-called community or imbedded networks, without the necessity of customers having to be directly involved in system installation

or ongoing management.



Monetize information derived from our proprietary data

management system.We collect voluminous data on the performance of projects, components and systems in our proprietary

data management system. From this data we are able to discern trends and correlate relationships affecting system and component

performance that is not generally available in the market. Subject to our commitments regarding customer data confidentiality

we anticipate being able to monetize this data resource by analyzing data and selling information to risk managers, asset managers,

financial intermediaries manufacturers and project owners. Although we have not yet realized revenue from this strategy and there

is no assurance that we will do so, our management expects the value of our database for renewable generation projects, together

with the empirical information it can provide, to grow in value over time.





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Selectively acquire or retain project ownership interests.

Through our project development and proprietary data management activities we have visibility of expected project returns in many

situations. Over time we expect to be able to invest opportunistically in commissioned generating projects that we believe will

have high returns on our invested capital, generate O&M revenue or foster future business development. As capital cost and

availability permit, we intend to invest in such projects.



Acquire complimentary businesses. We have grown

and evolved the Company through acquisitions and intend to continue to do so (see “—Acquisitions” below).

We recently completed the acquisition of GED, BlueNRGY LLC and the operating platform and certain assets of Draker and we are actively

exploring other acquisitions and strategic partnerships that we believe would accelerate our entry into targeted markets and enhance

the depth of our management team



Our Challenges



In spite of our competitive strengths and strategies to capitalize

on them, we face significant challenges in executing our business plan that subject investors in our ordinary shares to a high

degree of risk, notably:



With respect to our business:



Weak financial condition– We emerged from the

VA process with a streamlined cost structure and no indebtedness at the corporate parent level. However, we remain thinly capitalized

and are currently not profitable. Some of our operating subsidiaries that were not part of the VA process require cash infusions

to meet working capital needs, including paying deferred trade creditors and funding for new projects. In addition, our data management

business requires additional investment in the software to satisfy competitive requirements. Consequently, we may encounter demands

for payment that we cannot meet and have limited access to trade credit, either of which could have adverse consequences for our

business and future prospects. Our auditors have raised substantial doubts as to our ability to continue as a going concern. Nevertheless,

we have raised sufficient equity and, at our subsidiaries, working capital loans, to fund our operations since emergence from VA.

We believe we are positioned to grow profitably during our 2016 fiscal year if we have access to sufficient additional capital

to fund business development opportunities in our pipeline.



Small scale and low market-share in highly competitive businesses– Competition is intense in all of our lines of business and we do not have significant market share in any of the

businesses or regions where we operate. This places us at a disadvantage to larger competitors and limits our control over margins.

We must work hard to originate new business leads and we expend significant resources doing so. With respect to obtaining financing

to deliver projects for our customers, we believe we are operating at a disadvantage to larger competitors who can more easily

build alliances with project financing resources and negotiate better rates. We may also be at a disadvantage with respect to purchasing

components at the lowest cost, although we believe that the component markets for the systems we install are currently so competitive

and commoditized that this is not a significant concern. We are seeking to overcome these disadvantages by: growing the scale of

our business; differentiating ourselves through use of the BlueNRGY brand; and applying innovative technology.



Difficult to manage international growth strategy–

We are seeking to grow in multiple jurisdictions, geographically dispersed from each other and from our Australian headquarters.

The renewable energy projects with which we are involved are complex and present significant financial, managerial and operational

challenges, including difficulties of coordinating the activities of scattered personnel, integrating and financial and control

systems, high travel expenses, the assumption of unknown liabilities and risks of operating in unfamiliar legal and regulatory

environments. These difficulties are exacerbated by our small size and the limited number of seasoned executives in our management

ranks and on our Board. We are seeking to overcome these obstacles by employing the most capable personnel we can find and linking

their compensation to our corporate performance, making efficient use of information technology, standardizing best practices across

geographies, engaging specialized qualified resources when necessary to handle unique jurisdictional issues and, throughout each

line of business, closely monitoring performance.





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With respect to our industry:



Instability of renewable energy policies and market conditions– Changes to global political and economic conditions have negatively impacted our business in the past and are likely

to do so in the future. The renewable energy sectors we serve depend, to a degree, on the availability of rebates, tax credits

and other financial incentives and government policies affecting the purchase and use of energy generated from solar and wind resources,

changes in which could reduce the demand for our services and impair our margins. Some changes can be anticipated, such as the

reduction in the U.S. federal tax credit for renewable energy projects that is scheduled to step down from 30% to 10% at the end

of 2016. But other changes can occur with little advance warning and opportunities to mitigate the consequences of policy changes

in any single jurisdiction may be limited. Our strategy to diversify our operations across renewable energy technologies and geographies

is intended to ameliorate this risk but cannot eliminate it.



Limited availability of cost-effective project financing–Renewable energy generation and energy efficiency installations are generally capital intensive and have long useful lives

ranging up to 20 years or more. The availability of financing, and in the U.S., tax equity financing, is usually a key factor in

determining project viability. Because renewable energy generation technology, particularly solar, is not mature, the legal and

regulatory frameworks governing these installations are evolving and demands for financing have been high relative to availability.

Consequently, costs vary widely depending on project-specific factors and availability of financing is not reliably predictable.

Gaining access to financing for projects on acceptable terms is an important factor to our success. While financing constraints

affect all renewable system developers and providers, some larger competitors have advantages in accessing financing that we are

seeking to overcome by rapidly increasing our own scale of operations in key markets. If interest rates rise or other factors cause

financing costs to increase, this could dampen growth in all of the markets we serve.



Description Of Our Business Segments



Monitoring & Performance Analytics



The integration of BlueNRGY LLC with the Company in conjunction

with our emergence from VA and the subsequent acquisition of the Draker monitoring platform gives us capabilities that our management

believes will allow us to access the growing market for data management and services related to operating and maintaining the large

global pool of distributed renewable generating assets over their multi-decade life-cycles.



Data Management.- The proprietary BlueNRGY and Draker data

management technology together comprise a powerful tool designed to provide asset owners and managers with the capability to cost-effectively

collect, store and analyze performance data on their renewable power generation systems over time with a high degree of granularity

and accuracy. Our system enables performance monitoring at the system component level and overall, and can be applied across a

wide spectrum of component suppliers. Renewable system component performance and overall plant performance can be compared over

time and across portfolios of projects, system performance can be compared across portfolios of assets and with design expectations,

and correlations between performance and external factors can be evaluated. Data and information from the system is accessed by

our customers through internet cloud-based applications, sometimes referred to as software as a service or SAAS. We believe that

system data, once accumulated, will have alternative applications in validating billing and revenue collection, to support asset

valuations and for financing providers, risk managers & insurers.



Our proprietary data management system is monitoring over 2,000

sites with a combined power generation capacity of more than 2GW. Although the substantial majority of the renewable systems for

which we provide data and performance analytics are PV solar installations located in the U.S., we are providing similar services

for asset owners and operators of systems located in Europe, throughout the Americas and in Japan, China and Australia. To meet

local regulations regarding data security we have established server and storage capacity in the U.S., China and Europe. Typically,

our customers for data management services subscribe to multi-year contracts and we expect to serve most of them over the useful

lives of their systems.



We also integrate and sell to many of our SAAS customers, data logger,

metrology and communications hardware supplied by third parties. Typically such equipment is installed at newly-built renewable

power generation facilities and is configured with our proprietary firmware to interface with our cloud-based data management system

to collect and transmit performance data from the equipment at each site. We also have the capability to collect and manage data

gathered from third-party hardware and supervisory control and data acquisition or SCADA systems. In China, we have engaged a reseller

on a non-exclusive basis to reach prospective customers and this group has been successful in placing our system with a few customers

already and supporting its successful launch. We intend to continue and broaden our use resellers in markets where we do not have

operations.





50







Operations & Maintenance, or O&M. - In our climate

control business, further discussed below (under the heading “Energy Efficiency — Parmac Air Conditioning &

Mechanical Services Pty Ltd, or Parmac”) we have, for many years, successfully offered post-installation maintenance

servicing of systems. This service is offered to prospective clients whenever we install a system and we frequently win contracts

to service systems installed by others. In our experience, post-installation maintenance servicing provides a steady stream of

recurring revenue, often pursuant to multi-year contracts, at attractive margins. Beginning in the second half of our 2015 fiscal

year we began offering similar services for operators of solar PV systems in those regions where we have operations.



We believe that our proprietary data management system greatly enhances

our ability to cost-effectively provide targeted O&M services for renewable energy projects and an opportunity to differentiate

our offerings from those of others. We have found that we can use the system to pinpoint maintenance requirements and to increase

the efficiency of work scheduling. It also provides us with clear metrics to demonstrate to our O&M customers that they are

getting results from our services. Since our emergence from VA and following our acquisition of the Draker monitoring platform,

our O&M specialists based in the U.S. have developed a pipeline of prospects that we expect will lead to our growth in this

line of business. We are also applying the BlueNRGY tools to enhance the O&M service offerings of our operations in Australia.

There can be no assurance, however, that we will be successful expanding our O&M services business in the renewables sector

to a level that is material to our overall business.



Solar PV- Residential and Small Commercial Solar



In addition to our data management and O&M services businesses,

we design and install small-scale (typically roof-top) solar PV systems in Australia. Since 2010 we have installed over 17,000

residential systems in Australia and we expect, over time, to be able to apply our experience in our home market in other regions,

although we are not currently selling small-scale solar PV systems in any other countries.



When we entered the solar PV sector our business was principally

focused on residential installations, typically averaging about 3kW. However, we have also completed a substantial but much smaller

number of commercial installations ranging in size up to about 100kW. After 2012, the policy environment in Australia became less

favorable to our small-scale solar operations there and led us to adjust our business model to reduce fixed costs, lower inventory

requirements, limit customer acquisition expense and shift most installation activities to qualified third parties. During our

2014 fiscal year we began the transition of our marketing focus to offer solar PV systems to Australian home owners under the

Westinghouse® brand and we launched a small test of residential sales in the U.S. under the Westinghouse Solar name. However,

as a result of the VA process, we lost our rights to use the Westinghouse® brand and in December we ceased all sales and marketing

initiatives referring to Westinghouse® and we are in the process of winding up the U.S. subsidiary in which the U.S. residential

trials were conducted. In April 2015, following our emergence from VA, we re-launched commercial sales in Australia under the

BlueNRGY brand and are currently undertaking residential sales in Australia on an opportunistic basis while we develop plans for

re-entering this market and addressing system upgrade opportunities for the large installed base of solar system owners.



As costs of solar PV systems dropped, reliance

in Australia on the SRES Program and other subsidies for the sale of PV systems has declined. With the cost of solar PV approaching

or having reached grid parity in most areas of Australia we and other solar installers have been successful attracting new customers

without the need for significant reliance on subsidies or feed-in-tariffs. Continued increases in energy prices in the future,

if they occur as our management expects, will serve to increase the attractiveness of small-scale solar installations to both

residential and commercial customers. Consequently, our management’s expectation is that if we have adequate working capital

availability we can rebuild our Australian small-scale installation business to a sustainable and stable contributor to our overall

financial performance. If we can grow our rate of small-scale system installations to a level of approximately 10MW/year, it would

represent approximately 2.5% - 5% market share for such systems based on the lower range of the ORER consultants’ forecasts

of the sustainable pace of solar installations in the Australian market. Attaining this market share is consistent with our rank

in August 2012, as reflected in Table 8 above in “Our Industry”, under the single reference to eco-Kinetics (the name

under which our systems were then marketed), as the 15th ranking Australian installer. There is no assurance, however,

that we can regain this level of market share.





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Going forward, we intend to market small-scale solar systems directly

to Australian purchasers primarily through commission sales representatives, tenders (for small commercial installations) and through

our website. Our experience is that direct marketing initiatives provide us with immediate feedback on customer reactions to price

and product changes and will allow us to adapt to changing market requirements. It is not known how consumers will react to the

BlueNRGY brand as we introduce it and an unfavorable response could constrain our ability to rebuild meaningful residential market

share.



Following our emergence from VA, components for our residential

and commercial solar systems, including solar panels, inverters and certain other elements, are currently being purchased on a

non-exclusive basis from third-party distributors, some of which have offered us limited trade credit terms. We are actively working

to expand the supply chain to include additional supply sources and direct purchasing arrangements with specific component manufacturers.

Obtaining such direct supply arrangements will necessitate growing our PV solar revenues substantially. With our emergence from

VA, we have abandoned past efforts to produce solar panels for our own use and for sales to others. The lease of the facility in

Queensland secured for that purpose was terminated in the VA process and the equipment transferred to the Administrator for liquidation.



As discussed in the profile of our industry above, growth in small-scale

installations in the United States is expected to be robust over the next few years in both the residential /consumer segment and

commercial segment. We consider the opportunity to participate in this market to be attractive and we are currently developing

plans to do so utilizing an approach similar to that employed in Australia and utilizing our BlueNRGY brand. We hope to be able

to accelerate our entry into the U.S. residential market through acquisition of at least one company with strong customer origination

capability and to exploit what our management believes will be a developing market for so-called community solar offerings. As

of the date of this Report we are not currently selling small-scale solar systems in the USA.



Solar PV- Large Commercial and Utility Scale Solar



In 2011, we established a separate division to construct large-scale

solar projects, which typically have a capacity of approximately 1MW or greater building on our experience in system design and

project management. Our capabilities in these functions were further augmented with the acquisition of GED, a U.S. EPC contractor

in 2014. The projects we have developed include both ground mount and large commercial rooftop solar projects in various geographic

markets.



Since inception, our large-scale solar business has employed three

different delivery models, depending on customer requirements, working capital availability and cost at the time project opportunities

became available:



Engineering, Procurement and Construction (EPC)



Under the EPC model, the customer pays the EPC contractor on a

milestone or percentage of completion basis as project construction progresses and ownership of project work-in-progress is turned

over to the customer. The EPC contractor typically takes responsibility for:



| | ● | completing the project

engineering, procuring components and materials for the project and performing the construction work; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                  
| | ● | paying vendors,

subcontractors and its own staff for their respective contributions to the project.                             



The timing of project progress payments is generally negotiated

to allow the EPC contractor to receive funds at approximately the same time it expects to have to pay for system components, materials

and sub-contractor fees related to the project. Sometimes, however, contract terms dictate that the EPC contractor must defer receiving

payment for 30 to 60 days. If the EPC contractor is effective in matching its payment obligations related to the project with cash

receipts from the customer, low or limited capital resources are required by the EPC contractor to operate under this model. Consequently,

many companies can qualify to bid for contracts under the EPC model, bidding is often highly competitive and our experience is

that gross margins are consequently lower than those of alternative business models that we seek to utilize when circumstances

permit and that are further described below. Working capital requirements can rise sharply if customers impose deferred payment

terms in their contracts and, in such cases, competition can be less intense. All of GED’s business has been and continues

to be carried out under the EPC model.





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Build, Own and Transfer (BOT)



Under the BOT model, which we employed beginning in our 2013 fiscal

year, we acquire site development rights, with permits and off-take agreements in place, from small or thinly capitalized developers

and we complete the projects on a turnkey basis. The BOT model requires application of our EPC capabilities and that we provide

the funding to acquire the site development rights, power generation equipment, complete construction and have the project connected

to the grid. It also requires us to arrange the sale of completed projects, either individually or on a bundled basis, to third-party

owners who are acquiring the long-term cash flow expected from projects following their commissioning. Such sale processes can

be costly and protracted. Nevertheless, if construction financing is available, the BOT model can result in higher project margins

than for EPC projects, although the benefits may be partially offset by the associated financing costs. We employed this model

in Italy in FY 2013 at several sites aggregating to 5MW and referred to as the Italian Projects. These projects were sold during

our 2014 fiscal year. Following our emergence from VA, we have not had sufficient capital available at a cost that allows us to

employ the BOT model and there are no assurances that we will be able to do so in the foreseeable future. .



Build, Own and Operate (BOO)



The BOO model has been used successfully by us for only a few projects

to date. It too requires application of our EPC capabilities and the provision of financing to fund construction. However, under

the BOO model, we retain ownership of the project for an extended period of time, potentially through the useful life of the project

assets and realize a revenue stream from the sale of power as long as we own the project. Our applications of this model included

a construction of a solar array on King Island, Australia and, on New Zealand’s Chatham Islands, construction of a small

wind farm. Our current policy is to undertake BOO projects only if the project has a long term PPA backed by a credit-rated utility

on terms we deem favorable and if we can find and incorporate financing at an acceptable cost. While our management believes that

the BOO model has the potential to yield the highest margins, utilizing it requires access to significant financial resources on

terms that are not currently available to us following our emergence from VA.



Within Australia, our opportunities to bid on large-scale solar

PV projects have been limited and the awards few. As the cost of solar PV approaches grid parity, our management expects the larger

scale commercial and utility market within the Australia region to grow. With our capabilities in the Australia and, through GED

in the USA, to undertake system design, engineering and installation, we believe we are positioned to participate actively in projects

in Australia as well as internationally. This capability is enhanced by the insights we gain from observing system performance

through our data management and O&M businesses.





53







As shown in the table below, we and our acquired subsidiaries have

aggressively and more successfully pursued the large-scale solar projects business outside of Australia, primarily through the

EPC model:



|Our Large-Scale Solar PV Installations*
|---------------------------------------
|                                       
|Country                                
|United States**                        
|Italy                                  
|United Kingdom***                      
|Germany***                             
|Fiji                                   
|Australia***                           
|Thailand                               



| | * Except as noted, excludes projects completed by companies we acquired prior to the dates of their acquisition
| | ---------------------------------------------------------------------------------------------------------------
| | ** Includes 22 MW installed by GED prior to July 2014 when the Company acquired GED.                           
| | ***Aggregation of multiple small commercial installations                                                      



Although our large-scale solar experience is substantial, our projects

generally represented less than 1% of the installations in our served markets at the time they were performed. Nevertheless, these

experiences in designing and building large-scale solar PV projects have focused us on the potential opportunity for this line

of business and our ability to win large-scale solar business is facilitated by the fact that competition is highly fragmented

in the markets we serve.



Whenever we construct a large-scale solar project we generally tender

or negotiate for post-commissioning operations and maintenance, or O&M, contracts if we have a permanent presence in the country

and region where the project is located. Such contracts, if awarded, normally have a multi-year term and sometimes are in place

for the life of these projects, but there is no assurance that an O&M contract will be awarded to the project constructor.

Our historical track record of winning O&M awards has been poor and we believe the acquisition of BlueNRGY LLC and it’s

O&M team together with the capabilities and processes available through the Draker platform will assist us to win a higher

percentage of O&M awards.



While our large-scale solar installations are not tied to any particular

manufacturer or technology, we do work with preferred component suppliers to ensure quality products are installed and that strong

warranty support from large established equipment manufacturers is available to our customers. This strategy allows us to optimize

total project costs to give us an advantage in some bidding situations. Our large-scale solar projects are generally of sufficient

scale to permit us buy components directly from a diverse group of manufacturers if the project owner is not negotiating component

procurement arrangements directly. We believe that, as a result, our procurement costs are competitive with other large installers/developers

and that we have a competitive advantage over some smaller installers who must purchase system components through distributors.



Our staff members located in the key markets we serve are constantly

soliciting and responding to bid and development opportunities sourced through a network of contacts in the industry. We do not

believe that our large-scale solar business is subject to significant seasonality in any region where we are operating.



Wind



Our wind project business was substantially curtailed in January

2015, following the VA process. Prior to that, it functioned solely in Australia and the scope of activity included acting as

a project developer, project manager, operator and, to a lesser extent, owner. We did not manufacture or distribute wind generation

equipment. Our decision to withdraw from active pursuit of wind projects was driven largely by recent changes in Australian

renewable energy policy that we believe will constrain new wind project developments in Australia for the foreseeable future.





54







Following our emergence from VA, we intend to confine our activities

in the wind sector primarily to data management, operations and maintenance of commissioned facilities. We intend to emphasize

regions where there are large concentrations of wind projects and we have established business operations and relationships, including

Australia, the U.S. and Europe. However, we may opportunistically pursue smaller projects in remote locations on an opportunistic

basis, particularly when they can be combined with PV solar and/or energy storage installations.



Our first wind project development was a 450kW installation on Chatham

Island, completed in 2010 and referred to as the Chatham Project. The Chatham Islands are a remote part of New Zealand in the South

Pacific where previously power was generated solely by diesel generation. The Chatham Project comprises two turbines that were

installed with the goal of delivering approximately one-third of the island’s total electricity power.



Our only large utility-scale wind project was the Taralga Project,

a development valued at about A$290 million with capacity of 107 MW and located in the state of New South Wales, Australia. Although

we never held a control ownership stake in the Taralga Project, we did assume the primary role in the project’s development

process and we managed critical design, financing offtake and construction functions. Our ongoing financial interest in the Taralga

Project was conveyed to WHSP in January 2015 pursuant to our Reorganization Plans.



Energy Efficiency



Our business segment targeting energy efficiency comprises business

units whose products and services reduce the amount of energy and related services consumed by end-users for a given activity.

In Australia, powerful incentives exist for end-users to employ energy efficiency measures to reduce cost and/or comply with government

regulations. Australia has experienced sharp increases in electricity charges in the last five years and these are expected to

continue. The country’s power cost increases have been primarily driven by investment in regulated infrastructure and the

introduction of carbon pricing and other government policy mandates that are intended to promote the use of energy resources deemed

to be more sustainable. The range of products and services associated with energy efficiency is broad. We have chosen to serve

this market in niche areas through separate subsidiaries focused on commercial and industrial customers in Australia. Our management

believes these businesses provide the following strategic advantages to the Company as a whole:



| | ● | We can provide our customers with access to a greater depth of technology and engineering resources than they would have otherwise.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



| | ● | The diversification provides additional pathways for growth in the rapidly evolving and uncertain renewable energy industry.
| | - | ----------------------------------------------------------------------------------------------------------------------------



Parmac Air Conditioning & Mechanical Services Pty Ltd,

or Parmac, is a contracting and servicing company, based in Blackburn, Victoria, Australia and primarily serving the Melbourne

market for energy-efficient climate control systems (including heating, ventilation and air conditioning). As shown in the table

below, the primary service provided by Parmac is: tendering of air conditioning systems and mechanical services to building owners,

consulting engineers, project managers and architects:



|Period           |  | Installation/Contracting |    | OtherServices
|---------------- |  | ------------------------ | -- | -------------
|Fiscal year 2014 |  |                          | 84 | %            
|Fiscal year 2015 |  |                          | 81 | %            





55







Other capabilities include:



| | ● | Computer aided design, design checking facilities, project management, computerized drafting;                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                            
| | ● | Execution of installations as a project

contractor; and                                                                                   
| |   |                                                                                                                                            
| | ● | Warranty and maintenance services to

our constructed projects and maintenance and service work to other mechanical services installations.



Parmac competes in a regional market with a number of other contractors

and holds approximately a 2% share of our addressable market. The principal competitors with larger market share between 5-10%

(individually) are AG Coombs, AE Smith, D & E Air Conditioning, Allstaff Air Conditioning and JL Williams. Other competitors

with a similar or smaller market share include: RKH Air Conditioning, PJM Air Conditioning, Quadrant Air Conditioning and Proair

Air Conditioning.



Parmac is not positioned to grow significantly in our regional home

market and thus revenue growth is bounded by and highly correlated to construction activity levels in and around Melbourne, Australia.

Because of the favorable weather patterns in the region, the construction cycle is not seasonal in nature. Parmac’s business

on major new installations is awarded primarily by competitive tender where price is a key determinate of success. Parmac often

submits tenders as part of a syndicate of contractors and sources opportunities through long-standing relationships with construction

general contractors. Parmac sources air conditioning system components through competitive bid processes involving multiple vendors

and has no exclusive representation relationships with suppliers that constrain its procurement of the most cost-effective equipment.

Service sales are generated by in-house sales personnel and from relationships with prior installation customers. In other areas

of our business such as equipment and systems maintenance, Parmac seeks to distinguish itself by providing a high level of service

and typically enjoys higher margins from providing post-installation services than it does when it functions a contractor on new

installations.



Since the emergence from VA, our management has determined that

Parmac should serve as an implementation arm for our PV solar business in the Melbourne region. Over time the scope of this activity

is expected to encompass local sales, installations and project management and post-installation servicing / maintenance.



Remote Area Power Systems (RAPS). Our RAPS business

segment historically includes generating assets we own and the Larkden energy storage technology that was divested in April 2013.

Our interests in the solar installation on King Island and various solar installations owned by our subsidiary in the UK were eliminated

with the divestiture of those assets and subsidiaries pursuant to the Reorganization Plans. The only remaining assets in our RAPS

business segment after emergence from VA are related to the above-described Chatham (wind) Project we developed in 2010. The Chatham

Project is not currently operating due to a dispute with the counterparty to the power purchase agreement, Chatham Islands Electricity

Limited. Chatham Islands Electricity Limited is seeking to terminate its power purchase agreement with our subsidiary, Chatham

Islands Wind Ltd (“CIWL”), and acquire the assets in accordance with contractual rights triggered by our VA. At this

time it is not possible to predict how this matter will be resolved or what economic impact it will have on us.



As availability of capital permits, we will consider retaining future

equity positions in other renewable generation assets, if we can:





| | ● | reasonably expect to generate a reliable and steady

income stream above our cost of capital and we are able to exchange EPC profits and development fees for equity in the project

on terms we deem favorable; or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                    
| | ● | develop, construct and own projects

with acceptable returns from inception, as was originally the case with the Chatham, King Island and UK projects.                                                             



Our capability to manage such assets, should we able

to acquire them, is enhanced by our demonstrated capabilities in monitoring and analyzing operating performance of such systems

and the provision of O&M services. Utilizing these core competencies, we also intend to purchase already-commissioned assets

from third parties if we can do so on terms we consider favorable and if capital is available to do so. To date, this has not

proven feasible and there is no assurance that we will be able to make such project purchases in the future.





56









Capacitor Technologies Pty. Ltd., referred to as CapTech,

was acquired by us in 2003 and divested in August 2013. During the period of our ownership, CapTech specialized in the engineering,

design, manufacturing and installation of energy saving and electric power quality solutions including power factor correction

equipment, harmonic filters, capacitors and similar products. Notwithstanding our divestiture of CapTech, our management believes

that we will have ongoing opportunities to utilize their products and technology in conjunction with our installations of renewable

generation and energy-efficient climate control solutions and we have maintained amicable relations with CapTech’s management.



Seasonality



Our current business is not seasonal and neither demand for our

services, nor supply of products used in connection with our business, is significantly impacted by seasonal factors.



Intellectual Property



Our intellectual property includes trade names and trademarks that

we own. Commencing September 1, 2013 we entered into a License Agreement and Trade Name Agreement with Westinghouse Electric, collectively,

referred to as the Westinghouse License. The Westinghouse License was terminated in January 2015 as a result of our VA process.



We also own numerous patents covering
the Draker Corp and BlueNRGY LLC data collection and monitoring software systems used within our Monitoring &
Performance Analytics business. The patent portfolio consists of 10 distinct applications in varying stages of patent
prosecution, including six issued U.S. patents and three pending published U.S. applications, as well as similar
international applications. The subject matter of the patents pertains primarily to optimization and monitoring of solar
modules and wireless mesh network communications as applied to arrays of solar panels and the display of a graphical user
interface for power plant monitoring. The Company may not prosecute all applications to issuance.



Research and Development



We did not conduct research and development through the end of our

2015 fiscal year.



OH&S and Environmental Regulations



Our operations are subject to laws and regulations of the jurisdictions

in which we operate relating to the energy and construction/building industries. Occupational Health and Safety (OH&S) and

Environmental laws have in recent years become more stringent and have generally sought to impose greater liability on a larger

number of potentially responsible parties. Because we provide services that involve construction/manufacturing hazards or may be

perceived to be unfavorable to the environment, we may become subject to sanctions or claims resulting from these activities.



We strive to conduct our business activities in a safe and environmentally

sustainable manner and have appropriate corporate policies and procedures in place. In Australia, we have OH&S committees in

place in our operating subsidiaries to ensure regulatory compliance. While our management is not currently aware of any situation

involving environmental or OH&S matters that would likely have a material adverse effect on us, it is possible that situations

could arise that could cause our business to suffer. Our management does not anticipate any material expenditure to comply with

OH&S or environmental regulations affecting our operations.



Insurance



Our operating subsidiaries carry property and casualty and general

liability insurance to mitigate the economic consequences of an adverse event affecting our assets. Our insurance currently meets

the contractual and statutory requirements of our businesses. As we enter new markets, we assess the form of insurance required

and procure such insurance through brokers that our management deems appropriate.



Currently, no material insurance claims are outstanding.





57









4.C.            Organization Structure



The table below lists, as of December 4, 2015,

our material direct and indirect subsidiaries and the jurisdictions in which they are registered:



|Name                                                                    |  | Country ofIncorporation |  | PrincipalActivity         |  | %
|----------------------------------------------------------------------- |  | ----------------------- |  | ------------------------- |  | -
|BlueNRGY Group Limited Ltd                                              |  | Australia               |  | Holding

company          |  |  
|BlueNRGY LLC                                                            |  | USA                     |  | Data

Management

and O&M |  |  
|Draker Corporation                                                      |  | USA                     |  | Data

Management          |  |  
|Parmac Air Conditioning & Mechanical Services Pty Ltd                   |  | Australia               |  | Energy

efficiency        |  |  
|BlueNRGY Renewable Solutions Pty Ltd (f/k/a Westinghouse Solar Pty Ltd) |  | Australia               |  | Solar                     |  |  
|Chatham Island Wind Ltd                                                 |  | New Zealand             |  | Special purpose vehicle   |  |  
|Green Earth Developers LLC                                              |  | USA                     |  | Solar EPC                 |  |  



4.D.            Property, Plants and Equipment



Our facilities, as of December 4, 2015, consist

of stand-alone administrative offices and multi-purpose facilities incorporating office, warehouse and manufacturing activities

for some of our businesses. Our administrative office facilities, located in various countries, are utilized by our various business

units as necessary to support changing operational requirements. We believe that our administrative offices are adequate to support

our current needs and all foreseeable growth and we have no current plans for expansion or improvements. All are occupied pursuant

to short-term operating leases and are listed below:



|Country   |  | Address |                                                            | Approximate size (sq-m)
|--------- |  | ------- | ---------------------------------------------------------- | -----------------------
|Australia |  |         | Level 11, 32 Martin Place, Sydney, NSW 2000                |                        
|USA       |  |         | 110 E. Broward Blvd, 19th Floor, Fort Lauderdale, FL 33301 |                        
|USA       |  |         | 547 W. Charles St., Suite 100, Matthews, NC 28105          |                        
|USA       |  |         | 431 Pine Street, Suite 114, Burlington, VT 05401           |                        
|          |  |         |                                                            |                        





58









All of our multi-purpose facilities are located

in Australia and are leased. Their sizes, locations and our business units that they primarily serve are listed below as of December

4, 2015:



|          |  |                                                      |  | Approximate Size (sq-m) |  | PrimaryBusiness

Unit
|--------- |  | ---------------------------------------------------- |  | ----------------------- |  | ---------------------
|Country   |  | Address                                              |  | Warehouse               |  | Office               
|Australia |  | 15 Terra Cotta Dr., Blackburn, VIC                   |  | 180sq-m                 |  | 290sq-m              
|Australia |  | Unit 6, 806 Beaudesert Road, Coopers Plains QLD 4108 |  | 200sq-m                 |  | 125 sq-m             



The production and logistics activities at

the above facilities generally operate on a single shift and thus have capacity available that would accommodate currently foreseeable

growth. Accordingly, we have no plans for expanding or making material improvements to our production or logistics facilities or

our complement of production equipment. We do not have any environmental issues or deficiencies at any of our production facilities.



As of December 4, 2015, we owned or held under

leases assets in the categories shown in the following table having an aggregate value of A$2.3 million, which comprised an “at

cost” total of A$4.3 million less depreciation and impairment of A$2.0 million



|Amounts in A$’000    |  |      |       |  |              |  |        |           | 
|-------------------- |  | ---- | ----- |  | ------------ |  | ------ | --------- | 
|                     |  |      |       |  | Accumulated  |  |        |           | 
|Asset Category       |  | Cost |       |  | Depreciation |  |        | Net Value | 
|Plant & Equipment    |  |      | 2,612 |  |              |  | (783   | )         | 
|Office and Leasehold |  |      | 916   |  |              |  | (646   | )         | 
|Motor Vehicles       |  |      | 759   |  |              |  | (510   | )         | 
|Total                |  |      | 4,287 |  |              |  | (1,939 | )         | 



Capital Expenditures



Our capital expenditures for property, plant and equipment for the

fiscal year ended June 30, 2015 and 2014 respectively were approximately A$0.2 million and A$0.4 million. In the year ended June

30, 2015 property, plant and equipment with a net value of A$0.2 million was acquired as part of the GED and BlueNRGY LLC acquisitions.



Our capital expenditures for the 2015 fiscal year mainly related

to replacement of vehicles and office and leasehold assets which had reached the end of their useful lives. There were no significant

one time asset purchases.



The capital expenditure total for fiscal year 2014 was primarily

for essential upgrades to our motor vehicle fleet in Parmac and computer systems.





59









ITEM  4A.  UNRESOLVED STAFF

COMMENTS



Not applicable.



ITEM  5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The following discussion and analysis
of our financial condition and results of operations should be read together with our consolidated financial statements, including
the accompanying notes, included in this Report. Unless otherwise specified, all dollar amounts are presented in Australian dollars
and represented by the notation A$. Some of the information in the discussion and analysis set forth below and elsewhere in this
Report includes forward-looking statements based on current expectations that involve risks and uncertainties. See “Special
Note Regarding Forward-Looking Statements” and Item 3.D. under the heading, “Risk Factors” for a discussion
of important factors that could cause actual results to differ materially from the results described in the forward-looking statements
contained in this Report.



5.A.            Operating Results



We are an Australian corporation operating in the renewable energy

and energy-efficiency sectors. Our businesses provide technology and services that allow owners of renewable generation assets

to maximize power production and return on investment throughout the lifecycle of this long-lived class of assets. In some regions

where we operate, most notably in Australia and the USA, this includes the application of our engineering know-how and extensive

data resources to design and install efficient new renewable systems and to upgrade, retrofit and optimize existing facilities.

In Australia, we also deliver differentiated products and services that are designed to allow electricity consumers to reduce power

costs and increase efficiency of their electricity consumption.



Our operations were unprofitable and we were unable to continue

as a going concern without restructuring through VA in the period from November 14, 2014 through January 27, 2015 (refer to Item

4.A. under the heading “Voluntary Administration and Deed of Company Arrangement”). The scope of our activities

was curtailed by the VA process, but we continue to conduct business through multiple subsidiaries operating in the aforementioned

regions. In the months following our emergence from VA, we continued to operate at a loss, but several of our operating units

are profitable and we are taking active steps to grow revenue and attain profitability on a consolidated basis. Our activities

are currently divided among the following lines of business:



| | ● | Monitoring & Performance Analytics                                                                        
| | - | ----------------------------------------------------------------------------------------------------------
| |   |                                                                                                           
| | ● | Solar Photovoltaic (or PV) – ranging from small scale residential up to megawatt-scale scale installations
| |   |                                                                                                           
| | ● | Energy Efficiency/Technology Solutions                                                                    



Prior to the VA process, we were also actively developing large-scale

wind projects, but our involvement with wind generation systems is now, and is expected to continue to be, limited to providing

data management and system management services.



In keeping with customary practice in Australia, our fiscal years

end on June 30. During the fiscal years ended June 30, 2015 (fiscal year 2015); June 30, 2014 (fiscal year 2014) and June 30, 2013

(fiscal year 2013), we incurred a net loss from continuing operations of A$13.6 million, A$22.2 million and A$2.1 million respectively,

of which A$6.2 million, A$10.0 million and A$0.6 million for fiscal years 2015, 2014 and 2013 respectively were attributable to

asset impairments and non-recurring expenses, as further described below. However, as a result of the Reorganization Plans coupled

with our initiatives to reduce costs and increase our capitalization, our management expects that we will return to profitability

in the future, although there is no assurance that we will be able to do so. If we are unable to achieve our business growth strategies

and objectives or to obtain sufficient financing on acceptable terms in order to meet our future operational needs, there is a

substantial doubt as to whether we will be able to continue as a going concern.



60









The breakdown of our revenues by segment is shown below for fiscal

years ended June 30, 2015, 2014 and 2013:







|                                       |  | Fiscal Year Ended June 30,
|-------------------------------------- |  | --------------------------
|                                       |  | 2015                      
|Amounts in A$(000) except as noted     |  | Revenue (A$ millions)     
|Solar PV                               |  |                           
|Large-scale Wind                       |  |                           
|Monitoring & Performance Analytics     |  |                           
|Energy Efficiency/Technology Solutions |  |                           
|Parmac                                 |  |                           
|RAPS / Technology Solutions            |  |                           
|Total reported revenue                 |  |                           









Monitoring & Performance Analytics



Data Management and Related Products and Services. We entered

the business of data management and the provision of O&M services for renewable generation assets in January 2015 with our

acquisition of BlueNRGY LLC. For our fiscal years 2013 – 2014 we were not in either of these lines of business, other than

as minimally required to service assets that we owned and operated. At the time we acquired BlueNRGY LLC, the BlueNRGY data management

business was in the early stages of commercialization. Therefore it did not contribute materially to revenues during our 2015 fiscal

year.



In September 2015 we acquired the Draker data management platform.

The Draker Transaction substantially boosted our U.S. market position to being, in the judgment of our management, one of the leading

independent providers of monitoring and data management services for solar PV facilities. Despite Draker’s market standing

and broad customer base, numerous customers suffered delivery or service interruptions prior to our consummation of the Draker

Transaction. Consequently, we expect to experience some short-term customer attrition and interruption of the historical growth

pattern for this business. Nevertheless, we expect our Data Management and related revenues to grow strongly during our 2016 fiscal

year due to positive industry growth dynamics, particularly in the USA, and our ability to broaden the served market base for Draker

data collection systems and software services to other countries where we operate.



Subsequent to our consummation of the Draker Transaction we have

made, and continue to make, substantial expenditures to upgrade and integrate the Draker and BlueNRGY software platforms. We are

also expending resources to deploy the combined data management capability throughout our primary markets and in Europe and emerging

markets where there is substantial growth in solar PV deployments. Consequently our data monitoring business will sustain losses

through the first half of our 2015 fiscal year. We expect a turnaround to positive profitability for this line of business in the

second half of our 2016 fiscal year, however, there can be no assurances about when, if ever, the data management business will

become profitable.



O&M Services. Since the acquisition of BlueNRGY LLC our

O&M business has made a positive contribution to profits, but the revenues in this line of business are not yet material to

our overall operations. Although we are working actively to accelerate the growth of O&M services, there can be no assurance

as to when or whether this line of business will be large enough to significantly affect our financial performance.





61









Solar PV.



Our revenue in the solar PV segment declined
during our 2013 – 2014 fiscal years due in part to reductions in the cost of components, most notably solar panels. (Refer
to Item 4.B. under the headings “Our Industry –The Solar PV Segment” and “Description
Of Our Business Segments — Solar PV Residential and Small Commercial Solar”). The cost reductions were
largely passed through to customers by us and other PV solar developers and installers throughout the industry with the result
that we needed to continually increase the amount of capacity installed to maintain stable revenues and contributions to profits.
When development or installation unit volumes declined due to other factors, as they did in all sub-segments of our solar business
between fiscal years 2013 and 2015 the adverse impact on revenue and profitability was amplified as further discussed below. The
increase in revenue in the solar PV segment from our 2014 to 2015 fiscal years was attributable to the acquisition of GED in July
2014.



Small-scale. Our small-scale solar business has been concentrated

in Australia and focused on residential or small-commercial customers who are typically installing solar PV generating capacity

on their rooftops to offset the costs of their own electricity purchases. The market for small-scale systems is fragmented, highly

competitive and commoditized. Consequently, installers, such as the Company, are compelled to sell systems at market prices, which

can be volatile as a result of short-term fluctuations in supply and demand. Our individual transactions have been relatively small,

averaging less than A$8,000 during fiscal 2014 fiscal year and thereafter. The market demands rapid fulfillment of orders, with

installation times typically being between 20 and 30 days from order date. Most customer purchases are paid for at or prior to

installation in the form of a combination of small-scale technology certificates, or STCs, issued under the Small-scale Renewable

Energy Scheme, or SRES, and cash.



During our fiscal years ended June 30, 2012 and 2013, government

policies related to small-scale solar were broadly adjusted throughout Australia, moderating growth in overall installation rates,

stabilizing the market and, substantially eliminating the seasonal dynamics and significance of swings in STC prices. The percentage

of payment that we receive in the form of cash is now and, we expect, will continue to be, approximately 70% if policies affecting

SRECs remain stable.



During our fiscal years 2013, 2014 and 2015 we experienced cash

constraints that limited inventory availability to levels that were inadequate to satisfy order flow and constrained our ability

to advertise and acquire new customers at levels that would maintain historical installation bookings. This led to a significant

and persistent decline in our unit volume of small-scale installations and, due to the prevailing trend of falling system prices,

a disproportionate reduction in our revenues and losses in this line of business in our 2012 – 2015 fiscal years. Consequently,

we have further reduced fixed costs in our Australian solar PV units during and following the VA to a level that we believe will

allow our Solar PV line of business to contribute to profits in the future. Our success in achieving profitability in the small-scale

solar PV segment will depend heavily on sustaining transaction flow to exceed the break-even level. Since emerging from VA we have

terminated this line of business in the UK and focused our sales and marketing efforts in Australia on commercial installations

sized above 10kW. Our management believes that the commercial market for small-scale installations to be less commoditized and

less saturated than the residential segment. With the limited trade credit available to us following our emergence from VA, the

working capital required to grow this business from current levels cannot be internally funded by us. Supply agreements negotiated

with wholesale distributors of PV components since our emergence from VA are now allowing us to operate without holding significant

levels of inventory, albeit leading to lower-than-targeted gross margins, and the short operating cycle of our small-scale solar

PV business is expected to require us to maintain a net working capital level for this business unit of only about one times monthly

revenue in the near term.



In April 2013, we began selling, under license, small-scale solar

systems using the Westinghouse® brand. Our rights to use this brand were terminated in January 2015 and we are in the process

of relaunching our small-scale solar PV marketing under the BlueNRGY brand.





62









Large-scale.Our large-scale solar business is a project-based

business focused on installations of solar PV generating capacity that generally range in size from approximately 500KW to 8MW.

We have constructed such large-scale, or megawatt-scale, solar projects in geographically diverse locations, usually outside of

Australia, although management is exploring opportunities to increase the level of activity in Australia as component costs have

declined and system costs are now at or approaching grid parity in most states. The intense nature of the competition in this business

line has caused the number and installation rate of large-scale projects awarded to us to be irregular. Consequently, subsequent

to our emergence from VA we have evolved our cost structure for this segment to be scalable, both up and down. Other than a core

team of staff members based in Australia and the USA who handle project engineering and overall project management, we rely heavily

on outsourcing and sub-contractors working in markets where projects are constructed. As a consequence of these initiatives, we

reversed the historical pattern of losses in this line of business that extended through our 2015 fiscal year and our large-scale

solar business has made a positive contribution to operating profit in the first half of our 2016 fiscal year. Our management expects

this dynamic to continue, but there can be no assurance that such expectations will be borne out or that this segment of our business

will avoid losses in the future.



Generally we undertake large-scale solar projects as an EPC contractor

working for customer owners. In this role we remain subject to competitive bidding processes, with the number of projects awarded

being small and the timing uncertain. With a few exceptions, project fulfillment cycles have been short, typically less than 6

months, and we are paid on a progress-payment basis. In general, the timing of payments to suppliers has been closely linked to

progress payments, where applicable, thereby limiting the net working capital requirements the company needs to support these

projects. In cases where we construct projects and on-sell the project at completion, construction financing has been sourced

to meet working capital requirements. Because of the short execution cycle, we have not historically tracked backlog for our large-scale

solar business but it is our intention to begin to do so as new projects are awarded. As of December 4, 2015 our backlog of large-scale

solar projects was approximately 44MW, mostly at our GED unit. Because of uncertainties in the contract bidding process, there

can be no assurance about when we will win a new contract. The bidding effectiveness of our subsidiaries involved with the installation

of large-scale solar PV projects was impaired during the VA process and this may create ongoing challenges to winning bids in

the near future.



In the latter half of fiscal year 2012, we initiated direct development

of large-scale solar projects with the intent of reselling them to third-party owners under the BOT model. The first 5MW, referred

to as the Italian Projects, was constructed in Italy and completed in June 2012. These projects were sold in December 2012 (during

our 2103 fiscal year) for A$15.1 million, A$1.1 million above the site acquisition and construction costs (but excluding finance

costs). During our 2012 and 2013 fiscal years we expended funds to establish and maintain a four-person organization in Europe

intended to allow us to transact future projects Following our emergence from VA, this team has been wound down with the shift

of our business development focus to the Americas and Australia.



Energy Efficiency/Technology Solutions/RAPS. The business

activities encompassed in our Energy Efficiency and Remote Area Power businesses, i.e. Parmac, RAPS and, until its divestiture

in August 2013, CapTech, were collectively unprofitable in our 2013, 2014 and 2015 fiscal years as described below in the year-to-year

and period-to-period comparisons of operating results. As a result of management changes and focused attention to financial performance,

our management expects that the ongoing businesses of Parmac will contribute positively to profits in the current fiscal year and

beyond, although there is no assurance that this will be the case.



Parmac. Our Parmac business unit typically receives deposits

or progress payments for its work on new projects and bills for service work monthly as incurred, so it has an average net working

capital requirement of about 15% of revenues. We also have a low fixed cost structure typical of construction general contractors

and have achieved average pre-tax operating margins in the range of 7% - 8% in some fiscal years prior to fiscal year 2012. We

believe this level of profitability is sufficient to sustain available growth opportunities from operating cash flow. However,

Parmac experienced adverse performance on several contracts entered into in the latter half of fiscal year 2013 that resulted in

a loss in the 2013 and 2014 fiscal years as those contracts were completed. These losses are believed by our management to be contract-specific

and are not necessarily indicative of the Parmac’s expected future performance. During the 2015 fiscal year, Parmac’s

net profit was impacted by one-time expenses totaling A$1.1million relating to a parent entity loan extinguishment in the VA process

and a bad debt arising from a major customer entering voluntary administration.



Parmac’s business depends heavily on the level of activity

for commercial and industrial development in the region around Melbourne. The pace of general construction is cyclical in this

market and is related to factors such as the general economic conditions in Australia, the strength of the commodities markets

that underpin large segments of the Australian economy, demographic and other trends affecting growth in the state of Victoria

and the bidding success of construction general contractors with which Parmac is aligned. The overall market is small enough that

the flow of bidding opportunities can be irregular and work load from awarded projects can be volatile. Low utilization of project

personnel and staff can lead to future losses, notwithstanding improved performance on individual contracts.





63









RAPS. During our 2013 – 2015 fiscal years, the RAPS

division derived revenue from projects and activities for the generation or storage of power to off-grid (typically remote) customers.

Revenue from the King Island project averaged A$26,000 per annum since the beginning of fiscal year 2010 until it was divested

in our VA. Prior to or as a result of the VA, we have either disposed of all assets in the RAPS unit or have taken 100% valuation

allowances for assets that we still legally own except the Chatham Island Project. The Chatham Island Project, which was completed

in 2010 and is 100% owned by us as a power generating asset. Chatham Islands revenue has averaged A$305,000 per annum since it

was commissioned in July 2010, but there is currently a dispute regarding the status of the Chatham Island contract arising out

of our entry into VA. Consequently, no revenue was received or recognized from this project from November 2014 to June 2015, however,

we have received revenue from the project since June 2015. At present we are unable to project the outcome of this dispute or whether

we will realize continuing value from the Chatham Island Project Assets that are recorded in our financial statements without provision

for impairment.



Having concluded that we lacked the financial resources to fully

exploit the Larkden Technology, we sold the license together with our Larkden subsidiary in April 2013 and recognized a loss of

A$0.6 million based on the total consideration of A$2.75 million. Most of the consideration for the sale the Larkden Technology

is payable by the acquirer in future periods and, while A$1.0 million of this was been received subsequent to June 30, 2014 and

our management believes that the specified amount will be paid in full, there can be no assurances that we will receive the full

A$2.75 million. Our rights to the unpaid consideration were assigned to a third party under the Reorganization Plans and consequently

the receivable asset was de-recognized in our Financial Statements.



CapTech. We divested CapTech
in August 2013 and it will therefore does not factor in our financial performance after our 2014 fiscal year.



Large-scale wind.During our 2013 fiscal year

and until we entered VA, we were active in the sourcing of opportunities for the development of large-scale wind projects in Australia

and the associated costs were reflected in our expenses. Our active pursuit of new large-scale wind opportunities was curtailed

in the VA process and we are no longer incurring expenses related to this line of business and we do not expect to realize additional

revenues from this segment of our business related to our prior activities. When we were active in the Large-scale wind development

arena, we typically incurred costs on early-stage development of projects with a view to sourcing the equity and/or debt funding

required to take it through to construction and operation. Such expenses were undertaken with no assurance of being able to realize

a recover of the development expense. The Taralga Project is an example of a project for which equity funding to complete construction

was secured and we were able to recover our costs and profit from the activity.



In our 2012 fiscal year we earned a development fee in connection

with the Taralga project and reinvested this fee as equity into the project. As a result we retained a residual equity ownership

of the completed project. During the 2014 financial year, the timeline for the completion of the Taralga project was delayed as

a result of design changes and the subsequent requirement to amend Development Approvals. The impact of these delays, coupled with

cost overruns has negatively impacted the value of our residual equity interest in the project, and our holding was fully impaired

at June 30, 2014, resulting in an impairment charge being recognized in the Statement of Comprehensive income for our 2014 fiscal

year of A$10.8 million. We also entered into a separate project management agreement for the Taralga Project, but this was terminated

in the VA process and we will not realize any management fee revenue in our 2016 fiscal year or beyond.



Other Factors Materially Affecting Our Businesses and Results

of Operations



Although the trajectory and dynamics of each of our lines of business

vary substantially from segment to segment as described above, our management believes that a few external forces will have a major

influence on all of our business segments other than Parmac.





64









The cost competitiveness of renewable

versus conventional power generation is improving and parity has been or is expected to be reached in most targeted markets within

the next two to three years, favorably affecting growth prospects for our solar PV businesses.



This situation is due to a confluence of factors:



| | ● | Average energy costs have been and are widely projected to continue to rise in most markets over time due to increasing global demand and limited availability of reliable low-cost supplies.                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                      
| | ● | Capital costs are at historical lows in many markets we serve (especially senior debt for infrastructure projects).                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                      
| | ● | The costs of renewable power systems and PV solar systems in particular have been declining as a result of scale efficiencies in manufacturing, some overcapacity for the production of certain components such as PV cells and continuing technological innovations.



Consequently, our management anticipates that the trend of increasing

demand for renewable energy developments, both large and small-scale, will continue for several years, stimulating strong growth

and profit opportunities for downstream industry participants and those providing services applicable to the large and growing

base of renewable assets, such as the Company.



Government policies and mandates favoring

energy efficiency and the use of renewable energy are further adding to near-term demand for renewable energy capacity in both

developed and emerging markets.



Many government policies in place including those applicable to

the largest markets, such as Europe and the United States, call for increasing levels of renewable energy usage over time and impose

mandates or incentives for purchases of renewable power even though such power may cost more than conventionally generated power.

This pressure tends to add to the pace of renewable power adoption in specific countries, states and municipalities where the mandates

apply. Favorable tax incentives in the USA, most notably the 30% federal investment tax credit (ITC) applicable to renewable energy

projects, that are set to reduce at the end of 2016 and beyond, are expected to create a bubble of growth in the 2016 calendar

year that may be followed by a tail-off in activity subsequently.



The complexity and inconsistency of the regulatory and legislative

frameworks can create localized barriers to entry in some markets, which we anticipate will be favorable in limiting competition

or increasing pricing and margins in the near-term in markets such as the USA, where we have already established operations.



Pressure on government budgets and liquidity

constraints are expected to serve as a partial offset to otherwise favorable growth trends for the renewable energy sector and

will lead to volatility in some countries and regional markets.



As individual governments experience fiscal constraints that make

direct subsidies impractical or are forced to adjust mandates because their constituents demand limits on premium payments for

renewable energy, some of the demand for new renewable energy capacity will abate. This impact will fall unevenly across countries

and regions as corrections are made to compensate for policies that were not sustainable or sound when implemented. Our management

expects the effect of this trend will most greatly affect our large-scale solar business, which operates internationally and is

already seeing supply-demand imbalances corrected in served markets such as Italy and anticipates corrections in the USA after

December 31, 2016.



The broad acceptance and implementation

of renewable energy generation capacity globally has attracted new entrants in most markets and increased competitive pressures.



To date growth in competition has had the greatest adverse effect

on capital-intensive equipment and component manufacturers with high fixed costs, e.g., manufacturers of PV solar panels

and wind turbines, both of which are experiencing reduced profitability and consolidation. We expect that the impact on downstream

participants will be muted because of market fragmentation and robust prospects for near-term growth. However, we expect to nevertheless

be required to continuously improve service levels and efficiency and apply new technologies to create barriers to new entrants,

attain profitability and grow market share across all of our energy-related business segments.





65









In addition, access to incremental capital is essential to the successful

pursuit of our business strategies (see “—Liquidity and Capital Resources”).



| | ● | Without the necessary additional working capital, which we estimate to be at least A$1.0 million and as much as $3.0 million

if we are successful in securing larger megawatt-scale contract awards , our solar PV businesses cannot grow to management’s

targeted revenue run-rate in our 2016 fiscal year and beyond.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Obtaining significant penetration of our data management business in new geographic markets and in renewable sub-segments such

as wind, micro-hydro and bio-technologies can only be funded in the near term from new capital infusions to the Company.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | The net working capital deficit and deferred creditor balances in some of our operating subsidiaries can only be relieved with

an infusion of new debt or equity capital, or an exchange of indebtedness for equity or a compromise of creditor claims.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | We cannot complete and integrate beneficial acquisitions, without supplementary liquidity such as that raised to fund the Draker

Transaction.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



Acquisitions



We have developed our current business in part

through several strategic acquisitions and we expect to pursue additional acquisitions in the future. Summary descriptions of the

material acquisitions we completed during fiscal year 2013 through the date of this Report are as follows:



Draker Transaction



On September 16, 2015, we acquired, through a newly formed

U.S. subsidiary, the monitoring platform, accounts receivable, inventory, plant, property and equipment and certain other assets

of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including the Draker name, trademark, and all copyrights

then owned by the Sellers. Immediately subsequent to the transaction, referred to as the Draker Transaction, our acquisition subsidiary

changed its name to Draker Corporation and the names of the Sellers were changed to delete the “Draker” name. With

the exception of the Seller’s secured indebtedness to the VEDA amounting to approximately US$0.2 million, Draker Corporation

did not assume Seller’s liabilities. As a result of the Draker Transaction, we are supplying monitoring services to Seller’s

customers while we negotiate and document continuing service agreements at more than 2,000 sites in the Americas, Japan and Europe.

Cash consideration paid to Sellers, including interim operating loans that we do not believe to be recoverable, totaled approximately

US$2.4 million.



BlueNRGY LLC



On January 27, 2015 we acquired 100% of the equity interests of

BlueNRGY LLC, a U.S. company specializing in managing data related to geographically distributed energy generation systems and

providing related operations and maintenance, or O&M, services. At the time of its acquisition, BlueNRGY LLC was serving customers

in Europe and Asia. Subsequently we have expanded the scope of its operations to include customers with U.S. and Australian assets.

Consideration paid to the BlueNRGY LLC shareholders and shares issued to key executives and Directors of the Group as part of the

transaction comprised in aggregate 150,162,640 of our ordinary shares. Based on the issuance of our ordinary shares to investors

in a contemporaneous private placement at US$0.03785 per share, the value of our shares issued to the BlueNRGY LLC shareholders

was US$5.7 million.





66









Green Earth Developers LLC (GED)



On July 1, 2014 we acquired Green Earth Developers LLC, a solar

and electrical EPC contractor in the Southeastern U.S. that has bolstered our ability to capitalize on commercial project opportunities

in this market. The target company has a track record of successfully completing projects of 1MW – 5MW in size. The purchase

price was USD$1,500,000 cash, $500,000 of which was deferred, plus 500,000 restricted shares in BlueNRGY valued at US$1.675 million

at the time of the transaction. Of the deferred cash component of the purchase price, $100,000 was paid in cash and the remainder

was exchanged for our ordinary shares at an exchange price of US$0.03785 per share following the effectiveness of the Reorganization

Plans in January 2015.



Results of Operations



Fiscal Year Ended June 30, 2015 Compared to Fiscal Year Ended

June 30, 2014 —Consolidated Results







|Amounts in A$(000) except as noted                                |  | Year Ended June 30,
|----------------------------------------------------------------- |  | -------------------
|                                                                  |  | 2015               
|Revenues from continuing operations                               |  |                    
|Operating Expenses                                                |  |                    
|Cost of raw materials, consumables and contractors                |  |                    
|Employee benefit expenses                                         |  |                    
|Compliance & consultants                                          |  |                    
|Travel costs                                                      |  |                    
|Occupancy expenses                                                |  |                    
|Provision for impairment of receivables and bad debts written off |  |                    
|Other expenses                                                    |  |                    
|Depreciation and amortization expenses                            |  |                    
|Sub-total - operating costs                                       |  |                    
|Other income                                                      |  |                    
|Finance costs                                                     |  |                    
|Impairments                                                       |  |                    
|(Loss) / Profit before income tax                                 |  |                    
|Income tax (expense) / benefit                                    |  |                    
|Net (Loss)/profit from continuing operations                      |  |                    
|Net profit / (loss) from discontinued operations                  |  |                    
|Net (Loss) / Profit for the period                                |  |                    
|Other comprehensive income                                        |  |                    
|Total comprehensive income/(loss)                                 |  |                    







67











Operating revenue



Total operating revenues from continuing operations increased from

A$13.7 million for the year ended June 30, 2014 to A$16.9 million for the year ended June 30, 2015. The revenues increases were

mainly attributable to the acquisition of GED and an increase in revenue for Parmac.





|                                       |  | Revenue for Year Ended June 30,
|-------------------------------------- |  | -------------------------------
|Amounts in A$(000) except as noted     |  | 2015                           
|Solar PV                               |  |                                
|Large-scale Wind                       |  |                                
|Monitoring & Performance Analytics     |  |                                
|Energy Efficiency/Technology Solutions |  |                                
|Parmac                                 |  |                                
|RAPS / Technology Solutions            |  |                                
|Total reported revenue                 |  |                                





Solar PV revenue increased by 59% from A$1.9 million for the year

ended June 30, 2014 to A$3.1 million for the year ended June 30, 2015, due to the revenue contribution of A$0.9 million from GED

which was acquired in July 2014. In May 2015, GED commenced the design and construction of part of its contracted backlog resulting

in the recognition of revenue for these projects in line with the percentage completed by June 30, 2015. The balance of the revenue

was generated from the sale of residential and small scale commercial solar PV projects in our Australian and USA businesses.





68









Revenue from our Large-scale Wind segment recognized during our

fiscal year 2014 and 2015 was from the provision of project management services to the Taralga project. The project management

agreement was terminated in January 2015.



The Monitoring & Performance Analytics business was acquired

in January 2015 when it was in its early stages of commercialization so it did not contribute significantly to revenues in 2015

and there are no comparative revenues for 2014.



Parmac recorded an increase in revenue of A$2.0 million from A$10.2

million for the year ended June 30, 2014 to A$12.2 million for the year ended June 30, 2015. The 2014 revenues had been negatively

impacted by a change in our focus from larger greenfield developments to smaller retro-fitting and service opportunities, which

are considered more in line with the Parmac team’s capabilities to manage profitably. In 2015, this focus lead to improvements

in our success at securing and retaining customers for these revenue streams. RAPS revenue decreased by A$0.2m from 2014 to 2015

primarily as a result of a contract dispute regarding the Chatham Island wind project triggered by the VA process.



Operating costs



For the year ended June 30, 2015 and 2014, respectively, total

operating costs including the cost of raw materials, consumables and contractors are presented in the table below for our various

business segments:



|                                       |  | Year Ended June 30,
|-------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted     |  | 2015               
|Solar PV                               |  |                    
|Large-scale Wind                       |  |                    
|Monitoring & Performance Analytics     |  |                    
|Energy Efficiency/Technology Solutions |  |                    
|Parmac                                 |  |                    
|RAPS / Technology Solutions            |  |                    
|Corporate                              |  |                    
|Total reported operating costs         |  |                    







69









The 134% increase in solar PV operating costs from A$3.2 million

for the year ended June 30, 2014 to A$7.5 million for the year ended June 30, 2015 is due to the costs of GED for a twelve month

period in fiscal year 2015 and other costs incurred in establishing further solar operations within the USA outside of GED. The

increase in costs is disproportionate to the increase in solar PV revenues in the same time frame due to the interruption to sales

and marketing activity during the VA process. A core base of personnel was maintained over this period in order to enable the re-establishment

of operations upon conclusion of the VA process.



Large-scale wind operating costs increased by A$0.1 million to A$0.7

million for fiscal year 2015 as compared with A$0.6 million for fiscal year 2014 due to hiring additional resources to fulfill

our obligations under the project management agreement for the Taralga project.



Parmac operating costs were A$12.4 million for the year ended June

30, 2015 as compared to A$11.0 million for the year ended June 30, 2014. The 13% increase in operating costs for Parmac was less

than the 20% increase in revenue reflecting the margin improvements being realized from our change in customer focus to smaller

retro-fit projects and service clients. RAPS operating costs were fully offset by an unrealized foreign currency gain of A$0.2

million on liabilities of the segment. Other operating costs of RAPS were consistent between 2014 and 2015 fiscal years.



The Monitoring & Performance Analytics business was acquired

in January 2015 so there are no comparative operating costs for 2014.



Changes in the categories of operating expenditure are discussed

in more detail below.



The cost of raw materials, consumables and contractors used increased

from A$6.1 million for the year ended June 30, 2014 to A$8.5 million for the year ended June 30, 2015 as a result of the increase

in revenue levels between the two periods. The percentage increase in this category of expense for the fiscal year ended June 30,

2015 as compared with the year ended June 30, 2014 was 40%, which exceeds the increase in revenue of 23% in that period which reflects

the fact that revenue growth was largely from the sale of equipment in our projects-based businesses.



Employee benefit expense has increased by 22% from A$9.3 million

for the year ended June 30, 2014 to A$11.4 million for the year ended June 30, 2015 through the acquisition of GED and BlueNRGY

LLC. These increases were to some level offset by a reduction in headcount across many of our continuing operations during the

VA process.



Total compliance and consultant’s expense decreased by 40%

from A$3.5 million for the year ended June 30, 2014 to A$2.1 million for the year ended June 30, 2015. The most significant contributor

to the cost reductions were lower professional fees in relation to capital raising activities, auditor fees and costs associated

with the preparation for registration of our securities in the United States in 2014 which were not repeated in 2015.



Travel costs reduced by 15% from A$0.7 million to A$0.6 million

as the level of expenditure to allow senior operational executives to travel to the United Kingdom and United States of America

to oversee our businesses there was reduced.



Occupancy expenses increased by A$0.1 million from A$0.6 million

for the year ended June 30, 2014 to A$0.7 million for the year ended June 30, 2015 as a result of the acquisition of the GED and

BlueNRGY LLC. These increases were largely offset by reductions following the VA process, whereby a number of leases were disclaimed

by our Australian operations.



Our provision for impairment of receivables and bad debts expense

was A$0.8 million for the year ended June 30, 2015 compared to a negligible expense for the same period in 2014. This resulted

from a major customer of Parmac entering voluntary administration, difficulties in recovering some debts during the VA process

and provisions against some debtors in GED.



Total depreciation and amortization expense remained consistent

between the 2014 and 2015 years as it relates to RAPS, Parmac and corporate assets largely unaffected by the VA process.





70









Other Income



We recognized A$1.8 million of other income in the year ended June

30, 2015 as compared to A$0.7 million for the year ended June 30, 2014. The other income in the year ended June 30, 2014 was attributable

to gains from the extinguishment of debt from creditors and lenders as a result of the VA process. The other income in 2014 was

from the reversal of contingent consideration payable in relation to the acquisition of eco-Kinetics in 2010 of A$0.6 million.



Finance Costs



Finance costs comprise interest expenses, debt restructuring fees,

share option expenses directly related to financing activities and foreign exchange differences on loan balances. We reported a

gain in the finance costs category of A$0.1 million in 2015 resulting from foreign currency gains on borrowings of A$0.9 million

which exceeded interest charges of A$0.8 million. In 2014 net interest expense was A$3.8 million, share option expensesA$0.1 million

and foreign exchange losses A$0.2 million. Net interest expense reduced significantly between the 2014 and 2015 fiscal years as

a result of the extinguishment of borrowings following the VA process.



Impairments



The impairment loss in the 2015 fiscal year of A$6.2 million was

due to an impairment charge of that amount relating to the goodwill carrying value of our Solar CGU. The impairment loss of A$10.0

million for the year ended June 30, 2014, was due to a decline in the value of our investment in the Taralga wind farm project

to $ Nil as a result of construction delays and cost overruns during the year.



Income taxes



No income tax expense was recorded for the years ended June 30,

2015 and 2014.





71









Fiscal Year Ended June 30, 2014 Compared to Fiscal Year Ended

June 30, 2013 —Consolidated Results



|Amounts in A$(000) except as noted                                |  | Year Ended June 30,
|----------------------------------------------------------------- |  | -------------------
|                                                                  |  | 2014               
|Revenues from continuing operations                               |  |                    
|Operating Expenses                                                |  |                    
|Cost of raw materials, consumables and contractors                |  |                    
|Employee benefit expenses                                         |  |                    
|Compliance & consultants                                          |  |                    
|Travel costs                                                      |  |                    
|Occupancy expenses                                                |  |                    
|Provision for impairment of receivables and bad debts written off |  |                    
|Other expenses                                                    |  |                    
|Depreciation and amortization expenses                            |  |                    
|Sub-total - operating costs                                       |  |                    
|Other income                                                      |  |                    
|Finance costs                                                     |  |                    
|Impairments                                                       |  |                    
|(Loss) / Profit before income tax                                 |  |                    
|Income tax (expense) / benefit                                    |  |                    
|Net (Loss)/profit from continuing operations                      |  |                    
|Net profit / (loss) from discontinued operations                  |  |                    
|Net (Loss) / Profit for the period                                |  |                    
|Other comprehensive income                                        |  |                    
|Total comprehensive loss                                          |  |                    



Operating revenue



Total operating revenues from continuing operations decreased from

A$43.5 million for the year ended June 30, 2013 to A$13.7 million for the year ended June 30, 2014. The revenues for the year ended

June 30, 2013 included A$18.2 million of revenue related to the Taralga Project and A$3.4 million related to large scale solar

projects developed in the USA. No wind farm developments were sold in the year ended June 30, 2014.



|                                       |  | Revenue for Year Ended

June 30,
|-------------------------------------- |  | --------------------------------
|Amounts in A$(000) except as noted     |  | 2014                            
|Solar PV                               |  |                                 
|Large-scale Wind                       |  |                                 
|Energy Efficiency/Technology Solutions |  |                                 
|Parmac                                 |  |                                 
|RAPS / Technology Solutions            |  |                                 
|Total                                  |  |                                 





72









Solar PV revenue declined by 75% from A$7.6 million for the year

ended June 30, 2013 to A$1.9 million for the year ended June 30, 2014, due to the absence of any large scale solar projects in

our 2014 fiscal year, a reduction in our level of residential installations due to our continued lack of working capital and inability

to sustain sales and marketing expenditures to generate new customers and revenues. A$3.4 million of the solar PV revenue for the

year ended June 30, 2013 was in relation to an EPC contract for a solar project in New Jersey. In the year ended June 30, 2014

we sold two commercial solar projects in the United Kingdom for a combined A$0.3 million.



Revenue from our Large-scale Wind segment recognized during our

fiscal year 2013 was the result of the sale of the Taralga Project, which had been under development by us beginning in the prior

fiscal year. Further details about the Taralga Project and the sale are included above under the heading “—Large-scale

Wind.” In our fiscal year 2014, we earned $1.3 million from the provision of project management services to the Taralga project.



Parmac recorded a decrease in revenue of A$7.2 million from A$17.4

million for the year ended June 30, 2013 to A$10.2 million for the year ended June 30, 2014, which was largely the result of a

change in our focus from larger greenfield developments to smaller retro-fitting and service opportunities, which are considered

more in line with the Parmac team’s capabilities to manage profitably. RAPS revenue remained consistent at A$0.3 million

between the two periods reflecting the stable nature of the revenue generated from the Chatham Island Wind project.



Operating costs



For the year ended June 30, 2014 and 2013, respectively, total operating

costs including the cost of raw materials, consumables and contractors are presented in the table below for our various business

segments:





|                                       |  | Year Ended June 30,
|-------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted     |  | 2014               
|Solar PV                               |  |                    
|Large-scale Wind                       |  |                    
|Energy Efficiency/Technology Solutions |  |                    
|Parmac                                 |  |                    
|RAPS / Technology Solutions            |  |                    
|Corporate                              |  |                    
|Total                                  |  |                    





73









The 62% reduction in solar PV operating costs from A$8.5 million

for the year ended June 30, 2013 to A$3.2 million for the year ended June 30, 2014 is lower than the reduction we recognized in

revenues for this division over the same period, reflecting the fixed element of some of the operating costs in this division.



Large-scale wind operating costs decreased by A$3.9 million to A$0.6

million for fiscal year 2014 as compared with A$4.5 million for fiscal year 2014 due to our expensing of capitalized early stage

development costs upon sale of the Taralga Project in fiscal year 2013, which was not repeated in the year to June 30, 2014.



Parmac operating costs were A$11.0 million for the year ended June

30, 2014 as compared to A$18.7 million for the year ended June 30, 2013. The changes in operating costs for Parmac were closely

linked to direct costs of delivery, which fluctuate in line with changes in revenue and the mix of products and services delivered.

RAPS operating costs of A$0.1 million for the year ended June 30, 2014 were largely comprised of depreciation related to the Chatham

Island assets and are fixed in nature. In the year ended 30 June 2013 the RAPS division also included $0.1m of maintenance and

other one-off costs.



Changes in the categories of operating expenditure are discussed

in more detail below.



The cost of raw materials, consumables and contractors used decreased

from A$21.9 million for the year ended June 30, 2013 to A$6.1 million for the year ended June 30, 2014 as a result of the reduction

in revenue levels between the two periods. The percentage decrease in this category of expense for the fiscal year ended June 30,

2014 as compared with the year ended June 30, 2014 was 72%, which correlates closely with the decrease in revenue of 68%.



Employee benefit expense has been reduced by 15% from A$11.0 million

for the year ended June 30, 2013 to A$9.3 million for the year ended June 30, 2014 through headcount reductions primarily in the

solar PV division. A significant proportion of employee costs relate to corporate and executive management; these were maintained

at the levels considered necessary to implement the diversification strategies we are pursuing. The wind division was heavily supported

by the senior corporate executive team to manage the construction progress of the Taralga Project.



Total compliance and consultant’s expense increased from

A$2.5 million for the year ended June 30, 2013 to A$3.5 million for the year ended June 30, 2014. The most significant contributor

to costs in this area were professional fees in relation to capital raising activities and preparation for registration of our

securities in the United States and costs for two senior executives employed under consultants agreements.



Travel costs were A$0.6 million and A$0.7 million for fiscal years

2013 and 2014 respectively. This level of expenditure was incurred largely to allow senior operational executives to travel to

the United Kingdom and United States of America to oversee our businesses there.



Occupancy expenses remained consistent at A$0.6 million in both

years.



Our provision for impairment of receivables and bad debts expense

was A$0.1 million for the year ended June 30, 2013 compared to an expense of $0.02 million for the same period in 2014. This resulted

from a lower debtors balance against which customary provisions were applied.





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Total depreciation and amortization expense remained consistent

at A$0.4 million for both years reflecting the stable property, plant and equipment balance.



Other Income



We recognized A$0.7 million of other income in the year ended June

30, 2014 as compared to A$2.6 million for the year ended June 30, 2013. The other income in the year ended June 30, 2014 was attributable

to the reversal of contingent consideration payable in relation to the acquisition of eco-Kinetics in 2010. The other income in

the year ended June 30, 2013 was attributable to a gain of A$2.6 million on the revaluation of financial liabilities, being derivatives

embedded in the secured convertible notes we issued in May 2012 and gains on STCs and a recovery of bad debt previously written

off.



Finance Costs



We reported finance costs of A$4.1 million and A$8.3 million for

the years ended June 30, 2014 and 2013, respectively. Finance costs comprise interest expenses, debt restructuring fees, share

option expenses directly related to financing activities and foreign exchange differences on loan balances. The $4.2 million decrease

was made up of A$0.4 million of foreign exchange losses on foreign currency denominated debt and A$3.8 million of penalties incurred

(classified in interest expense) and extinguishment costs relating to the defaults on and subsequent restructure of our then-outstanding

Series 1 convertible notes.



Impairments



The impairment loss of A$10.0 million for the year ended June 30,

2014, was due to a decline in the value of our investment in the Taralga wind farm project to $ Nil as a result of construction

delays and cost overruns during the year. The impairment loss in the 2013 fiscal year of A$0.6 million was due to a decrease in

the market value of our investment in common shares of Andalay Solar.



Income taxes



No income tax expense was recorded for the year ended June

30, 2014. An income tax benefit of $0.1 million was recognized in the year ended June 30, 2013 from the reversal of a prior year

deferred tax liability.



Application of Critical Accounting Policies, Estimates and Judgments



Our accounting policies form the basis for preparation of our financial

statements and our financial statements in turn are an essential factor in understanding our operations. Our accounting policies

are in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards

Board (IASB) and are fully described in the notes to our audited financial statements as of and for the three years ended June

30, 2013, 2014 and 2015. The preparation of our financial statements required management to make judgments, estimates, assumptions

and judgments that affect the reported amounts of revenue, assets, liabilities and expenses. Our management re-evaluates estimates

on an on-going basis and such estimates are based on historical experience and on various other assumptions that management believes

to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Unless otherwise stated, all dollar amounts stated in our financial statements are expressed in the currency of the Commonwealth

of Australia.



Critical accounting policies



Critical accounting policies that reflect our industry and activity

specific accounting treatments used in preparing our financial statements as of and for the fiscal years ended June 30, 2013, 2014

and 2015 or that have significant potential to result in a material adjustment to the carrying amounts of assets and liabilities

during such fiscal years.





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(a) Basis of preparation - going concern



The consolidated financial statements have been prepared assuming

that we will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of

this uncertainty. As further discussed below in “—Liquidity and Capital Resources,” our current liabilities

exceeded our current assets by A$4.6 million as of June 30, 2015. We remain dependent upon receiving continuing support from existing

lenders, raising additional funds in new financings, and monetizing long-term assets to fund the business and to continue as a

going concern.



(b) Revenue recognition



Revenue is recognized to the extent that it is probable that the

economic benefits will flow to us and the revenue can be reliably measured, regardless of when payment is being made. Revenue is

measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment

and excluding taxes or duty. The specific recognition criteria described below are applicable to the primary sources of our revenue:



(i) Sale of products, materials and parts



Revenue from the sale of products, material and parts is recognized

upon the delivery of goods to customers.



(ii) Construction contracts



Contract revenue and expenses, such as those related to large-scale

solar and air conditioning projects where we are acting as a general contractor, are recognized in accordance with the percentage

of completion method unless the outcome of the contract cannot be reliably estimated. Revenue is matched with the contract costs

incurred in reaching the stage of completion, resulting in reporting revenue, expenses and profit, which can be attributed to the

work completed. When it is probable that a loss will arise from a construction contract, the excess of total costs over revenue

is recognized immediately as an expense. Where the outcome cannot be measured reliably, revenue is recognized only to the extent

that related expenditure is deemed recoverable. The stage of completion of a contract is measured by reference to the recoverable

costs incurred to date as a percentage of estimated total costs for the contract.



(iii) Project development revenue



Revenue from large-scale solar and wind projects that we undertake

as principal is recognized when the project is commissioned and rents or revenues from the power sales are received, or if control

of the project is sold to a third party, when the risks and rewards of ownership have been transferred. The timing and amount

of revenue recognized depends on the specifics of each such project and the arrangements that we have with our customers.



Costs incurred for project development are expensed in the period

in which incurred unless we determine that it is probable the project will be completed and generate future economic benefit equal

to or in excess of such costs and that can be measured reliably in which case the costs are recorded in inventory until a development

fee is recognized.



(c) Work-in-progress



Project work in progress includes both work in progress on construction

contracts, such as those performed for customers of our large-scale solar and air conditioning systems customers and projects in

progress in which we are a principal such as certain large-scale solar projects, or in which we are investing in project development

for a fee such as large-scale wind projects.



Project Work in Progress



As further described in Note 2(q) (iii) to our audited financial

statements included elsewhere in this Report, costs incurred for developing projects for which we are acting as a principal or

earning a developer fee is valued at the lower of cost and estimated net realizable value when it is probable that the project

will be completed, will generate future economic benefits and the costs can be measured reliably. Cost comprises staff salary costs

and direct expenses including direct material costs and contractor costs together with an appropriate proportion of overheads.

Net realizable value is based on estimated selling prices less further costs expected to be incurred to completion. At June 30,

2015 the carrying amount of capitalized project work in progress was A$0.1 million as compared to A$0.3 at June 30, 2014.





76









Other development expenditures that do not meet these criteria

are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset

in a subsequent period.



Significant Accounting Judgments, Estimates and Assumptions



Significant accounting judgments, estimates and assumptions that

have been used in the preparation of our financial statements are set out below. Estimates and judgments are continually evaluated

and are based on historical experience and other factors, including expectations of future events that may have a financial impact

on the entity and that are believed to be reasonable under the circumstances.



We make estimates and assumptions concerning the future in determining

accounting treatments and quantifying amounts for transactions and balances in certain circumstances. The resulting accounting

estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk

of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed

below.



(a) Recovery of deferred tax assets



Deferred tax assets are recognized for deductible temporary differences

as management considers that it is probable that future taxable profits will be available to utilize those temporary differences.



Judgment is required in assessing whether deferred tax assets are

recognized in the statement of financial position. Deferred tax assets, including those arising from un-recouped tax losses, capital

losses and temporary differences, are recognized only where it is considered more likely than not that they will be recovered,

which is dependent on the generation of sufficient future taxable profits.



Assumptions about the generation of future taxable profits depend

on management’s estimates of future cash flows. These depend on estimates of future sales, operating costs, capital expenditure

and other capital management transactions. Judgments are also required about the application of income tax legislation. These judgments

and assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations,

which may impact the amount of deferred tax assets and deferred tax liabilities recognized on the balance sheet and the amount

of other tax losses and temporary differences not yet recognized. In such circumstances, some or all of the carrying amounts of

recognized deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the income

statement. Should operating performance and prospects improve in the future, then deferred tax assets may be recognized in future

on prior year operating losses. As of June 30, 2015, we had A$16.6 million of derecognized deferred tax assets and A$19.9 million

at June 30, 2014.



(b) Share-based payment transactions



We measure the cost of equity-settled transactions with employees

by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using

a Black-Scholes model, with the assumptions detailed in Note 26 to our audited financial statements included elsewhere in this

Report. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying

amounts of assets and liabilities within the next annual reporting period.



The Group measures the cost of equity-settled transactions with

regards warrants using an un-modified binominal lattice model giving consideration to the dilution impact of the shares issued

upon conversion of the warrants as well as other options on issue.





77









(c) Impairment of goodwill and other intangibles other than Patents



We determine whether goodwill and other intangibles other than patents

are impaired at least on an annual basis (as of June 30, the end of our fiscal year) and when circumstances indicate the carrying

value may be impaired. The Group’s impairment test for goodwill and intangible assets with indefinite lives is based on value-in-use

calculations that use a discounted cash flow model using assumptions believed by management to be reasonable. These valuations

would not reflect unanticipated events and circumstances that may occur. However, as detailed in the notes to our statements under

the heading “Goodwill Impairment” (see Note 16 to our audited financial statements included elsewhere

in this Report) indicators of potential impairment exist and there can be no assurance that we will avoid a downward revision in

the carrying value of goodwill in the future and any such revision in value will also result in the recording of a charge in the

Statement of Comprehensive Income.



(d) Wind development projects



The investment of 10% of the Taralga Wind Farm project is by way

of investment in two entities, Taralga Holding Nominees 1 Pty Ltd and Taralga Holding Nominees 2 Pty Ltd. This investment was funded

by us from the re-investment of part of our development fee generated on equity close of the project. This investment is classified

as an “Available-for-sale financial asset”. It has always been expected that we, along with the majority equity holder,

would exit this investment within a three year period. The investment in Taralga was initially recognized at fair value at the

date of the equity transaction on October 9, 2012. Fair value was determined by reference to the present value of net cash inflows

projected to be received by us from exiting this investment based on the financial model of the project and the contractually defined

distributions from any sales profits due to us on exit. Due to the requirement for judgment over variables within the financial

model to determine future returns and profit achievable on exit, the fair value calculations were based on a net present value

of a risk adjusted, probability weighted average return from different sales Internal Rate of Return (IRR) expectations.



The range of IRR assumptions used in these calculations was from

9.0% to 13.0%, which are considered the high and low points between which arm’s length sales transactions of wind farm projects

may occur in Australia. A discount rate of 17.0% was applied to the calculated amount to reflect the risk to deliver the project

as per the model associated with construction risk and the time value of money based on return premiums specific to the project.

The range of outcomes of the fair value calculations was from A$9,500,000 to A$10,900,000 and the adopted value was A$10,000,000.

Variances between actual results and the estimated results from the valuation methodology may result in higher or lower profits

being achieved on exit of this project. After initial recognition the investment in the Taralga Wind Farm project is accounted

for as an available-for-sale investment, which is measured at fair value with gains or losses being recognized as a separate component

of equity until the investment is derecognized or until the investment is determined to be impaired. At June 30, 2013 and December

31, 2013 this available-for-sale asset had been revalued to $10,800,000. This revaluation was based on an indicative offer to

acquire the asset which was received by CBD during 2013.



At 30 June 2014, the fair value calculations were re-performed using

the same methodology as on initial recognition. Based on actual events and expected changes to future outcomes arising from events

during the 2014 financial year, the investment was fully impaired at 30 June 2014. This impairment resulted in the recognition

of a charge to the Statement of Financial performance of $10,800,000.





78









5.B.            Liquidity and Capital Resources



Analysis of financial condition, liquidity and capital resources



The following table presents a comparison of our cash flows and

beginning and ending cash balances during the fiscal years ended June 30, 2015, 2014 and 2013 as reflected in our audited financial

statements presented elsewhere in this document.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2015               
|Net cash flows used in operating activities            |  |                    
|Net cash flows used in investing activities            |  |                    
|Net cash flows from financing activities               |  |                    
|Net (decrease) / increase in cash and cash equivalents |  |                    
|Cash and cash equivalents at beginning of period       |  |                    
|Cash and cash equivalents at end of period             |  |                    



At June 30, 2015 our cash and cash equivalents had decreased to

A$0.5 million from A$1.4 million at June 30, 2014 primarily as a result of the application to operating activities of funds raised

from the issuance of ordinary shares in June 2014 in conjunction with an offering pursuant to our prospectus effective as of June

12 2014, referred to as the June 2014 Offering. During each of the last three fiscal years ended June 30, 2015, 2014 and 2013 and

subsequently through the date of this Report, our liquidity has been generated primarily from borrowings and sales of equity securities.

Cumulative funding from financing activities of A$13.8 million and funding from investing activities of A$0.1 million over this

period was insufficient to fund cumulative losses from operations during fiscal years 2015, 2014 and 2013 and provide any further

working capital. Consequently, our cash availability and liquidity remained constant at A$0.5 million at the beginning of fiscal

year 2013 to June 30, 2015, a level too low to sustain our operating outflows and continuance as a going concern, as further discussed

below. Our liquidity deficiencies were exacerbated by our acquisition in July 2014 of GED to which we allocated US$1.5 million

within 60 days following the 2014 Offering for purposes of consummating transaction and addressing GED’s working capital

deficit. In June 2014, we were successful in negotiating exchange agreements with convertible note holders to exchange notes with

a face value of A$7.8 million into ordinary share capital, but this was insufficient to overcome our working capital deficit. We

have classified the remaining indebtedness we had incurred during the two prior fiscal years and which was not converted into equity

prior to June 30, 2014 became current liabilities as of June 30, 2014 as a result of default events that occurred with respect

to bonds issued by our subsidiaries and the acceleration of other obligations. Consequently, we had a working capital deficit on

June 30, 2014 of A$30.5 million, payments to many trade creditors were substantially deferred, liquidity was severely constrained

and we were unable to continue as a going concern without voluntarily placing the Company and three of our subsidiaries into Administration.

See – Reorganization in Note 5 in our audited June 30, 2015 financial statements included elsewhere in this document.



On November 14, 2014 as a result of our constrained liquidity and

inability to raise sufficient additional financing after June 30, 2014 to meet our obligations the Company and three of its Australian

subsidiaries were determined by the Board to be insolvent or likely to become insolvent in the future and were placed into voluntary

administration (VA). The three Australian subsidiaries of the Company that entered VA were CBD Solar Labs Pty, Westinghouse Solar

Pty Ltd and KI Solar Pty Ltd, which, referred to collectively as the VA Companies. Our other subsidiaries continued to operate

outside the VA process.



On December 24, 2014, deeds of company arrangement
under the Act were signed for the Company and Westinghouse Solar Pty Ltd, referred to as the Reorganized Companies. The DOCAs
for the Reorganized Companies became effective on January 27, 2015 and we exited VA (refer to Item 4.A. under the heading “Voluntary
Administration and Deed of Company Arrangement”).



In accordance with the DOCAs for the Reorganized
Companies, creditor claims and contingent liabilities for those Companies were extinguished and, since exiting VA through the
date of this Report, investors have infused US$5.9 million into the Company pursuant to equity private placement. Of this US$1
million was used to pay the Deed Funds as a condition to effectiveness of the DOCAs and US$2.4 million was used to acquire the
assets of Draker Inc. The remainder of the funds raised have been used for working capital purposes and to fund operating losses
following our emergence from VA.





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In connection with effectuating the Reorganization Plans on January

27, 2015, we acquired 100% the issued and outstanding membership interests of BlueNRGY LLC. The acquisition was settled through

the issuance of an aggregate of 150,162,640 of our ordinary shares.



Our ability to continue as a going concern and

to achieve our business objectives over the next 12 months depends on our ability to accomplish some or all of the following:



| | ● | Attain profitability: Not all of our subsidiaries are contributing cash flow to cover our corporate costs and we are

not operating profitably overall. However, we are continually reviewing costs structures in our operating subsidiaries and making

the appropriate changes to maximize cash flow and profitability of our businesses. New business opportunities are carefully assessed

with a view to ensuring their potential to contribute to profits without undue consumption of working capital. Specifically, since

effectiveness of the Reorganization Plans we have reduced the number of employees in our Solar PV business units and corporate

units to lower costs and better match the current scope of our activities. In addition, we have implemented operational changes

and new controls at Parmac that we anticipate will allow us to avoid losses on projects such as we experienced in fiscal year 2013

and 2014 and that we believe will allow this business unit to sustain profitability.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Raise new debt and/or equity capital: BlueNRGY continues to discuss opportunities for further investment with current

equity holders. In addition, as of the date of this Report we have been successful in establishing a working capital facility for

our Parmac subsidiary of US$0.5 million and there is a likelihood, but no assurance, that the current lender or a substitute lender

will increase the amount of this facility, if required. In addition, we have structured long term payment arrangements with legacy

trade creditors of our GED subsidiary in the amount of approximately US$0.5 million. We had a positive cash balance of approximately

A$0.8 million as of December 4, 2015.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our management and Board have determined that

there is a risk that our funding requirements may not be successfully met through the foregoing initiatives and that some of our

initiatives may not be successful. However, as previously mentioned, we have achieved some operating and financing objectives

and our management and board believe that we have a reasonable prospect of achieving others; consequently, we have no intention

to liquidate or cease trading, except with respect to our U.S. subsidiary, Westinghouse Solar Inc., which is dormant and ceased

operating prior to the effectiveness of our Reorganization Plans as a result of the termination of the license agreement with

Westinghouse Electric Corporation.



Operating activities



As shown in the table below, although our

operating activities generated positive cash flow for fiscal year 2013, the cumulative utilization of cash over the last

three fiscal years has been A$15.9 million.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2015               
|Cash flow from operating activities                    |  |                    
|Receipts from customers (inclusive of GST)             |  |                    
|Payments to suppliers and employees (inclusive of GST) |  |                    
|Payments for development costs                         |  |                    
|Finance costs                                          |  |                    
|Interest received                                      |  |                    
|Net cash flows used in operating activities            |  |                    





80









For the year ended June 30, 2015, net cash used in operating activities

was A$5.6 million as compared with an outflow of A$20.2 million for the year ended June 30, 2014. The excess of disbursements to

suppliers and employees over receipts in the year ended June 30, 2015 was A$5.1 million and was largely driven by funding of ongoing

operating losses.



For the year ended June 30, 2014, net cash used in operating activities

was A$20.2 million as compared with an inflow of A$9.8 million for the year ended June 30, 2013. The excess of disbursements to

suppliers and employees over receipts in the year ended June 30, 2014 was A$18.8 million and was largely driven by the catch up

of payments to overdue creditors and funding ongoing operating losses.



The excess of receipts over disbursements to suppliers and employees

the year ended June 30, 2013 was A$15.8 million, largely driven by the receipt of sale proceeds of A$15.1 million from the Italian

Solar Projects and cash proceeds of A$7.3 million from the sale of the Taralga project (after recognizing related development costs

of A$3.5 million), offset by net losses from the remainder of our operations and finance costs of A$2.5 million. The excess of

finance costs over interest income of A$2.5 million further contributed to the net use of cash for operations in fiscal year 2013.





Investing activities



In two out of the last three fiscal years, we divested assets in

part to fund operating losses and pay down debt as detailed in the table below.





|                                                                      |  | Year Ended June 30,
|--------------------------------------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted                                    |  | 2015               
|Cash flow from investing activities                                   |  |                    
|Proceeds from sale of property, plant and equipment                   |  |                    
|Proceeds from the sale of intangible assets                           |  |                    
|Purchase of property, plant and equipment                             |  |                    
|Cash forfeited during reorganisation                                  |  |                    
|Proceeds from sale of investments                                     |  |                    
|Payment for the purchase of controlled entities, net of cash acquired |  |                    
|Net cash flows used in investing activities                           |  |                    





81









Net cash used in investing activities was A$2.0 million for the

year ended June 30, 2015, as opposed to A$1.3 million cash generated in investing activities for the year ended June 30, 2014 Payment

for the purchase of controlled entities, net of cash acquired of A$1.3 million in the year ended June 30, 2015 related to the purchase

of GED and cash of A$0.4 million held at the time of entering VA was forfeited. For the year ended June 30, 2014, A$1.8 million

was received following the sale of CapTech and net investments of A$0.7 million were made for purchases of plant, property and

equipment predominantly for the construction of solar PV assets owned by one of our UK subsidiaries. In 2013, A$1.0 million was

received from the sale of Larkden.





Financing

activities



As shown in the table below, we generated the cash used in operating

and investment activities during fiscal years 2015 and 2014, with net contributions from financing activities during those years.

In fiscal year 2013, the flows were reversed with cash generated from operations and investments being used to repay borrowings.

Nevertheless, over the three-year period ended in June 2015 we generated A$13.8 million cumulatively from financing activities:





|                                         |  | Year Ended June 30,
|---------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted       |  | 2015               
|Cash flow from financing activities      |  |                    
|Proceeds from share issues               |  |                    
|Proceeds from issue of convertible notes |  |                    
|Convertible note and share issue costs   |  |                    
|Proceeds from borrowings                 |  |                    
|Repayment of borrowings                  |  |                    
|Payment of finance lease liabilities     |  |                    
|Net cash flows from financing activities |  |                    



For the year ended June 30, 2015, net cash inflows from our financing

activities was A$6.6 million as compared with net cash inflows from our financing activities of A$19.8 million for the year ended

June 30, 2014. In the year ended June 30, 2015 we raised $4.5 million from the issuance of ordinary and preference shares and our

parent company and operating subsidiaries borrowed A$2.2 million as follows: Parmac (A$0.7 million), GED (A$0.5 million) and BlueNRGY

Group Limited (A$1.0 million). In  the year ended June 30, 2014, A$14.1 million of borrowings were from the issuance of bonds

in the United Kingdom by (our then-subsidiaries) Secured Energy Bonds Plc and Energy Bonds plc, A$2.1 million from a working capital

loan facility and A$1.1 million from the issuance of further Series 1 Notes (defined below and referred to in the table as convertible

notes) which were subscribed to in September 2013. During the year ended June 30, 2014 we repaid an inventory financing facility

of A$0.5 million and A$1.7 million of secured convertible notes, referred to as Series 1 Notes from the proceeds of the sale of

CapTech as well as A$1.5 million of our other non-equity linked loan balance. In June 2014 we raised A$7.7 million from the issuance

of 1,810,000 of our ordinary shares at an issue price of US$4.00 per share (equivalent to A$4.25 per share). Issue costs of A$1.3

million were incurred in relation to this share issue for broker fees and other professional services incurred in connection with

the offer.





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Indebtedness



As a result of the Reorganization Plans, we
emerged from VA with no outstanding debt at the level of our parent company. Subsequent to our emergence from VA we have obtained
corporate debt financing of A$ 2.0 million from shareholders and affiliates of management  and accumulated trade creditor balances
amounting to approximately A$0.2 million as of November 30, 2015, some of which are past due. Our direct trade creditors with
deferred payment balances are cooperating to defer payments until we can realize subscriptions receivable or arrange other financing.
However, there is no assurance that their cooperation will continue and we could be faced, without notice, with immediate payment
obligations that we cannot meet. As of December 4, 2015, three of our subsidiaries, Parmac, GED and BlueNRGY LLC have obligations
that are non-recourse to our Parent Company under separate secured credit facilities or deferred payment plans with trade creditors
or both and, in the case of Parmac, finance leases undertaken for the purchase of motor vehicles, equipment and machinery as further
described below. As part of the Reorganization Plans, our subsidiaries Parmac and Chatham Island Wind Limited issued Redeemable
Preference shares with a face value of US$3,600,000 which are classified as non-current borrowings on our balance sheet (refer
to Interest-bearing loans and borrowings – Note 18 in our audited financial statement at June 30, 2015).



Parmac



Working Capital Facility - secured:
In April 2015 one of our subsidiaries, Parmac, secured a line of credit with an affiliate of our Managing Director (refer to Item
7.B. under the heading “Related Party Transactions”), for up to US$0.5 million, referred to as the Parmac
Liquidity Facility, against which Parmac has drawn the maximum amount of funds available to meet its working capital needs. The
Liquidity Facility had a term of four months and reverted to being a demand note in July 2015. The facility has a commitment fee
of 7.5% of the principal amount and interest is charged at 1.0% per month on the outstanding balance for the first 90 days (or
duration of the facility if shorter), 1.25% per month on the outstanding balance during the next month and 2.0% per month on any
outstanding exposure thereafter (a default rate) until the loan is repaid. The Parmac Liquidity Facility is currently secured
by a lien on all of the assets of Parmac except statutory liens and liens under finance leases, as described below.



Deferred Trade Obligations (unsecured): As of December 4,

2015, Parmac had outstanding A$0.2 million of significantly overdue trade accounts payable. These deferred payables are being paid

down on an informal deferred payment arrangement. Our direct trade creditors with deferred payment balances are cooperating to

defer payments until we can arrange other financing or generate sufficient operating cash flows to pay the outstanding balances.

However, there is no assurance that their cooperation will continue and we could be faced, without notice, with immediate payment

obligations that we cannot meet. In aggregate, Parmac maintained a positive working capital balance as of October 31, 2015 after

giving effect to the Parmac Liquidity Facility.



Finance Leases (secured):We have obligations under various

financing leases for equipment and motor vehicles aggregating A$0.2 million as of October 30, 2015. The lessors have a perfected

senior security interest in the equipment or vehicles covered by the leases. The terms of the leases vary, with the longest scheduled

to be retired in approximately 3 years. Required payments under our financing leases are generally monthly or quarterly. We recognize

these financing lease obligations as debt on our balance sheet. As of June 30, 2015 A$0.1 million of the financing leases were

recorded as current obligations and the remaining A$0.2 million finance lease balance was classified as non-current.



Redeemable Preference Shares (unsecured):On execution of the Reorganization Plans, Parmac issued 2,200,000 US$1.00 non-voting, redeemable preference shares (“RPS”).
The Parmac RPS are convertible in into parent company Ordinary Shares in whole or in part at any time after June 30, 2015 at a
price of US$0.03785 per share and are restricted to the extent that such conversion would result in any holder having more than
20% of the outstanding ordinary shares in the Company. RPS receive an annual dividend of 4% per annum payable on December 31 each
year. If dividends cannot be paid in cash, further RPS will be issued to satisfy the dividend amount. RPS are redeemable by Parmac,
in whole or in part, at our sole election. The holder of the RPS may, at its discretion, force redemption through the sale of
Parmac if the RPS have not been converted or redeemed by December 31, 2017. The RPS are classified as a liability on the Statement
of Financial Position as there exists an obligation for Parmac to deliver either cash or another financial asset to the holder
at some point in the future. The face value of the Parmac RPS at December 4, 2015 is US$2,200,000.





83









GED



Working Capital Facility (secured):In November 2014 Washington

H. Soul Pattinson & Co. Ltd. (WHSP) extended to one of our subsidiaries – Green Earth Developers LLC (GED) a secured

line of credit for up to US$0.36 million, referred to as the GED Liquidity Facility, against which we drew funds to fund operations

and working capital for GED during the VA process. As of April 30, 2015, the Company had drawn the maximum amount available under

the GED Liquidity Facility. The Liquidity Facility is repayable within 10 days of a repayment demand. No demand for repayment

has been made at the date of this report. The interest rate applicable to funds drawn under the Liquidity Facility is 6.00 percent

per annum calculated on any drawn amounts. The GED Liquidity Facility is secured by a first lien on the assets of GED.



Deferred Trade Obligations (unsecured):As of April 30, 2015,

our GED subsidiary had past due balances with a number of large trade creditors who were collectively owed US$0.5 million. We entered

into Payment Plan Agreements with these trade creditors whereby GED committed to make 18 monthly payments to these creditors to

satisfy the indebtedness. No interest or other charges are payable on the Payment Plan Agreements. As of December 4, 2015 GED was

current on its payment obligations under the Payment Plan Agreements and balances had been reduced to US$0.3 million.



BlueNRGY LLC



Deferred Trade Obligations (unsecured):As of December 4,

2015, our BlueNRGY LLC subsidiary had past due balances with a number of trade creditors who were collectively owed US$0.2 million.

We have entered into deferred payment arrangements with a number of these creditors and are in discussions with the largest creditor

to settle the balance owing through the issuance of our shares.



Chatham Island Wind Limited (CIWL)



Redeemable Preference Shares (unsecured):On execution of the Reorganization Plans, CIWL issued 1,400,000 RPS. The RPS are convertible in into parent company
Ordinary Shares whole or in part at any time after June 30, 2015 at a price of US$0.03785 per share and are restricted to the
extent that such conversion would result in any holder having more than 20% of the outstanding ordinary shares in the Company;
provided however, if the CIWL contract with CIEL is terminated, the CIWL RPS cannot be converted. The CIWL RPS receive an annual
dividend of 4% per annum payable on December 31 each year. If dividends cannot be paid in cash, further RPS will be issued to
satisfy the dividend amount. RPS are redeemable by Parmac, in whole or in part, at our sole election. The holder of the RPS may,
at its discretion, force redemption through the sale of CIWL if the RPS have not been converted or redeemed by December 31, 2017.
The RPS are classified as a liability on the Statement of Financial Position as there exists an obligation for CIWL to deliver
either cash or another financial asset to the holder at some point in the future. The face value of the CIWL RPS at December 4,
2015 is US$1,200,000.



5.C.            Research and Development



For our fiscal years 2013-2015 we did not conduct

research and development.



5.D.            Trend Information



Other than as disclosed elsewhere in this
Report, we are not aware of any trends affecting our businesses. Refer to Item 4.B. under the heading “Our Industry”.



5.E.            Off-Balance Sheet Arrangements



Except for amounts due under operating lease commitments disclosed

below in Section F of this Item 5 we do not have any material off-balance sheet commitments or arrangements.





84









5.F.            Tabular Disclosure of Contractual Obligations



As of December 4 2015 our contractual, obligations, excluding trade

creditors, were as set forth below:



|                          |  |       |       | Payments Due By Period
|------------------------- |  | ----- | ----- | ----------------------
|(Amount in A$ 000)        |  | Total |       | Less than 1 year      
|Obligations under:        |  |       |       |                       
|Operating leases          |  |       | 525   |                       
|Financing leases          |  |       | 228   |                       
|Borrowings and interest * |  |       | 3,539 |                       
|                          |  |       | 4,292 |                       





* Excludes Redeemable Preference Shares as at December 4,

2015 there is no cash obligation associated with them



ITEM  6.     DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



6.A.            Directors and Senior Management



The following table presents our directors, executive officers and

key employees as of the date of this Report.



|Name                    |  | Age |  | Position                                                                                        
|----------------------- |  | --- |  | ------------------------------------------------------------------------------------------------
|Executive Officers      |  |     |  |                                                                                                 
|William Morro           |  | 61  |  | Managing Director (the equivalent of an American company’s chief executive officer) and Director
|Richard Pillinger       |  | 41  |  | Chief Financial Officer and Secretary                                                           
|Emmanuel Cotrel         |  | 34  |  | Senior Vice President                                                                           
|Peter Maros             |  | 28  |  | Senior Vice President                                                                           
|Non-Executive Directors |  |     |  |                                                                                                 
|Carlo Botto             |  | 54  |  |                                                                                                 
|Yves-Regis Cotrel       |  | 62  |  |                                                                                                 







85







Executive Officers



William Morro. Mr. Morro was

appointed to our Board in February 2014 and has served continuously in that capacity since then except for a brief interruption

during the VA process when the Administrator assumed all governance responsibilities. Mr. Morro was appointed our Managing Director

and Chairman on February 9, 2015. Mr. Morro is also a Managing Partner of the InterAmerican Group, a U.S. investment and advisory

firm focused primarily on middle-market businesses with cross-border operations in North America and/or Latin America. He also

currently serves as a member of the board of supervisors of JSC “Capital Bank” of Georgia and is Chairman of the Board

of CNC Development Limited, a company with interests in the civil infrastructure sector in China, Prior to joining InterAmerican

in 2001, Mr. Morro headed private equity business units for BMO Group and Heller Financial and was a Principal and shareholder

of the international management consulting firm, Cresap, McCormick & Paget until shortly after its acquisition by Towers, Perrin.

He holds an undergraduate degree from Dartmouth College and a Masters degree from the Kellogg Graduate School of Management at

Northwestern University. Mr. Morro has three decades of senior executive and board experience with more than 20 companies, both

public and private, in which he has been a direct investor.



Richard Pillinger. Mr. Pillinger

is our Chief Financial Officer, having been appointed to this role in October 2011, and also served as our Corporate Secretary

since May 2010. Immediately prior to joining the Company, Mr. Pillinger held positions with a number of WHSP affiliates, including

portfolio Chief Financial Officer for Pitt Capital Partners Limited, BKI Investment Company and Souls Private Equity Limited and

Chief Executive Officer of Corporate and Administrative Services Pty Ltd. WHSP is currently our second largest shareholder. Mr.

Pillinger’s previous roles within other ASX listed companies include Group Finance Manager and Commercial Manager for Volante

Group Limited and Commander Communications Limited, respectively. Mr. Pillinger has significant international business experience,

having worked in accounting audit and advisory positions in London before relocating to Australia. Mr. Pillinger is a Fellow of

the Institute of Chartered Accountants England & Wales and has a Bachelor of Science Degree from the University of Nottingham.



Emmanuel Cotrel. Since
January 27, 2015, Emmanuel Cotrel has been a Senior Vice President and responsible for strategy and corporate development as
well as serving as the senior executive officer of BlueNRGY LLC, one of the subsidiaries comprising our Monitoring &
Performance Analytics business. Mr. Cotrel founded BlueNRGY LLC in 2012 and prior to that he was a co-founder and
principal of an investment fund, L14 FCP SIF, affiliated with the Edmond de Rothschild Bank; the fund targeted investments in
or acquisition of renewable energy infrastructure projects across Europe, specifically wind and solar power generation
systems. Before co-founding BlueNRGY and L14, Mr. Cotrel was a co-founder of SeaMobile, Inc. (USA), currently an industry
leader in global maritime telecommunications where he was active in acquisitions and other development matters until 2006.
Prior to his involvement with SeaMobile, Mr. Cotrel worked in the International Private Banking division at HSBC Private Bank
in New York. He is an active member of the US-based Cotrel Spinal Research Foundation and the France-based Yves Cotrel
Foundation affiliated with the Institut de France. Mr. Cotrel graduated from IMIP MBA Institute (INSEEC business school in
Paris, France) in 2004.



Peter J. Maros. Since September 1, 2015, Mr. Maros has

been a Senior Vice President and responsible for our solar PV design and installation business in North America. In this capacity

he also serves as the senior executive officer of GED. Prior to joining the Company, Mr. Maros was Executive Director of Shoals

Technologies Group, a leading U.S. supplier of balance-of-system components for solar PV systems. Before that he co-founded the

renewables group for Future Energy Solutions, a leading global distributor of electronics, including components for solar installations

and served as the Renewable Energy Director. Previously he worked in investment banking for Merrill Lynch. Mr. Maros is a graduate

of the Kelly School of Business at Indiana University.



Directors



Carlo Botto. Mr. Botto is a
non-executive member of our Board. His affiliation with the Company began in 2011 when he served as a consultant. In 2012,
he was appointed Senior Vice President of Strategy & Development and continued in an executive role until his resignation
as an executive in 2014. In 2013, he was appointed as a Board member and has been a director continuously since then, with a brief
interruption during our VA process when the Administrator assumed all governance responsibilities. Mr. Botto has extensive energy
industry experience, having worked in various roles in the energy supply industry in Australia and North America over 30 years.
These roles have included senior executive positions responsible for wholesale energy trading, retail marketing, corporate strategy,
risk management and regulatory/corporate affairs. Immediately prior to joining the Company, Mr. Botto was a senior executive with
CLP (0002.HK) working in Melbourne, Australia from 2004 to 2010. Mr. Botto has a Bachelor of Engineering (Electrical) from University
of NSW and a Graduate Diploma in Engineering (Asset Management) from Monash University.



86







Yves-Regis Cotrel. Yves-Regis
Cotrel has been a non-executive member of the Board since January 27, 2015. He is the Founder and, until his retirement
in 2008, was President of Group Quietude, a real estate investment and operations firm with properties in Europe. From 1976 through
his retirement in 2000 to form Group Quietude, Mr. Cotrel held senior executive positions first with the Sofamor Group, a world
leader in manufacturing devices, equipment and biomaterials used in the treatment of spinal and cranial disorders, and then with
its successor companies through various business combinations. In this capacity he developed distribution networks in more than
20 countries in Europe, the Middle East and Asia. Successor businesses to Sofamor Group included the Sofamor-Danek Group, which
was formed through business combination with Danek USA and then Medtronic (NYSE: MDT) which merged with Sofamor-Danek Group in
1999. Mr. Cotrel holds a MSc in Management from IAE Lille and a Bachelor of Law degree from L’Ecole de Notariat de Paris.



Family Relationships



Mr. Yves-Regis Cotrel is the father of Mr. Emmanuel Cotrel. Aside

from this, there are no family relationships between any of our directors or executive officers.



Arrangements



There are no known arrangements or understanding with any major

shareholders, customers, suppliers or others pursuant to which any of our officers or directors were selected in their capacity

as such.



Arrangements Concerning Election of Directors;

Family Relationships



6.B.             Compensation



The following table sets forth all of the compensation awarded to,

earned by or paid to each individual who served as directors and executive officers in the fiscal year ended June 30, 2015.



|                                                                               |  | Short-term Benefits |           | Post- employment Benefits |       | Value of Share- based Payments |       |               
|------------------------------------------------------------------------------ |  | ------------------- | --------- | ------------------------- | ----- | ------------------------------ | ----- | --------------
|Amounts in A$                                                                  |  | Salary  and  Fees   |           |                           | Other |                                |       | Superannuation
|                                                                               |  |                     |           |                           |       |                                |       |               
|Gerard McGowan – CEO and Chairman (until November 14, 2015) (i)                |  |                     | 275,013   |                           |       |                                | —     |               
|Todd Barlow – Director (ii)                                                    |  |                     | —         |                           |       |                                | —     |               
|William Morro – Director; CEO from January 28, 2015 (iii)                      |  |                     | 189,999   |                           |       |                                | —     |               
|Carlo Botto - Director (iv)                                                    |  |                     | 34,390    |                           |       |                                | —     |               
|John Chapple – Director (v)                                                    |  |                     | —         |                           |       |                                | —     |               
|John Donohue - Director(vi)                                                    |  |                     | —         |                           |       |                                | —     |               
|Yves-Regis Cotrel - Director (vii)                                             |  |                     | 38,000    |                           |       |                                | —     |               
|Richard Pillinger - Chief Financial Officer                                    |  |                     | 246,975   |                           |       |                                | —     |               
|Emmanuel Cotrel - Senior Vice President - Data Analytics and Monitoring (viii) |  |                     | 147,878   |                           |       |                                | —     |               
|                                                                               |  |                     |           |                           |       |                                |       |               
|Patrick Lennon - Senior Vice President, Wind and Off Grid Solutions (ix)       |  |                     | 172,694   |                           |       |                                | 5,762 |               
|James Greer - CEO of International Operations (x)                              |  |                     | 114,035   |                           |       |                                | —     |               
|Total                                                                          |  |                     | 1,218,984 |                           |       |                                | 5,762 |               



Notes:

| | i. | Voluntary leave of absence as of October 23, 2014, suspended as of November 14, 2015 and subsequently terminated as Managing

Director by the Administrator; resigned as a director effective December 30, 2015.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | Resigned effective July 18, 2014.
| | --- | ---------------------------------



| | iii. | Stood
                                         down effective November 14, 2014 pursuant to the VA process; reinstated as a director
                                         effective January 27, 2015; appointed as Managing Director and Chairman of the Board
                                         effective February, 2015; salary amount includes accrued compensation that has been deferred
                                         and was not paid in our 2015 fiscal year.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | Stood
                                         down effective November 14, 2015 pursuant to the VA process; reinstated as a director
                                         on January 27, 2015. Salary amount includes accrued compensation that has been deferred
                                         and was not paid in our 2015 fiscal year.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | v. | Director
                                         February 2 to June 16, 2015. Mr. Chapple did not receive any Director fees for
                                         the period of his tenure.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | vi. | Director
                                         January 27 to July 31, 2015. Mr. Donohue did not receive any Director fees for
                                         the period of his tenure.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | vii. | Director
                                         since January 27, 2015. Salary amount includes accrued compensation that has been
                                         deferred and was not paid in our 2015 fiscal year.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | viii. | Executive since January 27, 2015. Salary amount includes accrued compensation that has been deferred and was not paid in our

2015 fiscal year.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------



| | ix. | Terminated January 27, 2015.
| | --- | ----------------------------



| | x. | Terminated December 1, 2014.
| | -- | ----------------------------





87







Remuneration Policy



All key executives are eligible
to receive a base salary, post-employment benefits (including superannuation), fringe benefits (including provision of a motor
vehicle or the payment of a car allowance where necessary) and performance incentives, including equity-linked compensation. Performance
incentives are generally only paid once predetermined key performance indicators have been met. Our executives and members of
our Board based in Australia receive a superannuation guarantee contribution required by the government, which is currently 9.25%
of base salary, and do not receive any other retirement benefits. Some individuals, however, have chosen to allocate part of their
annual compensation to increase payments towards superannuation.



The employment terms and conditions for
our executives and directors have historically been formalized in contracts of employment or service contracts. This has not typically
been the case subsequent to the effectiveness of our Reorganization Plans, however, we expect to put in place formalized agreements
with our key managers following reconstitution of our Board Compensation Committee. In those cases where employment agreements
are applicable, termination payments are not payable upon resignation or under the circumstances of unsatisfactory performance.



The remuneration of directors and key executives is determined by

the Compensation Committee or the full Board. It is our objective to review and adjust executive compensation and performance incentives

on an annual basis, however, this was not achieved during our 2015 fiscal year or subsequently following the effectiveness of our

Reorganization Plans. The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and

responsibilities. All remuneration paid to key management personnel is valued at the cost to the company and expensed.



Service Agreements



The following key executives have service agreements as follows:



Richard Pillinger is employed by BlueNRGY Group Limited as

a permanent, full- time employee. Mr. Pillinger commenced his position with us in October 2011, with a base salary of A$272,500,

inclusive of superannuation. He has a notice period of 3 months. The contract provides for a bonus upon meeting defined performance

objectives mutually established by the executive and the Managing Director.



Emmanuel Cotrel is employed by BlueNRGY LLC as a permanent,

full-time employee pursuant to an employment agreement that commenced June 14, 2014. Under his agreement, Mr. Cotrel is an at-will

employee, however, if employment is terminated without cause, Mr. Cotrel would be entitled to six months of severance at his base

salary. Base salary under the contract is $250,000 subject to a 6-month severance, which severance is increased to 12 months if

the employer requires compliance with non-compete provisions of the contract which extend for a 12-month period. The contract provides

for bonus payments of up to 100% of base compensation, subject to meeting targets set by the board.



Employee Equity Plan



On May 8, 2014, the Board adopted the 2014 Equity Plan that will

serve as our primary employee share incentive plan. We have reserved 400,000 ordinary shares for issuance under the 2014 Equity

Plan. The number of ordinary shares reserved under the 2014 Equity Plan is subject to adjustment in the event of a share split,

share dividend or other change in our capitalization. Any other increase in the number of ordinary shares reserved under the 2014

Equity Plan must be approved by the Board and shareholders. If an outstanding award for any reason expires or is terminated or

canceled without having been exercised or settled in full, or if the ordinary shares acquired pursuant to an award that are subject

to forfeiture are forfeited without cost by the company, the ordinary shares allocable to the terminated portion of such awards

or such forfeited ordinary shares shall again be available for issuance under the 2014 Equity Plan.



As long as we are a publicly held corporation within the meaning

of Section 162(m) of the Code, no individual may be granted awards under our 2014 Equity Plan of more than 50,000 of our ordinary

shares in any full fiscal year of the Company and for our fiscal year ending June 2014, no individual may be granted awards having

a value of more than $200,000 at the time of grant.



The 2014 Equity Plan will be administered by the Compensation Committee

of the Board. The Compensation Committee will have full power to select, from among the individuals eligible for awards, the individuals

to whom awards will be granted, to make any combination of awards, and to determine the specific terms and conditions of each award,

subject to the provisions of the 2014 Equity Plan.



The following types of awards may be granted under the 2014 Equity

Plan:



Share Options. A share option is a right to acquire our ordinary

shares. The Compensation Committee may grant non-qualified share options or “incentive stock options” within the meaning

of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). Incentive stock options only may be granted

to our employees. If a share option intended to qualify as an incentive stock option does not so qualify it will be treated as

a non-qualified share option.





88







The Compensation Committee will determine the terms of each share

option. The exercise price of each share option may not be less than the fair market value of our ordinary shares on the date of

grant. The term of each share option will be fixed by the Compensation Committee and may not exceed 10 years from the date of grant.

Share options may vest and become exercisable upon continued service to the company or upon the achievement of certain performance

criteria. The Compensation Committee will determine when each option may be exercised and other conditions applicable to the share

option.



Share Appreciation Rights. A share appreciation right (SAR)

is an award based upon a specified number of our ordinary shares that entitles the participant to receive a payment equal to the

excess of the fair market value of our ordinary shares when the SAR is exercised over the exercise price of the SAR. The exercise

price for each SAR will be determined by the Compensation Committee but may not be less than the fair market value of our ordinary

shares on the date of grant. SARs may vest and become exercisable upon continued service to the company or upon the achievement

of certain performance criteria. The Compensation Committee will determine when each SAR may be exercised, any other conditions

applicable to it, and whether it will be settled in cash or our ordinary shares.



Restricted Share Awards. A restricted share award entitles

the participant to subscribe for our ordinary shares, upon payment of no less than their nominal value, but the ordinary shares

are subject to restrictions, which may include restrictions on transfer or forfeiture provisions. The Compensation Committee will

determine whether such restrictions will lapse upon continued service to the company or upon the achievement of certain performance

factors, and any other conditions applicable to the restricted shares.



Restricted Share Units. A restricted share unit represents

the right to acquire one ordinary share on a specified date, subject to such conditions and restrictions as the Compensation Committee

may determine, including continued service to the company or service with us through a specified vesting period or the attainment

of certain performance criteria.



Performance Awards. Performance awards may be granted in

the form of performance shares or performance units. A performance award is an award of a cash payment or an award denominated

in our ordinary shares that is subject to the achievement of certain performance criteria. Our Compensation Committee will determine

the performance criteria and any other conditions applicable to the award, and whether the award will be settled in cash or in

our ordinary shares. For participants in the United States, the performance awards are intended to qualify as “performance-based

remuneration” under Section 162(m) of the Code.



Other Share Awards. In addition to the awards described above,

the Compensation Committee may carry out the purpose of the 2014 Equity Plan by awarding share-based awards as it determines to

be in the best interests of the company and subject to such other terms and conditions as it deems necessary and appropriate.



Awards lapse upon the participant ceasing to be employed or engaged

by us, with the exception that share options and share appreciation rights, to the extent vested and exercisable, may be exercised

during a limited period of time after the participant leaves.



Awards granted under our 2014 Equity Plan may not be transferred

in any manner other than by will or by the laws of descent and distribution, or as determined by our Compensation Committee.



The Compensation Committee may award dividend equivalent rights

in respect of awards made under the 2014 Equity Plan, other than share options and share appreciation rights, but rights granted

in respect of an award that is subject to vesting conditions will be subject to those vesting conditions.



Our Compensation Committee may not, without shareholder approval,

re-price our outstanding share options or share appreciation rights.





89







In the event of a change in control of the Company, the outstanding

awards may be treated as described below. For share options and share appreciation rights, the Compensation Committee may provide

in any award agreement or, in the event of a change in control, may take such actions as it deems appropriate to provide for the

acceleration of the vesting and exercisability of the share option or share appreciation rights in connection with the change in

control. In addition, the surviving, continuing, successor, or purchasing corporation, as the case may be (the “Acquiring

Corporation”), may, without the consent of the participant, either assume the company’s rights and obligations under

the outstanding share options and share appreciation rights and substitute for the outstanding share options and share appreciation

rights substantially equivalent share options or share appreciation rights for the Acquiring Corporation’s shares. Any share

options or share appreciation rights which are neither assumed or substituted for by the Acquiring Corporation in connection with

the change in control nor exercised as of the date of the change in control shall terminate as of the date of the change in control.



With regard to awards other than share options and share appreciation

rights, the Compensation Committee may provide in any award agreement or, in the event of a change in control, may take such actions

as it deems appropriate to provide for the acceleration or waiver of any applicable vesting condition, restriction period or performance

criteria applicable to the award held by participant, whose service to the Company has not terminated prior to the change in control,

effective immediately prior to the consummation of the change in control; provided, however, that such acceleration or waiver shall

not occur to the extent such award is assumed or substituted with a substantially equivalent award by the Acquiring Corporation

in connection with the change in control.



Our Board may suspend, amend or terminate the 2014 Equity Plan and

our Compensation Committee may amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful

purpose, but no such action may adversely affect rights under an award without the participant’s consent. Certain amendments

to the 2014 Equity Plan may require the approval of our shareholders.



We anticipate that our 2014 Equity Plan will

terminate ten years from the date our shareholders approve our 2014 Plan, unless earlier terminated by our Board as described above.



6.C.             Board Practices



Independence





The Company defines director independence in accordance with
the NASDAQ Listing Rules. The NASDAQ Listing Rules in turn allow the Company, as a foreign private issuer, to follow its home
country practice in lieu of the requirements of the NASDAQ Listing Rules.



In Australia there are no mandatory corporate governance structures
and practices that must be observed by any company. The ASX Corporate Governance Council (the “Council”) publishes
the Corporate Governance Principles and Recommendations (the “Guidelines”) for those companies listed on the ASX.
The Guidelines contain recommendations of eight core principles which are intended to be a reference point for companies in respect
of corporate governance structures and practices. While it is not mandatory to follow the recommendations, companies listed on
the ASX are required to disclose to shareholders in their annual report the extent to which the company has followed the recommendations
and, if the recommendations have not been followed, the reasons for not following them.



As the Company is not listed on the ASX, this Report does not
contain the corporate governance statement required by the Guidelines disclosing the extent to which the Company has followed
each recommendation set by the Council. Rather, this Report only contains references to the recommendations the Company considered
when setting its corporate governance policies.



Under the Guidelines, if an executive has been an executive
of a Company within the last three years, it is a factor that indicates such person is not independent.  However, the Guidelines
also give the Board express latitude to assess the relationship of each Board member to the Company and to make a determination
about whether such Board member is independent, most notably in respect of audit committee service.



The Board has assessed Mr. Botto's relationship with the Company
and determined him to be independent, having considered that:





| | ● | Executive management in place during Mr. Botto's tenure
                                         as an employee is no longer associated with the Company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Much of Mr. Botto's activity was related to the Company's
                                         Wind Development business, which has been discontinued as a result of the VA.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Mr. Botto's role during 2013 and 2014 was not full
                                         time and was a functional one involving objective assessment of industry and competitive
                                         dynamics; he had no association with preparation of Company financial statements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







| | ● | Historical and contractual ties between the Company
                                         and material vendors that originated during Mr. Botto's executive tenure were terminated
                                         as a result of the VA.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







| | ● | Mr. Botto has no identifiable vested interests in
                                         Company affairs that would affect his independence.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



Audit Committee



On February 9, 2015,

Mr. Donohue and Mr. Botto were appointed to the Audit Committee, Mr. Morro resigned as a member of the Audit Committee, and Mr.

Donohue was appointed as the Audit Committee Chairman. However, due to Mr. Donohue’s resignation from the Board on July 31,

2015, Mr. Botto is the only member of the Audit Committee as of the date of this Report.



Compensation Committee



On February 9, 2015,

Mr. Chapple and Mr. Donohue were appointed to the Compensation Committee and Mr. Morro resigned as a member of the Compensation

Committee. However, Mr. Chapple resigned from the Board on June 16, 2015 and Mr. Donohue resigned from the Board on July 31, 2015.

Until replacement members of the Committee can be appointed, matters previously delegated to the Compensation Committee are being

considered by the full Board.





90







6.D.             Employees



As of December 4,

2015, we employed approximately 102 employees world-wide being predominantly full-time, permanent employees. Our employees are

supported from time-to-time by consultants and contractors, the number of which varies. The breakdown of employees at the end of

each of our last three fiscal years and as of December 4, 2015 per division is:



|                    |  | Number of Employees
|------------------- |  | -------------------
|                    |  | As of June 30,     
|Business Segment    |  | 2015               
|Head office         |  |                    
|Solar PV            |  |                    
|Large-scale wind    |  |                    
|CapTech             |  |                    
|Parmac              |  |                    
|Data Monitoring/O&M |  |                    
|Total               |  |                    



Of our 102 employees

as of December 4, 2015, 71 were located in Australia and 31 were in the United States. In addition, we engage specialist consultant

and temporary personnel from time to time as required to meet the needs of our businesses.



We believe that our

relations with employees are good and we have not experienced any significant labor stoppages or disputes. Except for approximately

35 employees of Parmac, our employees are not represented by labor unions or covered by collective bargaining agreements



6.E.             Share Ownership



Beneficial Ownership of Senior Management

and Directors



Beneficial ownership is determined in accordance with the rules

of the U.S. Securities and Exchange Commission, and generally includes voting or investment power with respect to securities. Ordinary

shares relating to options currently exercisable or exercisable within 60 days of the date of the table below are deemed outstanding

for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage

of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named

in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them.



The following table presents certain information regarding the beneficial

ownership of our ordinary shares as of December 4, 2015 by:



| | ● | each person known by us to be the beneficial owner of more than five percent (5%) of our ordinary shares;
| | - | ---------------------------------------------------------------------------------------------------------



| | ● | each of our directors;
| | - | ----------------------



| | ● | each of our named executive officers; and
| | - | -----------------------------------------



| | ● | all of our current directors and executive officers as a group.
| | - | ---------------------------------------------------------------





91







|Name and Address of Beneficial Owner (1)                                                                                                                                                              |  | Shares
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|                                                                                                                                                                                                      |  | Number
|Washington H. Soul Pattinson & Company Limited (3)                                                                                                                                                    |  |       
|ESOL B.V. (4)                                                                                                                                                                                         |  |       
|Alpha Capital Anstalt (5)                                                                                                                                                                             |  |       
|Directors and Executive Officers                                                                                                                                                                      |  |       
|Mr. Carlo Botto (6)                                                                                                                                                                                   |  |       
|                                                                                                                                                                                                      |  |       
|Mr. Emmanuel Cotrel (7)                                                                                                                                                                               |  |       
|                                                                                                                                                                                                      |  |       
|Mr. Yves-Regis Cotrel (7)(8)                                                                                                                                                                          |  |       
|                                                                                                                                                                                                      |  |       
|Mr. William Morro (9)                                                                                                                                                                                 |  |       
|                                                                                                                                                                                                      |  |       
|Mr. Richard Pillinger                                                                                                                                                                                 |  |       
|                                                                                                                                                                                                      |  |       
|Executive

    officer (as defined by Rule 3b-7 of the Securities and Exchange Act of 1934) and directors as a group (5 persons,

    including the executive officer and directors names above) (10) |  |       



| | (1) | Unless otherwise indicated, the address for each of the shareholders is c/o BlueNRGY Group Limited, 32 Martin Place, 11th

Floor Sydney, NSW 2000.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The applicable percentage of ownership for each beneficial owner is based on 461,444,980
ordinary shares outstanding as of December 4, 2015. In calculating the number of shares beneficially owned by a shareholder and
the percentage of ownership of that shareholder, ordinary shares issuable upon the exercise of options or warrants, or the conversion
of other securities held by that shareholder, that are exercisable within 60 days, are deemed outstanding for that holder; however,
such shares are not deemed outstanding for computing the percentage ownership of any other shareholder.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Address of the shareholder is GPO BOX 479, Sydney, NSW 2001
| | --- | -----------------------------------------------------------



| | (4) | Address of the shareholder is c/o Zala Group LLC (U.S. Agent), 110 E. Broward Blvd Suite 1900, Fort Lauderdale, FL 33301; number

of shares includes all shares owned by G. Armenta, an affiliate of shareholder.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | Address of the shareholder is Pradefant 7, 9490 Furstentums, Faduz, Lichtenstein
| | --- | --------------------------------------------------------------------------------



| | (6) | Includes all shares owned by Mr. Botto’s spouse, the beneficial ownership of which is disclaimed.
| | --- | -------------------------------------------------------------------------------------------------



| | (7) | Includes all shares owned by Ryames Investment Company LLC (7,430,381 ordinary shares). Ryames Investment Company LLC is an

affiliate of both Mr. Emmanuel Cotrel and Mr. Yves-Regis Cotrel.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | Includes shares owned by Mr. Yves-Regis Cotrel’s spouse, the beneficial ownership of which is disclaimed.
| | --- | ---------------------------------------------------------------------------------------------------------



| | (9) | Includes shares owned by WHI, Inc Retirement Savings Plan Trust, of which Mr. Morro is the beneficial owner.
| | --- | ------------------------------------------------------------------------------------------------------------



| | (10) | Shares owned by Ryames Investment Company LLC are counted only once in the total for our executive officers and directors as

a group.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------





92







ITEM  7      MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



7.A.             Major Shareholders



Six shareholders known to us owned beneficially more than 5% of

our ordinary shares as of December 4, 2015. See Item 6.E under the heading “Beneficial Ownership of Senior Management

and Directors”.



As of December 4, 2015, we estimate that 27.0% of our ordinary shares

were held in the United States by 80 holders of record, and 73.0% of our ordinary shares were held in various foreign jurisdictions

by 2,565 holders of record. None of the holders of our ordinary shares has different rights from other shareholders.



7.B.             Related Party Transactions



Other than direct payments of compensation and reimbursement of

out-of-pocket expenses incurred in the ordinary course and in accordance with our policies, during our 2015 fiscal year and subsequently

through the date of this Report, other than as disclosed below, we have not entered into any transactions or loans between us and

any (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under

common control with us; (b) associates; (c) individuals owning, directly or indirectly, an interest in our voting power that give

them significant influence over us, and close members of any such individual’s family; (d) our key management personnel and

directors and close members of such individuals’ families; or (e) enterprises in which a substantial interest in the voting

power is owned, directly or indirectly, by any person described in (c) or (d) or over which such person is able to exercise significant

influence. The value of the consideration ascribed to these transactions, including the exchange value for our ordinary shares

at the time the transactions occurred was at the amounts agreed to by parties and approved by our Board. We believe that all of

these transactions were conducted on terms substantially equivalent to, or no less favorable to the Company, than those that would

have been established for similar transactions with non-affiliated parties.



During the period from July 1, 2015 through December 4, 2015:



|● | Between July 1, 2015 and the date of this
report, affiliates of our Managing Director, Mr. Morro, have made cash advances to us in the aggregate amount of $619,991 to pay
certain of our operations expenses. The amounts advanced have not been repaid as of the date of this Report and are included in
the amounts payable under the MD Affiliate Note described in Item 8.B. under the heading “(b) – Financing”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|● | On November 30, 2015,

our Managing Director, Mr. Morro, agreed to accept, and our Board unanimously approved, the issuance of our ordinary shares, at

price per share of $0.03785, subject to adjustment for share splits and consolidations, in exchange for the following amounts

accrued by us: (i) $148,656 , representing 100% of the compensation payable to him by the Company from the effective date of our

Reorganization Plans through June 30, 2015 plus (ii) $43,750, representing 50% of the compensation payable to him by the Company

from July 1, 2015 through September 30, 2015. Our commitments to pay the remainder of Mr. Morro’s unpaid compensation have

been documented in a separate agreement, the MD Deferred Compensation Agreement, effective November 30, 2015. Pursuant to the

MD Deferred Compensation Agreement, until his deferred compensation is paid, Mr. Morro has also been granted the right to exchange

any or all of such amounts for our ordinary shares at a price per share of $0.03785, subject to adjustment for share splits and

consolidations. A tax-gross-up applies to compensation paid in the form of our ordinary shares.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|● | Affiliates of William Morro, our Managing Director, acted as escrow

agent, without compensation, for the collection of equity offering participations totaling $3,000,000 in connection with purchases

of our equity securities by investors who are not affiliates of Mr. Morro.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       





93







|● | Between July 1, 2015 and the date of this Report, Mr. Morro has incurred

expenses for travel and made disbursements for operating expenses incurred on our behalf. In aggregate, we have accrued an aggregate

of A$30,000 for such expenses incurred by Mr. Morro thus far during our 2016 fiscal year. Through the date of this Report, we

have reimbursed A$Nil to Mr. Morro for such expenses and expect to reimburse the remainder as soon as practicable, subject to

completion of our internal review procedures. Amounts actually reimbursed to Mr. Morro may differ from the amounts accrued.                                                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|● | On November 30, 2015, our Senior Vice President Emmanuel Cotrel, agreed

to accept, and our Board unanimously approved, the issuance of our ordinary shares, at price per share of $0.03785, subject to

adjustment for share splits and consolidations, in exchange for $145,883, representing 100% of the compensation payable to him

by BlueNRGY through December 31, 2014. His compensation for calendar year 2015 has been deferred and, unless previously paid by

the Company may be exchanged by Mr. Cotrel for our ordinary shares at a price per share of $0.03785, subject to adjustment for

share splits and consolidations. Our commitments to pay the remainder of Mr. Cotrel’s unpaid compensation and his right

to exchange such amount for our ordinary shares is documented in an agreement, the EC Deferred Compensation Agreement, effective

November 30, 2015.



During the fiscal year ended June 30, 2015:



| | ● | Between July 1, 2014 and his voluntary leave of absence on October 23, 2014, the Company and its subsidiaries made a series of payments to a Director, Mr. McGowan, totaling $121,900 and that were outside of the Company’s customary approval processes. Such payments were purported by Mr. McGowan to be for reimbursement of costs incurred on behalf of the company and paid by himself. The Company has not been provided with adequate documentation by Mr. McGowan to determine whether or not these costs represent bona fide costs incurred on behalf of the Company. These payments have been recognized as an expense in our fiscal year 2015.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | In April 2015 one of our subsidiaries, Parmac, secured a line of credit with an affiliate of our Managing Director, Mr. William Morro, for up to US$0.5 million, referred to as the Parmac Liquidity Facility, against which we have drawn funds to meet working capital needs of Parmac. As of May 29, 2015, the Company had drawn $499,000 under the Parmac Liquidity Facility. The Liquidity Facility has matured and is repayable on demand, although no demand has been issued as of the date of this Report. . The facility included a commitment fee payable by the Parmac of 7.5% of the principal amount and interest was charged at 1.0% per month on the outstanding balance for the first 90 days, 1.25% per month on the outstanding balance during the next month and 2.0% per month on any outstanding amount due thereafter (a default rate) until the loan is repaid. The Parmac Liquidity Facility is secured over the trade receivables of Parmac.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Some of our Directors, or their related entities, subscribed to purchase our ordinary shares under a Securities Purchase Agreement as follows:
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



|Director              |  | Subscription

Amount

US$ |         |  | Subscription

PricePerShare

US$ |   |         | Number

    of Ordinary Shares

Issued | 
|--------------------- |  | ------------------------- | ------- |  | -------------------------------- | - | ------- | -------------------------------------- | 
|Mr. John Chapple      |  | $                         | 500,000 |  |                                  | $ | 0.03785 |                                        | 
|Mr. Yves-Regis Cotrel |  | $                         | 450,000 |  |                                  | $ | 0.03785 |                                        | 
|Mr. William Morro     |  | $                         | 600,000 |  |                                  | $ | 0.03785 |                                        | 



| | ● | Some of our Directors, Associate Directors and Executives, or their related entities, who were shareholders in BlueNRGY LLC at the time we acquired it, were issued our ordinary shares under the Purchase Agreement as shown in the table immediately below. This transaction occurred before these individuals were appointed to the Board or became Executives of the Company:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





94







|Director                |  | Number of

Ordinary Shares

Issued |           
|----------------------- |  | ---------------------------------- | ----------
|Mr. Yves-Regis Cotrel * |  |                                    | 36,285,377
|Mr. John F. Donohue     |  |                                    | 7,722,918 
|Mr. Emmanuel Cotrel     |  |                                    | 19,130,955
|Mr. William Marks       |  |                                    | 12,951,743



* Included in the
shares issued to Mr. Yves-Regis Cotrel were 7,965,997 shares issued in exchange for a loan of US$301,513 Mr. Cotrel had provided
to BlueNRGY LLC prior to its acquisition by us. The exchange price was US$0.03785 per share.



| | ● | Pursuant to the BlueNRGY LLC share purchase agreement the following shares were allocated to some of our Directors and Executives in January 2015 (or upon their appointment if later) as follows:
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------







|                  |  | Number
of Ordinary Shares Issued
|----------------- |  | --------------------------------
|Directors         |  |                                 
|William
Morro     |  |                                 
|Carlo
Botto       |  |                                 
|John
Chapple      |  |                                 
|John
Donohue      |  |                                 
|Yves-Regis
Cotrel |  |                                 
|                  |  |                                 
|Executive         |  |                                 
|Richard
Pillinger |  |                                 
|Emmanuel
Cotrel   |  |                                 





| | ● | In March 2015, Mr. Emmanuel Cotrel was paid $36,203 for amounts owed to him by BlueNRGY LLC at

the time of its acquisition by us.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | ● | In March 2015, an affiliate of Mr. Emmanuel Cotrel and Mr. Yves-Regis Cotrel was paid $25,419 for

amounts owed to their affiliate by BlueNRGY LLC prior to its acquisition by us.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | In March 2015, an affiliate of Mr. Morro was paid $10,553 in repayment of a loan made to BlueNRGY

LLC prior to its acquisition by us.
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | ● | In December 2014 and January
                                         2015, an affiliate of our Managing Director, Mr. Morro, made cash advances to the Administrator
                                         on our behalf in the total amount of $58,590. These amounts were advanced to pay certain
                                         of our expenses in connection with the preparation of the DOCA and interim operations
                                         thereunder. The amounts advanced have not been repaid as of the date of this Report and
                                         are included in the amounts payable under the MD Affiliate Note described in Item 8.B.
                                         under the heading “(b) – Financing”.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Between our exit from VA
                                         and June 30, 2015, affiliates of our Managing Director, Mr. Morro, made cash advances
                                         to us in the total amount of $284,000 to pay certain of our operations expenses. The
                                         amounts advanced have not been repaid as of the date of this Report and are included
                                         in the amounts payable under the MD Affiliate Note described in Item 8.B. under the heading
                                         “(b) – Financing”.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Affiliates of William Morro, our Managing Director, acted as escrow agent, without compensation,

for the collection of equity offering participations totaling $1,500,000 in connection with the consummation of our Reorganization

Plans and subsequent purchases of our equity securities by investors who are not affiliates of Mr. Morro.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | During our 2015 fiscal year, Mr. Morro incurred expenses for travel and made disbursements for

operating expenses incurred on our behalf. In aggregate, we accrued an aggregate of A$90,000 for such expenses incurred by Mr.

Morro for our 2015 fiscal year. Through the date of this Report, we have reimbursed A$Nil to Mr. Morro for such expenses and expect

to reimburse the remainder as soon as practicable, subject to completion of our internal review procedures. Amounts actually reimbursed

to Mr. Morro may differ from the amounts accrued.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7.C.            Interests of Experts and Counsel



Not applicable



ITEM  8.     FINANCIAL

INFORMATION



8.A.            Consolidated Statements and Other Financial Information





95







Financial Statements



Our financial statements are stated

in Australian Dollars (A$) and are prepared in accordance with International Financial Reporting Standards as issued by the International

Accounting Standards Board.



See our audited financial statements

for the fiscal years ended June 30, 2015 and June 30, 2014 included under Item 18 of this annual report.



Legal Proceedings



In December 2014, a class action securities

suit was filed in a federal court in the Eastern District of Texas against the Company and various current and past officers and

directors, namely Mr. William Morro, Mr. Carlo Botto, Mr. Richard Pillinger, Mr. Todd Barlow, Mr. Gerard McGowan and Mr. James

Greer, as well as various third parties. The lawsuit was subsequently amended to include as a defendant CBD Energy USA Limited,

one of our U.S. subsidiaries. Mr. Morro, formerly a non-executive independent director currently serves as Chairman of the Company’s

Board and its Managing Director (the Australian entity equivalent of a CEO); Mr. Botto continues as a non-executive member of the

Board; and Mr. Pillinger is the Company’s CFO. The other individuals named as parties to the lawsuit are no longer associated

with the Company. This lawsuit is still pending with respect to the former officers and directors and our U.S. subsidiary and we

believe that those parties intend to defend themselves vigorously. The DOCA had the effect of extinguishing the direct claims against

the Company in this action, however, the possibility remains that the plaintiffs will endeavor to press their claims in jurisdictions

outside Australia. It is impossible to estimate the outcome or the costs to us of such an action if it were to occur.



In December 2014, a different lawsuit was filed

in New York State Supreme Court by one of the holders of Series B Preferred Shares against the Company and Messrs. Morro, Botto,

and McGowan. This action was withdrawn without prejudice in April 2015, but prior thereto Mr. Morro and Mr. Botto entered

into a settlement with respect only to themselves in their capacity as directors that precludes the plaintiff reasserting the suit

against them except in the case that plaintiff is itself sued in connection with losses suffered on the investment. The suit can

be reasserted again at any time against Mr. McGowan or other competent officers or directors or against us. Although the DOCA had

the effect of extinguishing the claims against us in this action, the possibility remains that the plaintiffs could endeavor to

press their claims in jurisdictions outside Australia. It is impossible to estimate the outcome or cost to us of such an action

were it to occur.



We are not currently a party to any other material legal proceedings.

We are from time to time subject to claims and litigation arising in the ordinary course of business. We intend to defend vigorously

against any future claims and litigation.



8.B.            Significant Changes



The following material events have occurred subsequent to June 30,

2015 on the dates indicated:



(a) Transactions



On September 16, 2015, in a transaction referred to as the

Draker Transaction, we acquired the monitoring platform, accounts receivable, inventory, plant, property and equipment and certain

other assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including the Draker name, trademark,

and all copyrights then owned by the Sellers. Refer to Item 4.A. under the heading “Recent Acquisitions”.



(b) Financing



During our reorganization process and subsequent to the effectiveness

of the Reorganization Plans, affiliates of William Morro, our Managing Director, have made cash advances to us to fund our operations

(refer to Item 7.B. under the heading “Related Party Transactions”). Effective November 30, 2015 we entered

into an agreement unanimously approved by our Board, referred to as the MD Affiliate Note, regarding the terms for such advances

and, subject to Board approval, future advances from Mr. Morro and his affiliates. The MD Affiliate Note establishes an outside

repayment date for the funds advanced of July 30, 2016, sets the rate of interest at 15% per annum from the date of any advance

through the repayment date, provides for the Company to repay any or all of the outstanding principal at any time and, until repaid

by the Company, grants our Managing Director the right to exchange any or all of the outstanding amounts payable under the note

for our ordinary shares at a price per share of $0.03785, subject to adjustment for share splits and consolidations. The foregoing

summary description is qualified in its entirety by the terms of the MD Affiliate Note filed with this Report as an Exhibit.





96







In addition to the MD Affiliate Note, Mr. Morro’s agreement

to accept our ordinary shares in exchange for $192,406 of compensation due to him was conditioned on the Company agreeing to (i)

make an incremental cash payment to him prior to April 15, 2016, referred to as a Gross-up Payment, sufficient to pay the cash

taxes he would expect to incur as a result of the arrangement to compensate him in shares instead of cash and (ii) terms under

which we would pay, on a deferred basis, the remainder of the compensation due to him through December 31, 2015, subject to a right,

until the deferred compensation amounts are paid, for him to elect to receive ordinary shares in lieu of cash. The foregoing arrangements

related to Mr. Morro’s compensation are documented in the MD Deferred Compensation Agreement, unanimously approved by our

Board, and a copy of which is filed with this Report as an Exhibit.



The compensation due to Mr. Emmanuel Cotrel under his employment

agreement (refer to Item 6.B. under the heading “Compensation”) and for a brief period prior to the inception

of the employment agreement has been deferred. As of June 30, 2015 our financial statements reflected an accrual of $270,883 pertaining

to compensation payable to Mr. Cotrel. Effective November 30, 2015 we entered into the EC Deferred Compensation Agreement with

Mr. Cotrel (refer to Item 7.B. under the heading “Related Party Transactions”) pursuant to which we committed

to (i) issue ordinary shares at a price per share of $0.03785 in exchange for 100% of the unpaid compensation due to him from

BlueNRGY LLC through December 31, 2014 ($145,883) and (ii) pay, on a deferred basis, the remainder of the compensation due to him

through December 31, 2015, subject to a right, until the deferred compensation amounts are paid, for him to elect to receive ordinary

shares in lieu of cash.



(c) Other



Listed Status and Trading



Our ordinary shares were delisted from

The NASDAQ Capital Market with effect from August 3, 2015.



On September 9, 2015, FINRA, the Financial
Industry Regulatory Authority approved our shares for trading in the over-the-counter market (OTC Markets) under the ticker
symbol CBDEF.



(d) Issuance and Repurchases of
Ordinary Shares and Other Equity-Linked Securities



As of June 30, 2015 we had outstanding
409,925,825 ordinary shares. Subsequent thereto, through the date of this Report, we issued 51,519,155 ordinary
shares pursuant to applicable exemptions from registration: all such shares were issued through subscription agreements
having terms substantially equivalent to that filed in connection with capital raised to consummate the DOCA, including a price
of $0.03785 per ordinary share.



In addition to ordinary shares issued at the Offering Price, certain

holders of our Series B Preferred shares elected to convert 2,484 Series B Preferred Shares plus dividends accrued thereon into

our ordinary shares at the stated conversion price of $0.05015125 per ordinary share. In satisfaction of the foregoing Series B

Preferred Share conversions we have issued 51,448,606 ordinary shares. 600 Series B Preferred Shares remained outstanding as of

this Report.



As of the date of this Report, we had 461,444,980
ordinary shares outstanding.





97







In addition to the issued and outstanding ordinary shares our Board

has approved the issuance of 13,286,972 additional shares as follows and expects to issue them as soon as practicable following

our pending share consolidation, if not before:



| | i. | 5,083,382 ordinary shares to Mr. Morro in lieu of cash compensation due to him for his services between January 27, 2015 and

September 30, 2015 (Refer to Item 7.B. under the heading “Related Party Transactions”);
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | 3,854,240 ordinary shares to Mr. Emmanuel Cotrel in lieu of cash compensation due to him for his
services to BlueNRGY LLC and us through June 30, 2015. (Refer to Item 7.B. under the heading “Related Party Transactions”);
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | 3,849,350 ordinary shares to be issued to 84 of our employees, some of which are expected to be issued under our 2014 Equity Plan and will be subject to vesting; and
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | 500,000 ordinary shares to vendors in consideration for services rendered or in exchange for indebtedness.
| | --- | ----------------------------------------------------------------------------------------------------------



In conjunction with the Draker Transaction
we also (i) issued convertible preferred shares in our subsidiary, Draker Corporation, referred to as Draker Preferred and (ii)
issued warrants, to acquire our ordinary shares, referred to as Draker Warrants. The Draker Preferred issued in conjunction with
the Transaction has a face value of $1,000,000 and is convertible by the holder at any time into our ordinary shares at a conversion
price of $0.03785 per ordinary share. The holder of the Draker Preferred was granted an incremental investment right to purchase
an additional $1,000,000 of Draker Preferred at any time prior to December 31, 2015 and as of the date of this Report has exercised
such right with respect to $500,000, bringing the total face value of the Draker Preferred to $1.5 million. There are 26,420,079
Draker Warrants outstanding and each allows the holder to acquire one of our ordinary shares for $0.05678 per ordinary share through
the warrant expiration date of December 31, 2018, subject to the Company’s right to repurchase each warrant for $0.001 once
the 60-day VWAP of our ordinary shares exceeds 175% of the exercise price and the average daily trading volume during such period
exceeds $100,000. This summary description of the warrant terms is qualified in its entirety by the terms of the warrant agreement,
a copy of which is filed as an exhibit to this Report.



(e) Entry into Other Material Definitive
Agreements



As noted above in (a) – Transactions, we entered into a definitive

agreement on September 16, 2015 pursuant to which we acquired the monitoring platform, accounts receivable, inventory, plant, property

and equipment and certain other assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including

the Draker name, trademark, and all copyrights then owned by the Sellers. For additional information regarding the Draker Transaction,

refer to Item 4.A. under the heading “Recent Acquisitions”.



As further described in Item 10.C. “Material
Contracts”, in July 2015 and October 2015 we entered into executory contracts with PESCO to design and install solar
PV generating systems having an aggregate capacity of approximately 45MW – DC.



(f) Board and Executive Changes



Mr. John H. Chapple and Mr. John F. Donohue resigned as members

of the Board on June 16, 2015 and July 31, 2015 respectively.



Effective June 5, 2015, Mr. Donald Reed, the senior executive at

GED resigned. On September 1, 2015, Peter Maros was hired as a Senior Vice President of the Company overseeing our Solar PV design

and installation business in North America. In this capacity he also serves as the senior executive officer of GED.





98







ITEM  9.     THE OFFER AND LISTING



9.A.            Offer and Listing Details



Australian

Securities Exchange



Our ordinary

shares traded on the ASX under the symbol CBD from 1989 through January 31, 2014.We were, however, suspended from trading

on ASX on October 8, 1998. In calendar year1999 we had nominal non-cash assets and we had nominal operations. We resumed trading

on ASX on April 18, 2000.The following table sets forth, for the periods indicated, the high

and low market quotations for our ordinary shares as quoted on the ASX.



|                 |  | CBD Ordinary Share Closing Prices
|---------------- |  | ---------------------------------
|                 |  | A$                               
|                 |  | High                             
|Fiscal Year      |  |                                  
|2010             |  |                                  
|2011             |  |                                  
|2012             |  |                                  
|2013             |  |                                  
|2014             |  |                                  
|                 |  |                                  
|Fiscal Year 2013 |  |                                  
|First Quarter    |  |                                  
|Second Quarter   |  |                                  
|Third Quarter    |  |                                  
|Fourth Quarter   |  |                                  
|Fiscal Year 2014 |  |                                  
|First Quarter    |  |                                  
|Second Quarter   |  |                                  
|Third Quarter    |  |                                  





99







OTC
Markets



As further described below under Item 9.C.
“Markets”, our ordinary shares traded on the OTC Markets from February 10, 2014 until June 13,
2014 under the ticker symbol CBDNF and from September 9, 2015 through the date of this Report under the ticker symbol CBDEF.
The following table sets forth, for the periods indicated, the high and low market quotations for our ordinary shares as quoted
on the OTC Markets.



|                 |  | CBD Ordinary Share Closing Prices
|---------------- |  | ---------------------------------
|                 |  | US$                              
|                 |  | High                             
|Fiscal Year 2014 |  |                                  
|Third Quarter    |  |                                  
|Fourth Quarter   |  |                                  
|                 |  |                                  
|Month (2015)     |  |                                  
|September        |  |                                  
|October          |  |                                  
|November         |  |                                  



The

NASDAQ Capital Market



Our ordinary shares began trading on The NASDAQ Capital Market
on June 13, 2014. Trading was suspended on November 13, 2014 following commencement of the VA process. As further described below
under Item 9.C “Markets”, our shares were delisted from the NASDAQ Capital Market effective August 3,
2015. The following table sets forth, for the periods indicated, the high and low market
closing price for our ordinary shares as quoted onThe NASDAQ Capital Market.



|                      |  | CBD Ordinary Share Closing Prices
|--------------------- |  | ---------------------------------
|                      |  | US$                              
|                      |  | High                             
|Fiscal Year 2014      |  |                                  
|Fourth Quarter        |  |                                  
|                      |  |                                  
|Fiscal Year 2015      |  |                                  
|First Quarter         |  |                                  
|Second Quarter        |  |                                  
|Third Quarter         |  |                                  
|                      |  |                                  
|Month (2014 and 2015) |  |                                  
|December – August     |  |                                  





100







9.B.            Plan of Distribution



Not applicable.



9.C.            Markets



Our ordinary shares were listed on the Australian
Stock Exchange, or ASX, from 1989 through January 31, 2014, when we voluntarily delisted them in connection with our U.S. listing.
Our ordinary shares traded on the OTC Markets from February 10, 2014 until June 13, 2014 under the ticker symbol CBDNF,
and began trading on The NASDAQ Capital Market on June 13, 2014 but trading was suspended on November 13, 2014 following commencement
of the VA process. Due to concerns of The NASDAQ about whether we met and continue to meet the listing requirements, our shares
were delisted from the NASDAQ Capital Market with effect from August 3, 2015. On September 9, 2015 our ordinary shares resumed
trading in the over-the-counter market (OTC Markets) under the ticker CBDEF. We have an application pending with the NASDAQ
Capital Market to relist our shares on that exchange and we are endeavoring to complete the steps necessary to demonstrate that
we have regained compliance with the applicable NASDAQ listing requirements. However, there can be no assurance that our ordinary
shares will be approved to trade on The NASDAQ Capital Market.



9.D.            Selling Shareholders



Not applicable.



9.E.             Dilution



Not applicable.



9.F.             Expense of the Issue



Not applicable.



ITEM  10.  ADDITIONAL INFORMATION



10.A.          Share Capital



Not applicable.



10.B.          Memorandum and Articles of Association



Information relating to our Constitution isincorporated

by reference to the Registration Statement on Form F-1 (File No. 333-194780), as filed with the SEC on March 25, 2014.



101







10.C.          Material Contracts



Substantially all of the material executory
contracts of our parent company were terminated in the VA process, including the license and trademark agreements with Westinghouse
Electric Corporation for use of the Westinghouse brand in connection with our solar sales. In conjunction with our emergence from
VA, we entered into an acquisition agreement with the shareholders of BlueNRGY LLC and subscription agreements with various investors
who provided funds for our recapitalization (refer to Item 4.A. under the heading “Voluntary Administration and Deed
of Company Arrangement” and Item 8.B. under the heading “Issuance and Repurchase of Ordinary Shares and
Other Equity-Linked Securities” and the exhibits to our reports on Form 6-K/A filed on January 29, 2015 and Form
6-K on November 12, 2015). We retained the rights to collect installment payments related to our Larkden Technology (refer to
Item 4.B. under the heading “Description of our Business Segments -- Energy Efficiency -- Remote Area Power Systems (RAPS)”),
although we are obligated under the DOCA to remit payments received to WHSP. Following the Draker Transaction, our parent company
guaranteed certain obligations of our subsidiary, Draker Corporation, under a contract manufacturing agreement entered into with
Kalow Technologies LLC that require Draker Corporation to make setup payments of approximately $0.3 million prior to December
31, 2015.



Our operating subsidiaries routinely enter
into contracts and purchase orders with customers for the performance of solar and climate installations and data management and
O&M services. With the exception of contracts between GED and Panasonic Enterprise Solutions Company, or PESCO, pursuant to
which GED has agreed to install seven solar PV power plants having a nameplate capacity of approximately 45MW DC, these contracts
are not individually material. The form of master contract with PESCO is attached as an exhibit to this Report. In
addition, the CIWL contract is material to us but termination may have been triggered by the VA process (refer to “Description
of our Business Segments -- Energy Efficiency -- Remote Area Power Systems (RAPS)”).



10.D.          Exchange Controls



Australia has largely abolished exchange controls on investment

transactions. The Australian dollar is freely convertible into U.S. dollars or other currencies. In addition, there are currently

no specific rules or limitations regarding the export from Australia of profits, dividends, capital or similar funds belonging

to foreign investors, except that certain payments to non-residents must be reported to the Australian Cash Transaction Reports

Agency, which monitors such transaction, and amounts on account of potential Australian tax liabilities may be required to be withheld

unless a relevant taxation treaty can be shown to apply and under such there are either exemptions or limitations on the level

of tax to be withheld.



The Foreign Acquisitions and Takeovers Act 1975 and Corporations

Act 2001



Under Australian law, in certain circumstances foreign persons are

prohibited from acquiring more than a limited percentage of the shares in an Australian company without approval from the Australian

Treasurer. These limitations are set forth in the Australian Foreign Acquisitions and Takeovers Act 1975, or the Foreign Takeovers

Act. Australia’s Foreign Investment Policy (Policy) operates alongside the Foreign Takeovers Act and places further limitations

on foreign acquisitions. Although the Policy does not have the force of law, the Treasurer will refer to it in making decisions

under the Foreign Takeovers Act. Further, non-compliance can lead to negative impacts such as negative views on future FIRB applications

and strained relations between the company and the government.



Under the Foreign Takeovers Act, as currently in effect, any foreign

person, together with associates, or parties acting in concert, is prohibited from acquiring 15% or more of the shares in any company

having total assets of A$248 million or more (or A$1,078 million or more in case of U.S. investors in non-sensitive sectors) without

the Australian Treasurer’s prior approval. “Associates” is a broadly defined term under the Foreign Takeovers

Act and includes:



|● |  | spouses, lineal ancestors and descendants, and siblings;                                
|- |  | ----------------------------------------------------------------------------------------
|  |  |                                                                                         
|● |  | partners, officers of companies, the company, employers and employees, and corporations;
|  |  |                                                                                         
|● |  | their shareholders related through substantial shareholdings or voting power;           





102







|● |  | corporations whose directors are controlled by the person, or who control a person; and
|- |  | ---------------------------------------------------------------------------------------
|  |  |                                                                                        
|● |  | associations between trustees and substantial beneficiaries of trust estates.          



In addition, if a foreign person acquires shares in a company having

total assets of A$248 million or more (or A$1,078 million or more in case of U.S. investors) and, as a result of that acquisition,

the total holdings of all foreign persons and their associates will exceed 40% in aggregate, seeking approval for the transaction

would be advisable. It is not an offence to complete such a transaction, however if such a transaction proceeded unapproved, the

Treasurer would retain residual transaction blocking and divestment rights if he forms the view that such a transaction is against

the “national interest.” Effectively this means that if the approval was not obtained, the Treasurer may make an order

requiring the acquirer to dispose of the shares it has acquired within a specified period of time. The same rule applies if the

total holdings of all foreign persons and their associates already exceeds 40% and a foreign person (or its associate) acquires

any further shares, including in the course of trading in the secondary market of the ordinary shares. At present, we do not have

total assets of A$248 million or more. At this time, our total assets do not exceed any of the above thresholds and therefore no

approval would be required from the Australian Treasurer. Nonetheless, should our total assets exceed the threshold in the future,

we will need to be mindful of the number of ordinary shares that can be made available, and monitor the 40% aggregate shareholding

threshold for foreign persons (together with their associates) to ensure that it will not be exceeded without an application to

the Australian Treasurer’s for approval having been contemplated and submitted if considered necessary.



Each foreign person seeking to acquire holdings in excess of the

above caps (including their associates, as the case may be) would need to complete an application form setting out the proposal

and relevant particulars of the acquisition/shareholding. The Australian Treasurer then has 30 days to consider the application

and make a decision. However, the Australian Treasurer may extend the period by up to a further 90 days by publishing an interim

order. As for the risk associated with seeking approval, the Policy provides that the Australian Treasurer may reject an application

if it is contrary to the national interest.



If the level of foreign ownership exceeds 40% at any time, we would

be considered a foreign person under the Foreign Takeovers Act. In such event, we would be required to obtain the approval of the

Australian Treasurer for the Company, together with our associates, to acquire (i) more than 15% of an Australian company or business

with assets totaling over A$248 million; or (ii) any direct or indirect ownership in Australian residential real estate and certain

non-residential real estate.



The percentage of foreign ownership in the Company would also be

included in determining the foreign ownership of any Australian company or business in which it may choose to invest. Because we

have no current plans for any such acquisition and do not own any property, any such approvals required to be obtained by us as

a foreign person under the Foreign Takeovers Act will not affect our current or future ownership or lease of property in Australia.



Subject to certain exceptions under the Corporations Act, acquisitions

of interests in voting shares of the Company will be prohibited where, as a result of the acquisition, the acquirer’s or

someone else’s voting power (as defined in the Corporations Act) in the Company increases to more than 20.0% or from a starting

point that is above 20.0% and below 90.0%. The definition of voting power in the Corporations Act is broad, and includes control

by persons or their associates over voting or disposal of voting shares. There are a number of exceptions to the prohibition, the

most important of which permit: (i) acquisitions under a formal takeover bid made in accordance with the Corporations Act in which

all shareholders can participate; (ii) acquisitions resulting from a court-approved scheme of arrangement; (iii) acquisitions made

with specified shareholder approvals (where no votes are cast in favor by the parties to the transaction or their associates);

and (iv) acquisitions of no more than 3.0% of voting power (as defined in the Corporations Act) every six months. Australian law

requires all holders of a class of shares to be treated equally under a takeover bid and prescribes various aspects of the conduct

of a takeover bid, including timing and disclosure requirements.





103







In addition, on application by a person, the Australian Takeovers

Panel may declare that unacceptable circumstances exist in relation to the affairs of the Company. Such a declaration may be made

where it appears to the Panel that, among other things, circumstances are unacceptable having regard to the effect the circumstances

have had, are having, will have or are likely to have on the control, or potential control, of the Company or the acquisition,

or proposed acquisition, by a person of a substantial interest in the Company. A declaration can be made whether or not the circumstances

constitute a contravention of the Corporations Act. If a declaration is made, the Panel may make a wide range of remedial orders.



Our Constitution does not contain any additional limitations on

a non-resident’s right to hold or vote our securities.



Australian law requires the transfer of shares in the Company to

be made in writing if the company’s shares are not quoted on the Australian Securities Exchange. Under current stamp duty

legislation no stamp duty will be payable in Australia on the transfer of ordinary shares.



10.E.           Taxation



The following is a discussion of the material

Australian and U.S. federal income tax consequences of an investment in our ordinary shares based upon laws and relevant interpretations

thereof in effect as of the date of this Report, all of which are subject to change. This discussion does not address all possible

tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax

laws. To the extent that the discussion is based on tax legislation that has not been subject to judicial or administrative interpretation,

the views expressed in the discussion might not be accepted by the tax authorities in question or by court. The discussion is not

intended, and should not be construed, as legal or professional tax advice and does not exhaust all possible tax considerations.



Holders of our ordinary shares should consult

their own tax advisors as to the United States, Australian or other tax consequences of the purchase, ownership and disposition

of ordinary shares, including, in particular, the effect of any foreign, state or local taxes.



Australian Tax Considerations



In this section we discuss the material Australian

tax considerations that apply to non-Australian tax residents with respect to the acquisition, ownership and disposal of the absolute

beneficial ownership of ordinary shares. This discussion is based upon existing Australian tax law as of the date of this Report,

which is subject to change, possibly retrospectively. This discussion does not address all aspects of Australian income tax law

that may be important to particular investors in light of their individual investment circumstances, such as shares held by investors

subject to special tax rules (for example, financial institutions, insurance companies or tax exempt organizations). In addition,

this summary does not discuss any foreign or state tax considerations, other than stamp duty. Prospective investors are urged to

consult their tax advisors regarding the Australian and foreign income and other tax considerations of the purchase, ownership

and disposition of shares.



Taxation of Dividends



Australia operates a dividend imputation system

under which dividends may be declared to be “franked” to the extent of tax paid on company profits. Fully franked dividends

are not subject to dividend withholding tax. Dividends payable to non-Australian resident shareholders that are not operating from

an Australian permanent establishment (“Foreign Shareholders”) will be subject to dividend withholding tax, to the

extent the dividends are not foreign sourced and declared to be conduit foreign income (“CFI”) and are unfranked. Dividend

withholding tax will be imposed at 30%, unless a shareholder is a resident of a country with which Australia has a double taxation

agreement and qualifies for the benefits of the treaty. Under the provisions of the current Double Taxation Convention between

Australia and the United States, the Australian tax withheld on unfranked dividends that are not CFI paid by us to which a resident

of the United States is beneficially entitled is limited to 15%.



If a company that is a Foreign Shareholder

owns a 10% or more interest, the Australian tax withheld on dividends paid by us to which a resident of the United States is beneficially

entitled is limited to 5%. In limited circumstances the rate of withholding can be reduced to nil.





104







Tax on Sales or other Dispositions of

Shares - Capital Gains Tax



Foreign Shareholders will not be subject to

Australian capital gains tax on the gain made on a sale or other disposal of our shares, unless they, together with associates,

hold 10% or more of our issued capital, at the time of disposal or for 12 months of the last 2 years.



Foreign Shareholders who, together with associates,

own a 10% or more interest would be subject to Australian capital gains tax if more than 50% of our direct or indirect assets determined

by reference to market value, consists of Australian land, leasehold interests or Australian mining, quarrying or prospecting rights.

Double Taxation Convention between the United States and Australia is unlikely to limit the amount of this taxable gain. Australian

capital gains tax applies to net capital gains at a taxpayer’s marginal tax rate. Net capital gains are calculated after

reduction of capital losses, which may only be offset against capital gains.



Tax on Sales or other Dispositions of

Shares - Shareholders Holding Shares on Revenue Account



Some Foreign Shareholders may hold shares on

revenue rather than on capital account, for example, share traders. These shareholders may have the gains made on the sale or other

disposal of the shares included in their assessable income under the ordinary income provisions of the income tax law, if the gains

are sourced in Australia.



Foreign Shareholders assessable under these

ordinary income provisions in respect of gains made on shares held on revenue account would be assessed for such gains at the Australian

tax rates for non-Australian residents, which start at a marginal rate of 32.5%. For Foreign Shareholders that are corporations,

the tax rate would be 30%. Some relief from Australian income tax may be available to such non-Australian resident shareholders

under the Double Taxation Convention between the United States and Australia.



To the extent an amount would be included in

a Foreign Shareholder’s assessable income under both the capital gains tax provisions and the ordinary income provisions,

the capital gain amount would generally be reduced, so that the shareholder would not be subject to double tax on any part of the

income gain or capital gain.



Dual Residency



If a shareholder were a resident of both Australia

and the United States under those countries’ domestic taxation laws, that shareholder may be subject to tax as an Australian

resident. If, however, the shareholder is determined to be a U.S. resident for the purposes of the Double Taxation Convention between

the United States and Australia, the Australian tax applicable would be limited by the Double Taxation Convention. Shareholders

should obtain specialist taxation advice in these circumstances.



Stamp Duty



No transfer duty is payable by Australian
residents or foreign residents on the trading of shares that are quoted on the NASDAQ or OTCBB Markets.



Australian Death Duty



Australia does not have estate or death duties.

As a general matter, no capital gains tax liability is realized upon the inheritance of a deceased person’s shares. The disposal

of inherited shares by beneficiaries, may, however, give rise to a capital gains tax liability if the gain falls within the scope

of Australia’s jurisdiction to tax (as discussed above).



Goods and Services Tax



The issue or transfer of shares will not incur

Australian goods and services tax.





105







United States Federal Income Tax Considerations



The following is a discussion of the material

U.S. federal income tax considerations applicable to an investment in ordinary shares by a U.S. holder, as defined below, that

will hold the ordinary shares as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended

(the “Code”). This summary is based upon existing U.S. federal tax law, which is subject to differing interpretations

or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”)

with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS or a court

will not take a contrary position. This discussion does not address the tax consequences to any particular holder nor any tax considerations

that may apply to holders subject to special tax rules, such as banks, insurance companies, individual retirement and other tax-deferred

accounts, regulated investment companies, individuals who are former U.S. citizens or former long-term U.S. residents, dealers

in securities or currencies, tax-exempt entities, persons subject to the alternative minimum tax, persons that hold ordinary shares

as a position in a straddle or as part of a hedging, constructive sale or conversion transaction for U.S. federal income tax purposes,

persons that have a functional currency other than the U.S. dollar, persons that own (directly, indirectly or constructively) 10%

or more of our equity or persons that are not U.S. holders.



In addition, this discussion does not address

any state, local or non-U.S. tax considerations (other than the discussion below relating to certain withholding rules and the

United States — Australian income tax treaty). Each U.S. holder is urged to consult its tax advisor regarding the U.S. federal,

state, local, and non-U.S. income and other tax considerations of an investment in our ordinary shares.



In this section, a “U.S. holder”

means a beneficial owner of ordinary shares that is, for U.S. federal income tax purposes:



| | ● | an individual

    who is a citizen or resident of the United States;
| | - | ---------------------------------------------------------------------



| | ● | a corporation

    (or other entity treated as a corporation) created or organized (or treated as created or organized) in or under the laws

    of the United States, any state thereof or the District of Columbia;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | an estate

    the income of which is subject to U.S. federal income taxation regardless of its source; or
| | - | ----------------------------------------------------------------------------------------------------------



| | ● | a trust

    (i) the administration of which is subject to the primary supervision of a court in the United States and for which one or

    more U.S. persons have the authority to control all substantial decisions or (ii) that has an election in effect under applicable

    income tax regulations to be treated as a U.S. person.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As used in this section, a “non-U.S.

holder” is a beneficial owner of ordinary shares that is not a U.S. holder or an entity or arrangement treated as a partnership

for U.S. federal income tax purposes.



If an entity or arrangement treated as a partnership

for U.S. federal income tax purposes holds ordinary shares, the U.S. federal income tax treatment of a partner generally will depend

on the status of the partner and the activities of the partnership. Partners of partnerships that will hold ordinary shares should

consult their tax advisors.



You are urged to consult your own tax advisor

with respect to the U.S. federal, as well as state, local and non-U.S., tax consequences to you of acquiring, owning and disposing

of ordinary shares in light of your particular circumstances, including the possible effects of changes in U.S. federal and other

tax laws.



Dividends



Subject to the passive foreign investment company

rules, discussed below, U.S. holders will include as dividend income the U.S. dollar value of the gross amount of any distributions

of cash or property (without deduction for any withholding tax), other than certain pro rata distributions of ordinary shares,

with respect to ordinary shares to the extent the distributions are made from our current or accumulated earnings and profits,

as determined for U.S. federal income tax purposes. A U.S. holder will include the dividend income at the time of receipt. To the

extent, if any, that the amount of any distribution by us exceeds our current and accumulated earnings and profits, as so determined,

the excess will be treated first as a tax-free return of the U.S. holder’s tax basis in the ordinary shares and thereafter

as capital gain. Notwithstanding the foregoing, we do not intend to maintain calculations of earnings and profits, as determined

for U.S. federal income tax purposes. Consequently, any distributions generally will be reported as dividend income for U.S. information

reporting purposes. See “Backup Withholding Tax and Information Reporting” below. Dividends paid by us will not be

eligible for the dividends-received deduction generally allowed to U.S. corporate shareholders.





106







Subject to certain exceptions for short-term

and hedged positions, the U.S. dollar amount of dividends received by an individual, trust or estate with respect to the ordinary

shares will be subject to taxation at a maximum rate of 20% if the dividends are “qualified dividends.” Dividends paid

on ordinary shares will be treated as qualified dividends if either (i) we are eligible for the benefits of a comprehensive income

tax treaty with the United States that the IRS has approved for the purposes of the qualified dividend rules, (ii) the dividends

are, with respect to ordinary shares, readily tradable on a U.S. securities market, provided that we are not, in the year prior

to the year in which the dividend was paid, and are not, in the year which the dividend is paid, a PFIC and (iii) certain holding

period requirements are met. The Agreement between the Government of the United States of America and the Government of Australia

for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “Treaty”)

has been approved for the purposes of the qualified dividend rules, and we expect to qualify for benefits under the Treaty. Our

ordinary shares currently trade irregularly in the U.S. over-the-counter market and thus may not meet condition (ii) described

above allowing dividends we pay to be deemed “qualified dividends”. We have applied to list the ordinary shares on

The NASDAQ Capital Market, but there is no assurance that our application will be approved. Provided that the listing is approved,

U.S. Treasury Department guidance indicates that the ordinary shares will be readily tradable on an established securities market

in the United States. Thus, we believe that dividends we pay on ordinary shares will meet conditions (i) and (ii), described above.

Accordingly, dividends we pay generally should be eligible for the reduced income tax rate. However, the determination of whether

a dividend qualifies for the preferential tax rates must be made at the time the dividend is paid. U.S. holders should consult

their own tax advisers.



Includible distributions paid in Australian

dollars, including any Australian withholding taxes, will be included in the gross income of a U.S. holder in a U.S. dollar amount

calculated by reference to the exchange rate in effect on the date of actual or constructive receipt, regardless of whether the

Australian dollars are converted into U.S. dollars at that time. If Australian dollars are converted into U.S. dollars on the date

of actual or constructive receipt, the tax basis of the U.S. holder in those Australian dollars will be equal to their U.S. dollar

value on that date and, as a result, a U.S. holder generally should not be required to recognize any foreign exchange gain or loss.



If Australian dollars so received are not converted

into U.S. dollars on the date of receipt, the U.S. holder will have a basis in the Australian dollars equal to their U.S. dollar

value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the Australian dollars generally

will be treated as ordinary income or loss to such U.S. holder and generally such gain or loss will be income or loss from sources

within the United States for foreign tax credit limitation purposes.



Dividends received by a U.S. holder with respect

to ordinary shares will be treated as foreign source income, which may be relevant in calculating the holder’s foreign tax

credit limitation. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes

of income. For these purposes, dividends will be categorized as “passive” or “general” income depending

on a U.S. holder’s circumstance.



Subject to certain complex limitations, a U.S.

holder generally will be entitled, at its option, to claim either a credit against its U.S. federal income tax liability or a deduction

in computing its U.S. federal taxable income in respect of any Australian taxes withheld by us. If a U.S. holder elects to claim

a deduction, rather than a foreign tax credit, for Australian taxes withheld by us for a particular taxable year, the election

will apply to all foreign taxes paid or accrued by or on behalf of the U.S. holder in the particular taxable year.



You may not be able to claim a foreign tax

credit (and instead may claim a deduction) for non-U.S. taxes imposed on dividends paid on the ordinary shares if you (i) have

held the ordinary shares for less than a specified minimum period during which you are not protected from risk of loss with respect

to such shares, or (ii) are obligated to make payments related to the dividends (for example, pursuant to a short sale).





107







The availability of the foreign tax credit

and the application of the limitations on its availability are fact specific. You are urged to consult your own tax advisor as

to the consequences of Australian withholding taxes and the availability of a foreign tax credit or deduction. See “Australian

Tax Considerations — Taxation of Dividends.”



Sale or Exchange of Ordinary Shares



Subject to the passive foreign investment company

rules, discussed below, a U.S. holder generally will, for U.S. federal income tax purposes, recognize capital gain or loss on a

sale, exchange or other disposition of ordinary shares equal to the difference between the amount realized on the disposition and

the U.S. holder’s adjusted tax basis in the ordinary shares. Any gain or loss recognized on a sale, exchange or other disposition

of ordinary shares will generally be long-term capital gain or loss if the U.S. holder has held the ordinary shares for more than

one year. Generally, for U.S. holders who are individuals (as well as certain trusts and estates), long-term capital gains are

subject to U.S. federal income tax at preferential rates. For foreign tax credit limitation purposes, gain or loss recognized upon

a disposition generally will be treated as from sources within the United States. The deductibility of capital losses is subject

to limitations for U.S. federal income tax purposes.



You should consult your own tax advisor regarding

the availability of a foreign tax credit or deduction in respect of any Australian tax imposed on a sale or other disposition of

ordinary shares. See “Australian Tax Considerations — Tax on Sales or other Dispositions of Shares.”



Passive Foreign Investment Company Considerations



A non-U.S. corporation will be treated as a

passive foreign investment company (a “PFIC”) for any taxable year if either (a) at least 75% of its gross income for

such taxable year consists of certain types of passive income or (b) at least 50% of gross assets during the taxable year, based

on a quarterly average and generally by value, produce or are held for the production of passive income. For this purpose, cash

and assets readily convertible into cash are categorized as passive assets and our unbooked intangibles associated with active

business activities may generally be classified as active assets. Passive income for this purpose generally includes, among other

things, dividends, interest, rents, royalties, gains from commodities and securities transactions and gains from assets that produce

passive income. The average percentage of a corporation’s assets that produce or are held for the production of passive income

generally is determined on the basis of the fair market value of the corporation’s assets at the end of each quarter. This

determination is based on the adjusted tax basis of the corporation’s assets, however, if the corporation is a controlled

foreign corporation, or CFC, that is not a publicly traded corporation for the taxable year. We would be treated as a CFC for any

year on any day in which U.S. holders each own (directly, indirectly or by attribution) at least 10% of our voting shares and together

own more than 50% of the total combined voting power of all classes of our voting shares or more than 50% of the total value of

all of our shares. If we are treated as a CFC for U.S. federal income tax purposes for any portion of our taxable year that includes

this offering, we would likely be classified as a PFIC for the current taxable year. The CFC determination involves a highly complex

and technical factual analysis and, in certain cases such as our own, potentially cannot be made with complete certainty. However,

although no assurances can be made in this regard because of these complexities, based on our current shareholder composition,

we believe that we are not a CFC.



Additionally, in determining whether a foreign

corporation is a PFIC, a pro-rata portion of the income and assets of each corporation in which it owns, directly or indirectly,

at least a 25% interest (by value) is taken into account.



The determination of whether or not we are

a PFIC is a factual determination that must be determined annually at the close of each taxable year. Based on our business results

for the last fiscal year and composition of our assets, we do not believe that we were a PFIC for U.S. federal income tax purposes

for the taxable year ended June 30, 2014. Similarly, based on our business projections and the anticipated composition of our assets

for the current and future years, we do not expect that we will be a PFIC for the taxable year ended June 30, 2015. If our actual

business results do not match our projections, it is possible that we may become a PFIC in the current or any future taxable year.





108







If we are a PFIC for any taxable year during

which a U.S. holder holds ordinary shares, any “excess distribution” that the holder receives and any gain realized

from a sale or other disposition (including a pledge) of such ordinary shares will be subject to special tax rules, unless the

holder makes a mark-to-market election or qualified electing fund election as discussed below. Any distribution in a taxable year

that is greater than 125% of the average annual distribution received by a U.S. holder during the shorter of the three preceding

taxable years or such holder’s holding period for the ordinary shares will be treated as an excess distribution. Under these

special tax rules:



| | ● | the excess distribution or gain will be allocated ratably over the U.S. holder’s holding

period for the ordinary shares;
| | - | -------------------------------------------------------------------------------------------------------------------------



| | ● | the amount allocated to the current taxable year, and any taxable year prior to the first taxable

year in which we were classified as a PFIC, will be treated as ordinary income; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | the amount allocated to each other year, other than a pre-PFIC year, will be subject to income tax at the highest rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year (other than a pre-PFIC year).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The tax liability for amounts allocated to

years prior to the year of disposition or excess distribution cannot be offset by any net operating loss, and gains (but not losses)

realized on the transfer of the ordinary shares cannot be treated as capital gains, even if the ordinary shares are held as capital

assets. In addition, non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from

us if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.



If we are a PFIC for any taxable year during

which any of our non-U.S. subsidiaries is also a PFIC (i.e., a lower-tier PFIC), a U.S. holder of ordinary shares during such year

would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC and would be subject to the rules

described above on certain distributions by a lower-tier PFIC and a disposition of shares of a lower-tier PFIC even though such

U.S. holder would not receive the proceeds of those distributions or dispositions. You should consult your tax advisors regarding

the tax consequences if the PFIC rules apply to any of our subsidiaries.



If a U.S. holder owns ordinary shares during

any year in which we are a PFIC and the U.S. holder recognizes gain on a disposition of our ordinary shares or receives distributions

with respect to our ordinary shares, the U.S. holder generally will be required to file an IRS Form 8621 (Information Return by

a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund) with respect to the company, generally with the

U.S. holder’s federal income tax return for that year. Additionally, recently enacted legislation creates an additional annual

filing requirement for U.S. persons who are shareholders of a PFIC. However, pursuant to recently issued guidance, this additional

filing obligation is suspended until the IRS releases the relevant final form. If the Company were a PFIC for a given taxable year,

then you should consult your tax advisor concerning your annual filing requirements.



A U.S. holder may avoid some of the adverse

tax consequences of owning shares in a PFIC by making a “qualified electing fund” election. The availability of this

election with respect to our ordinary shares requires that we provide information to shareholders making the election. We do not

intend to provide you with the information you would need to make or maintain a qualified electing fund election and you will,

therefore, not be able to make such an election with respect to your ordinary shares.



As an alternative to the foregoing rules,

a U.S. holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to our ordinary shares,

provided that the listing of the ordinary shares on applicable exchange is approved and that the ordinary shares are regularly

traded. We anticipate that our ordinary shares should qualify as being regularly traded, but no assurances may be given in this

regard. If a U.S. Holder makes a valid mark-to-market election for the ordinary shares, the electing U.S. holder will include

in income each taxable year that we are a PFIC, an amount equal to the excess, if any, of the fair market value of the ordinary

shares as of the close of the holder’s taxable year over the adjusted basis in such ordinary shares. The U.S. holder is

allowed a deduction for the excess, if any, of the adjusted basis of the ordinary shares over their fair market value as of the

close of the holder’s taxable year. Deductions are allowable, however, only to the extent of any net mark-to-market gains

on the ordinary shares included in the U.S. holder’s income for prior taxable years. Amounts included in the U.S. holder’s

income under a mark-to-market election, as well as gain on the actual sale or other disposition of the ordinary shares, are treated

as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the ordinary

shares, as well as to any loss realized on the actual sale or disposition of the ordinary shares, to the extent the amount of

such loss does not exceed the net mark-to-market gains previously included for such ordinary shares. The tax basis in the ordinary

shares will be adjusted to reflect any such income or loss amounts. A mark-to-market election will be effective for the taxable

year for which the election is made and all subsequent taxable years unless the ordinary shares are no longer regularly traded

on an applicable exchange or the IRS consents to the revocation of the election.



109







Because, as a technical matter, a mark-to-market

election cannot be made for any lower-tier PFICs that we may own, a U.S. holder may continue to be subject to the general PFIC

rules described above with respect to such U.S. holder’s indirect interest in any investments held by us that are treated

as an equity interest in a PFIC for U.S. federal income tax purposes.



U.S. holders are urged to contact their own

tax advisors regarding the determination of whether we are a PFIC and the tax consequences of such status.



Medicare Tax



An additional 3.8% tax is imposed on a portion

or all of the net investment income of certain individuals with a modified adjusted gross income of over US$200,000 (or US$250,000

in the case of joint filers or US$125,000 in the case of married individuals filing separately) and on the undistributed net investment

income of certain estates and trusts. For these purposes, “net investment income” generally includes interest, dividends

(including dividends paid with respect to our ordinary shares), annuities, royalties, rents, net gain attributable to the disposition

of property not held in a trade or business (including net gain from the sale, exchange or other taxable disposition of an ordinary

share) and certain other income, reduced by any deductions properly allocable to such income or net gain. U.S. holders are urged

to consult their tax advisors regarding the applicability of this tax to their income and gains in respect of an investment in

the ordinary shares.



Backup Withholding Tax and Information

Reporting Requirements



Dividend payments with respect to ordinary

shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject to information reporting to the IRS

and possible U.S. backup withholding at a current rate of 28%. Backup withholding will not apply, however, to a U.S. holder who

furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup

withholding and establishes such exempt status. Backup withholding is not an additional tax. Amounts withheld as backup withholding

may be credited against a U.S. holder’s U.S. federal income tax liability. A U.S. holder may obtain a refund of any amounts

withheld under the backup withholding rules by filing the appropriate claim for refund with the IRS in a timely manner and furnishing

any required information. U.S. holders are urged to contact their own tax advisors as to their qualification for an exemption from

backup withholding tax and the procedure for obtaining this exemption.



Foreign asset reporting



Certain U.S. holders who are individuals are

required to report information relating to an interest in our ordinary shares, subject to certain exceptions (including an exception

for shares held in accounts maintained by financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial

Assets) with their federal income tax return. U.S. holders are urged to consult their tax advisors regarding their information

reporting obligations, if any, with respect to their ownership and disposition of our ordinary shares.



The discussion above is not intended to

constitute a complete analysis of all tax considerations applicable to an investment in ordinary shares. You should consult with

your own tax advisor concerning the tax consequences to you in your particular situation.



10.F.           Dividends and Paying Agents



Not applicable.



10.G.          Statement by Experts



Not applicable.





110







10.H.          Documents on Display



Publicly filed documents concerning the Company

which are referred to in this Annual Report may be inspected and copied at the public reference facilities maintained by the SEC

at 100 F Street, N.E., Washington, D.C. 20549. Copies of these materials can also be obtained from the Public Reference Room at

the SEC’s principal office, 100 F Street, N.E., Washington D.C. 20549, after payment of fees at prescribed rates.



The SEC maintains a website at www.sec.gov

that contains reports, proxy and information statements and other information regarding registrants that make electronic filings

through its Electronic Data Gathering, Analysis, and Retrieval or EDGAR, system. We have made all our filings with SEC using the

EDGAR system.



For further information on the Public Reference

Room, please call the SEC at 1-800-SEC-0330. Our SEC filings, including the Annual Report, are also available to you on the SEC’s

website at http://www.sec.gov.



Information may also be found on the Investor

Relations section of our website at http://bluenrgy.com/ir/filings.html



10.I.            Subsidiary Information



Not applicable.



PART II



ITEM  11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK



We are exposed to various market risks,

including foreign currency fluctuations, changes in interest rates, equity and credit risk. The main risks to which we are exposed

are discussed below. Refer to Note 22 to the audited financial statements in Item 18 for more detailed analysis of the potential

financial impact of these risks.



Market risk



Our activities expose us primarily to

the financial risks of changes in foreign currency exchange rates and interest rates and fluctuations in the value of equity securities

as described below.



Foreign currency risk management



Foreign currency risk is the risk that

the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Our

exposure to the risk of changes in foreign exchange rates relates primarily to our operating activities, borrowings, and financial

assets.



Our parent company and a number of our

subsidiaries use the Australian dollar as their functional currency because the majority of their revenues and expenses are denominated

in Australian dollars. Accordingly, our reporting currency is also the Australian dollar. We did, however, earn revenue and incur

expenses in other currencies and there is thus a risk that currency fluctuations could have an adverse effect on the value of our

cash flows.



Our foreign currency risk arises from

the measurement of purchased components, debt, preferred stock, and other monetary assets and liabilities denominated in foreign

currencies converted to Australian dollars, with the resulting gain or loss recorded as “Other income” or “Other

expenses” and the impact of fluctuations in exchange rates on the reported amounts of our revenues and expenses which are

contracted in foreign currencies. In the future this exposure may be reduced as the Company strives to develop and sell assets

and project in the same currency in which it borrows and/or purchases inventory and components for those assets and projects.





111







Foreign currency sensitivity



We are party to derivative financial
instruments in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates. Our Parmac
and GED Working Capital Facilities (as described in Item 5.B. “Liquidity and Capital Resources”) are
denominated in U.S. dollars. In addition, the face value of our Series B Preferred Stock and the face value of the preferred stock
of our Parmac and CIWL subsidiaries, the Subsidiary Preferred, is denominated in U.S. dollars.



We do not apply hedge accounting. At

June 30, 2015 and subsequently through the date of this Report, there was no contract hedging in place.



Interest rate risk



Our main interest rate risk arises from

borrowings. Borrowings issued at variable rates expose us to cash flow interest rate risk. Borrowings issued at fixed rates expose

us to fair value interest rate risk only if the borrowings are carried at fair value, which is not our policy.



During fiscal years 2013 and 2014, our

borrowings at variable rate were denominated in Australian Dollars. At June 30, 2015 all of our borrowings are fixed rate (subject

to penalty rates which may be applied under default events).



We regularly analyze our interest rate

exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative financing, and the

mix of fixed and variable interest rates.



At June 30, 2015 we had no significant

interest bearing assets other than cash and cash equivalents, therefore our income and operating cash flows are substantially independent

of changes in market interest rates.



Liquidity and capital risk management



Our objective is to maintain a balance

between continuity of funding and flexibility through the use of variety of equity and debt instruments.



As discussed in Item 5.B. under
the heading “Liquidity and Capital Resources”, there is a material uncertainty that may cast significant doubt
on whether we will be able to continue as a going concern and therefore whether it will realize our assets and settle our liabilities
and commitments in the normal course of business and at the amounts stated in the financial report.



ITEM  12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



A. Debt Securities



Not required in annual report



B. Warrants and Rights



Not required in annual report



C. Other Securities



Not required in annual report



D. American Depositary Shares



Not applicable.





112







ITEM  13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



Some of our debt obligations outstanding as of fiscal year-end

2013 were extinguished in conjunction with exchange agreements entered into prior to our public offering in June 2014 and, upon

the consummation of that offering and commencement of trading of our shares on The NASDAQ Capital Market, we had no indebtedness

in default. However, circumstances encountered subsequent to that offering resulted in defaults under our outstanding bonds issued

by our subsidiaries, Energy Bonds Plc and Secured Energy Bonds Plc and our remaining convertible note obligations. Consequently,

A$26.9 million of our $27.2 million interest-bearing loans and borrowings were shown as current as of June 30, 2014.



In part because of the defaults or
imminent defaults under our debt obligations, we entered VA on November 14, 2014. The placement of our company into VA triggered
defaults under our agreements with Westinghouse Electric Corporation and CIWL that ultimately resulted in the termination of our
licensing agreement with Westinghouse Electric and an ongoing dispute with CIWL. When we emerged from VA, our indebtedness was
extinguished pursuant to the DOCAs, together with most of our executory contracts and we were not in default under any material
contracts or loan agreements and, with the exception of the CIWL agreement that Chatham Islands Electricity Limited is seeking
to terminate and loan agreements described in Item 5.B. that have matured and become demand notes, we are not in default under
any agreements as of the date of this report on Form 20-F. Refer also to Item 4.A. under the heading “Voluntary Administration
and Deed of Company Arrangement”.



We have never paid dividends and there are no dividend arrearages

or delinquencies.



ITEM  14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY

HOLDERS AND USE OF PROCEEDS



Share Issuances and Modifications Under Our Reorganization

Plans



In accordance with and upon effectiveness of the DOCAs:



| | ● | we issued additional ordinary
shares to the Deed Fund, our secured creditor, WHSP and to shareholders and designees of BlueNRGY LLC.
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | ● | our CIWL and Parmac subsidiaries issued convertible preferred shares to WHSP with face values
respectively of US$1.4 million and US$2.2 million, collectively referred to as the Subsidiary Preferred. The Subsidiary Preferred
accrues a dividend of 4% per annum on the face value and is convertible at any time into our ordinary shares at US$0.3785 per
share. The Subsidiary Preferred issued by CIWL may not be converted if the Chatham Island Project contract with Chatham Islands
Electricity Limited is terminated (refer to Item 4.B. under the heading “Description of Our Business Segments -- Energy
Efficiency -- Remote Area Power Systems (RAPS)”) This summary description of the terms of the Subsidiary
Preferred is qualified in its entirety by the terms set forth in the Exhibits to the DOCA for our Company and filed as an exhibit
to our Form 6-K/A filed on January 29, 2015.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | we modified the terms of
our outstanding Series B Preferred.
| | - | ------------------------------------------------------------



Private Placements of Unregistered Securities After Emergence

From VA



On or subsequent to January 27, 2015 after
emerging from VA we have issued ordinary shares in a private placement for US$0.03785 per share pursuant to a securities purchase
agreement filed with our Form 6-K/A on January 29, 2015.  Net proceeds from the private placements were used to pay US$1.0 million
($A1.247 million) to the Deed Funds and the remainder was used for working capital and to fund losses since emergence from VA.
There were no brokerage or placement fees paid in conjunction with the private placements.





113







Use of Proceeds



Registered Securities Offering Effective June 12, 2014



Details of the Offering



The registration statement on Form F-1 (File No. 333-194780) for

the offering was declared effective by the SEC on June 12, 2014.We sold 1,810,000 ordinary shares, at an offering price of US$4.00

per share (“Offering”). The Offering closed on June 18, 2014 and generated gross proceeds of US$7.24 million. Northland

Capital Markets, the trade name for certain equity capital markets and investment banking activities of Northland Securities, Inc.,

acted as co-manager for the offering.



Use of Proceeds



Net proceeds to us were approximately $6.00 million after deducting

underwriting discounts and commissions and other offering expenses. As disclosed in the prospectus for the Offering, a total of

US$1.83 million was repaid from net proceeds to lenders including WHSP, one of our shareholders holding in excess of 10% of our

outstanding ordinary shares, and Gerard McGowan our Managing Director. After giving effect to the repayment of the loans, net proceeds

to us were US$4.27 million. National Securities Corporation acted as lead manager for the offering.



As disclosed in the Offering Prospectus, CBD used $1.0 million of

the net proceeds from the Offering after giving effect to the loan payment to acquire GED. Consistent with the uses of proceeds

set forth in the Offering prospectus, the remaining $3.27 million of net proceeds was used for working capital, including the payment

of deferred trade debt, and to fund operating losses.



Private Placement of Series B Preferred Shares And Conversion

of Series B Preferred Shares



As disclosed in our filings on Form 6-K on July 30, 2014 and August

20, 2014, In a series of private placement offerings in July and August 2014, we issued US$4.5 million face value of our Series

B Convertible Preferred Shares, referred to as Series B Preferred. US$2.0 million of the proceeds from the private placement offerings

was used to redeem $2.0 million face value of our Series A convertible preferred shares (all of our then outstanding Series A preferred

shares). The Series B Preferred accrued a dividend at an annual rate of 8% of face value and had an initial conversion price of

US$4.00 per share and imposed restrictions on our ability to issue equity or equity-linked securities below a price of US$2.00

per share. In the private placement of Series B Preferred that occurred in August 2014, the conversion price was subsequently reduced

to US$3.00 per share for all Series B Preferred, including those Series B Preferred Shares previously issued. In conjunction with

the issuance of Series B Preferred we issued 150,000 ordinary shares as a placement fee and warrants for 416,667 ordinary shares

with an exercise price of $3.2916 per share. This summary of terms of the private placement offerings and Series B Preferred and

warrants is qualified in its entirety by the securities purchase agreement and related exhibits filed with the referenced forms

6-K. Net proceeds from the sale of Series B Preferred was used for working capital, to pay interest on our debt and to fund our

losses.



As disclosed in a Form 6-K filed on November 12, 2015, certain holders

of our Series B Preferred shares elected to convert 2,484 Series B Preferred Shares plus dividends accrued thereon into our ordinary

shares at the stated conversion price of $0.05015125 per ordinary share. In satisfaction of the foregoing Series B Preferred Share

conversions we have issued 51,448,606 ordinary shares. 600 Series B Preferred Shares remained outstanding as of this Report.





114







ITEM  15. CONTROLS AND PROCEDURES



Evaluation of Disclosure Controls and Procedures



Our management, with the participation of our Chief Executive Officer

and Chief Financial Officer, evaluated, as of the end of the period covered by this Report, the effectiveness of our disclosure

controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based

on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures

were not effective at the reasonable assurance level as of June 30, 2015.



Management’s Annual Report on Internal Control Over Financial

Reporting



Management of the Company is responsible for establishing and maintaining

adequate internal control over financial reporting for the Company, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the

IASB. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the

maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets

of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial

statements in accordance with IFRS as issued by the IASB and that receipts and expenditures of the company are being made only

in accordance with authorizations of our Board; and (3) provide reasonable assurance regarding prevention or timely detection of

unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements



A control system, no matter how well conceived and operated, can

provide only reasonable, not absolute, assurance that the objectives of the control system are met. In particular, the design of

a control system must be considered relative to their costs. Additionally, the design of a control system is based in part upon

certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving

its stated objectives under all potential future conditions. Due to its inherent limitations, internal control over financial reporting

may not prevent or detect all misstatements to the financial statements. Also, projections of any evaluation of effectiveness to

future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree

of compliance with the policies or procedures may deteriorate.



Management assessed the effectiveness of the Company’s internal

control over financial reporting as of June 30, 2015 based on the criteria set forth by the Committee of Sponsoring Organizations

of the Treadway Commission (2013 Framework) Internal Control-Integrated Framework. Based on this assessment, management concluded

that the Company’s internal control over financial reporting was not effective as of June 30, 2015 under the 2013 Framework

due to the following material weaknesses:



| | ● | There is insufficient specificity in and separation of the authorities delegated to line of business and corporate personnel with the effect that unintended or unauthorized financial commitments could be made on behalf of the Company or one of its subsidiaries and incorrect amounts could be paid to vendors.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | Procedures are not in place to adequately control and annual leave of employees with the effect that unauthorized annual leave could be taken and leave accruals could be misstated.                                                                                                                                
| | ● | Secretarial and corporate records filed with ASIC are not consistently up to date with the effect that we could fail to be remain in compliance with the Corporations Act.                                                                                                                                          
| | ● | Interim closings of account records are not consistently completed in a time frame that would allow adverse unforeseen financial consequences of business operations to be detected and managed.                                                                                                                    





This Report does not include an attestation report
of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by the Company’s registered public accounting firm pursuant to amendments made by
the enactment of the Dodd-Frank bill that permit the Company to provide only management’s annual report on internal control
over financial reporting in this Annual Report.



Changes in Internal Control Over Financial Reporting



There was no change in our internal controls over financial reporting

(as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) identified in connection with

the evaluation of our internal control over financial reporting performed during the fiscal year ended June 30, 2015 that

has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





115







Subsequent to communications

to our Audit Committee from our then-auditor, PricewaterhouseCoopers, in September 2014 that identified significant control weaknesses,

our board enacted emergency measures that continue following our emergence from VA to:



| | ● | Ensure that bank account signatory authority was imposed on all bank accounts and that our finance team has visibility over and reviews all account activity;                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                       
| | ● | Effect segregation of duties, particularly with respect to approval and payment of disbursements;                                                                                                                                     
| |   |                                                                                                                                                                                                                                       
| | ● | Ensure all members of management support proper recordkeeping, including with respect to executive and director compensation and expense reimbursement, and that there is an appropriate and frequent review of accounts of the Group;
| |   |                                                                                                                                                                                                                                       
| | ● | Ensure related-party transactions involving executives and directors are visible to and receive requisite Board approval and are implemented in accordance with approved agreements;                                                  
| |   |                                                                                                                                                                                                                                       
| | ● | Ensure that our executives and directors are aware of and follow our Code of Conduct and Ethics.                                                                                                                                      



As soon as practicable we intend to develop and implement a revised

authority matrix and updated budgets for our 2016 fiscal year that are approved by our Board.



ITEM  16A. AUDIT COMMITTEE FINANCIAL EXPERT



The composition of our Audit Committee currently and for fiscal

years June 30, 2015 and 2014 were:



Currently: - Mr. Carlo Botto* June 2015 – Mr. John Donohue

*

June 2014 – Mr. William Morro* and Mr. Todd Barlow



(*) denotes designated Audit Committee Financial Expert. Each Audit

Committee Financial Expert has been an independent director.



ITEM  16B. CODE OF ETHICS



We have adopted a code of conduct and ethics for employees, officers

and directors, which fully complies with the requirements of NASDAQ Rule 5610 and the requirements of Section 406(c) of the Sarbanes-Oxley

Act applicable to chief executive officers, principal financial officers, and principal accounting officers or controllers or persons

performing similar functions.



Our Code of Conduct and Ethics was filed as an as exhibit

to our FY2014 Annual Report.



ITEM  16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The auditor of BlueNRGY Group Limited is HLB Mann Judd of

Level 19, 207 Kent St, Sydney NSW 2000, Australia.



Prior to the appointment of HLB Mann Judd, our auditor was

PricewaterhouseCoopers of Darling Park 201 Sussex Street Sydney NSW 2000, Australia.



Remuneration of Auditors



|                                                               |  | Consolidated
|-------------------------------------------------------------- |  | ------------
|                                                               |  | 2015 

$’000
|Amounts paid or payable to the Company’s auditors              |  |             
|- an audit or review of the financial statements of the entity |  |             





116







The following amounts were paid to the

previous auditor of BlueNRGY Group Limited, PricewaterhouseCoopers



|                                                               |  | Consolidated
|-------------------------------------------------------------- |  | ------------
|                                                               |  | 2015 

$’000
|Amounts paid or payable to the Company’s auditors              |  |             
|- an audit or review of the financial statements of the entity |  |             
|- other consulting and advisory services                       |  |             
|- tax compliance                                               |  |             
|                                                               |  |             



Pre-Approval Policies and Procedures



All services to be performed by our auditor must be approved

in advance by the Audit Committee. The Audit Committee has considered whether the provision of services other than audit services

is compatible with maintaining the auditors’ independence and has adopted a policy governing these services. This policy

requires pre-approval by the Audit Committee of all audit and non-audit services provided by the external auditor.



ITEM  16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT

COMMITTEES



Not applicable.



ITEM  16E.  PURCHASES OF SECURITIES BY THE ISSUER AND AFFILIATED

PURCHASES



Not applicable.



ITEM  16F.  CHANGES IN THE REGISTRANT’S CERTIFYING

ACCOUNTANT



Previously disclosed in a Report of

Foreign Private Issuer on Form 6-K filed on December 2, 2014.



On January 29, 2015, the Audit Committee

of the Board appointed HLB Mann Judd as the Company’s new independent registered public accounting firm.



ITEM  16G. CORPORATE GOVERNANCE



Implications of Being an Emerging Growth Company



Pursuant to JOBS Act, we are classified

as an “Emerging Growth Company.” Under the JOBS Act, Emerging Growth Companies are exempt from certain reporting requirements,

including the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. Under this exemption, our auditor will

not be required to attest to and report on management’s assessment of our internal controls over financial reporting during

a five-year transition period.



Pursuant to the JOBS Act, we will

remain an Emerging Growth Company until the earliest of:



|● | the last day of our fiscal year following the fifth anniversary of the date of our initial public offering of ordinary shares;
|- | ------------------------------------------------------------------------------------------------------------------------------



|● | the last day of our fiscal year in which we have annual gross revenue of USD$1.0 billion or more;
|- | -------------------------------------------------------------------------------------------------



|● | the date on which we have, during the previous three-year period, issued more than USD$1.0 billion in non-convertible debt; and
|- | -------------------------------------------------------------------------------------------------------------------------------



|● | the date on which we are deemed to be a “large accelerated filer,” which will occur at such time as we (a) have an aggregate worldwide market value of ordinary shares held by non-affiliates of USD$700.0 million or more as of the last business day of our most recently completed second fiscal quarter, (b) have been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months, and (c) have filed at least one annual report pursuant to the Exchange Act.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





117







Implications of Being a Foreign Private Issuer



We are also considered a “foreign private

issuer.” In our capacity as a foreign private issuer, we are exempt from certain rules under the Exchange Act, that impose

certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition,

our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery

provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of

our ordinary shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently

or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are not required to comply

with Regulation FD, which restricts the selective disclosure of material information.



In addition, as a “foreign private issuer”,
we follow certain home-country corporate governance practices and intend to continue to do so in lieu of certain NASDAQ requirements,
even if we are successful in regaining our NASDAQ listing. The exception to the election to follow Australian practices is
those rules which are required to be followed pursuant to the provisions of Listing Rule 5615(a)(3). That is, the Notification
of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), an audit committee that satisfies Rule 5605(c)(3)
(audit committee responsibilities and authorities), and the audit committee’s members meet the independence requirement
in Rule 5605(c)(2)(A)(ii) (the criteria for independence).





As the Company is not listed on the ASX, this
Report does not contain the corporate governance statement required by the Guidelines disclosing the extent to which the Company
has followed each recommendation set by the Council. Rather, this Report only contains references to the recommendations the Company
considered when setting its corporate governance policies.



The following practices are not prohibited
under any Australian laws (including ASX listing rules).



(1) Audit Committee Composition (Rule 5605)(c)(2)(A):The Company’s Audit Committee is comprised of one director, Mr. Botto, who is an independent non-executive director.
The Guidelines include recommendations that
companies should have at least three members, members should be non-executive directors and a majority of the audit committee
should be independent directors and chaired by an independent director. Due to the small size of the Board the audit committee
will consists of two directors once we appoint another independent non-executive to the Board.



(2) Independent Director Oversight of Director

Nominations (Rule 5605(e)(1)):There is no requirement under Australian laws or ASX listing rules which requires director nominees

to be selected to the board or recommended for election by a majority of independent directors or a nominations committee comprised

solely of independent directors.



(3) Nominations Charter or Board

Resolution (Rule 5605(e)(2)):The Company does not have a Nominations Committee. The Guidelines includes a recommendation that

companies should establish a nomination committee. Given the small size of the Company and the Board, the directors consider that

establishing a committee would contribute little to the effective management of the company.



(4) Independent Director Oversight of Executive
Officer Compensation (Rule 5605(d)):On February 9, 2015, Mr. Chapple and Mr. Donohue were appointed to the Compensation Committee
and Mr. Morro resigned as a member of the Compensation Committee. However, Mr. Chapple resigned from the Board on June 16, 2015
and Mr. Donohue resigned from the Board on July 31, 2015. Until replacement members of the Committee can be appointed, matters
previously delegated to the Compensation Committee are being considered by the full Board. The Guidelines include Recommendations
that a compensation committees should have at least three members, members should be non-executive directors and a majority of
the committee should be independent directors and chaired by an independent director. Due to the small size of the Board, the
compensation committee, once reconstituted, will consist of two independent non-executive directors.





(5) Executive Sessions (Rule

5605(b)(2)):There is no requirement under Australian laws or ASX listing rules which require the Company to schedule meetings

at which only the independent directors are present.



(6) Quorum (Rule 5620(c)):There

is no requirement under Australian laws or ASX listing rules which require the Company to have a quorum of a particular number

of outstanding ordinary shareholders, rather, each company is able to determine its own quorum requirements. The current quorum

for the Company is two shareholders entitled to vote. This is consistent with typical Australian business practices.





118







(7) Shareholder Approval (Rule 5635)The Company’s

practices with regard to the requirements of Listing Rule 5635(a),(b) and (d) are not prohibited by Australian law applicable to

the Company as a public company not listed on the ASX, except that under the Australian Corporations Act2001 (Cth) there

is a restriction on a single person being issued shares which would result in a person’s voting power in a company increasing

from 20% or below to more than 20% or from a starting point above 20% and below 90%. The concept of voting power takes account

of shares owned or controlled by a person and its associates (in summary, associates includes body corporates controlled by a person,

persons with whom a person is acting in concert with in respect of the company issuing the stock or persons with whom a person

has a relevant agreement with for the purpose of controlling the conduct of the company’s affairs.



ITEM  16H. MINE SAFETY DISCLOSURE



Not applicable.



PART III



ITEM  17.    FINANCIAL STATEMENTS



See “Item 18 – Financial Statements”





ITEM 18.   FINANCIAL STATEMENTS



The following financial statements are
filed as part of this Annual Report, together with the report of the independent registered public accounting firm:



|● | Report of Independent Registered Public Accounting
    Firm
|- | -----------------------------------------------------------
|● | Consolidated statement of comprehensive income             
|● | Consolidated statement of financial position               
|● | Consolidated statement of changes in equity                
|● | Consolidated statement of cash flows                       
|● | Notes to the financial statements                          







119













BlueNRGY Group Limited

(Formerly CBD Energy Limited)



(A.C.N. 010 966 793)



Annual Financial Report

for the year ended 30 June 2015













Table of contents



|Report of independent registered accounting firm | F-1
|------------------------------------------------ | ---
|                                                 |    
|Consolidated statement of comprehensive income   | F-2
|                                                 |    
|Consolidated statement of financial position     | F-3
|                                                 |    
|Consolidated statement of changes in equity      | F-4
|                                                 |    
|Consolidated statement of cash flows             | F-6
|                                                 |    
|Notes to the financial statements                | F-7























Report of Independent







Registered Accounting Firm



To the Board of Directors and shareholders







of BlueNRGY Group Limited



We have audited the accompanying consolidated







statements of financial position of BlueNRGY Group Limited (‘the Company’) and its controlled entities (collectively







‘the Group’) as at 30 June 2015 and 2014, and the related consolidated statements of comprehensive income, changes







in equity and cash flows each of the three years in the period ended 30 June 2015. These financial statements are the responsibility







of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits of these financial







statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require







that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.







An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing







the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.







We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred







to above present fairly, in all material respects, the consolidated financial position of BlueNRGY Group Limited and its subsidiaries







at 30 June 2015 and 2014 and the consolidated results of their operations and their consolidated cash flows for each of the three







years in the period ended 30 June 2015 in conformity with International Financial Reporting Standards as issued by the International







Accounting Standards Board.



The accompanying financial statements have







been prepared assuming that the Company will continue as a going concern. As discussed in Note 5 to the financial statements, the







Company appointed Administrators on 14 November 2014, and following two Deeds of Company Arrangement was subsequently released







from Administration on 27 January 2015. The consolidated balance sheet at 30 June 2015 discloses a deficit of current assets in







relation to current liabilities of $4,637.000. Note 2 also advises that the ability of the Group to continue as a going concern







and meet its debts and commitments as and when they fall due requires that the Group meets or exceeds its operational budgets in







the future and raises funds from new loans and securities issuances. These uncertainties raise substantial doubt about its ability







to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial







statements do not include any adjustments that might result from the outcome of this uncertainty.



HLB Mann Judd

Sydney, Australia

December 9, 2015









F-1







Statement







of comprehensive income



|                                                                                                                     |  |  |      |  |  | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  |  | ---- |  |  | ------------
|For the year ended June 30                                                                                           |  |  | Note |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|Revenues from continuing operations                                                                                  |  |  | 6    |  |  |             
|Other income                                                                                                         |  |  | 6    |  |  |             
|Cost of raw materials, consumables used, and contractors                                                             |  |  |      |  |  |             
|Employee benefit expenses                                                                                            |  |  | 7    |  |  |             
|Amortisation and depreciation                                                                                        |  |  | 7    |  |  |             
|Impairment of asset                                                                                                  |  |  | 7    |  |  |             
|Other expenses                                                                                                       |  |  | 7    |  |  |             
|Net finance income/(costs)                                                                                           |  |  | 7    |  |  |             
|Loss from continuing operations before income tax                                                                    |  |  |      |  |  |             
|Income tax benefit/(expense)                                                                                         |  |  | 8    |  |  |             
|Loss from continuing operations                                                                                      |  |  |      |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|Profit/(loss) from discontinued operations                                                                           |  |  | 14   |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|Net profit/(loss) for the period                                                                                     |  |  |      |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|Other comprehensive income                                                                                           |  |  |      |  |  |             
|Items that may be reclassified to profit or loss                                                                     |  |  |      |  |  |             
|Changes in the fair value of available-for-sale financial assets                                                     |  |  |      |  |  |             
|Exchange differences on translation of foreign operations                                                            |  |  |      |  |  |             
|Other comprehensive loss for the period, net of tax of $ Nil (2014- $ Nil)                                           |  |  |      |  |  |             
|Total comprehensive profit/(loss) for the period                                                                     |  |  |      |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|                                                                                                                     |  |  |      |  |  |             
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |  |      |  |  |             
|Basic loss per share                                                                                                 |  |  | 9    |  |  |             
|Diluted loss per share                                                                                               |  |  | 9    |  |  |             
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |  |      |  |  |             
|Basic earnings/(loss) per share                                                                                      |  |  | 9    |  |  |             
|Diluted earnings/(loss) per share                                                                                    |  |  | 9    |  |  |             



The above statement of comprehensive income should be read in conjunction







with the accompanying notes.





F-2







Statement







of financial position



|                                                                                  |  |  |      | Consolidated
|--------------------------------------------------------------------------------- |  |  | ---- | ------------
|As at June 30                                                                     |  |  | Note |             
|ASSETS                                                                            |  |  |      |             
|Current Assets                                                                    |  |  |      |             
|Cash and cash equivalents                                                         |  |  | 10   |             
|Trade and other receivables                                                       |  |  | 11   |             
|Inventories                                                                       |  |  | 12   |             
|Other current assets                                                              |  |  | 13   |             
|Assets classified as discontinued operations                                      |  |  | 14   |             
|Total Current Assets                                                              |  |  |      |             
|                                                                                  |  |  |      |             
|Non-Current Assets                                                                |  |  |      |             
|Available-for-sale and other financial assets                                     |  |  | 14   |             
|Plant and equipment                                                               |  |  | 15   |             
|Goodwill and intangible assets                                                    |  |  | 16   |             
|Other non-current assets                                                          |  |  | 13   |             
|Total Non-Current Assets                                                          |  |  |      |             
|TOTAL ASSETS                                                                      |  |  |      |             
|                                                                                  |  |  |      |             
|LIABILITIES                                                                       |  |  |      |             
|Current Liabilities                                                               |  |  |      |             
|Trade and other payables                                                          |  |  | 17   |             
|Interest-bearing loans and borrowings                                             |  |  | 18   |             
|Provisions                                                                        |  |  | 19   |             
|Liabilities directly associated with assets classified as discontinued operations |  |  | 14   |             
|Total Current Liabilities                                                         |  |  |      |             
|                                                                                  |  |  |      |             
|Non-Current Liabilities                                                           |  |  |      |             
|Interest-bearing loans and borrowings                                             |  |  | 18   |             
|Provisions                                                                        |  |  | 19   |             
|Total Non-Current Liabilities                                                     |  |  |      |             
|TOTAL LIABILITIES                                                                 |  |  |      |             
|NET ASSETS                                                                        |  |  |      |             
|                                                                                  |  |  |      |             
|EQUITY                                                                            |  |  |      |             
|Contributed equity                                                                |  |  | 20   |             
|Retained earnings (Accumulated losses)                                            |  |  |      |             
|Reserves                                                                          |  |  | 21   |             
|TOTAL EQUITY                                                                      |  |  |      |             



The above statement of financial position should be read in conjunction







with the accompanying notes.





F-3







Statement







of changes in equity



|For







    the year ended June 30                           |  | Ordinaryshares







$’000 |         | Preferenceshares







$’000 |  | ConvertibleNotes







$’000 |        | Share optionsreserve







$’000 |  | Available-







for-salereserve







$’000 |      | Translation reserve  $’000 |  | Retainedearnings(Accumulated







Losses)  $’000 |        | Total$’000
|--------------------------------------------------------------- |  | --------------------------- | ------- | ----------------------------- |  | ----------------------------- | ------ | --------------------------------- |  | ---------------------------------------------- | ---- | -------------------------- |  | -------------------------------------------------- | ------ | ----------
|                                                                |  |                             |         |                               |  |                               |        |                                   |  |                                                |      |                            |  |                                                    |        |           
|At July 1, 2014 (restated)                                      |  |                             | 120,323 |                               |  |                               | 4,643  |                                   |  |                                                | 574  |                            |  |                                                    | 3,336  |           
|Profit/(loss) for







    period                             |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Other







    comprehensive income                           |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Total







    comprehensive income for the year              |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|                                                                |  |                             |         |                               |  |                               |        |                                   |  |                                                |      |                            |  |                                                    |        |           
|Transactions







    with owners in their capacity as owners |  |                             |         |                               |  |                               |        |                                   |  |                                                | —    |                            |  |                                                    |        |           
|Shares issued                                                   |  |                             | 18,025  |                               |  |                               | 2,775  |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Share issue costs                                               |  |                             | (444    | )                             |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Unissued shares                                                 |  |                             | 1,133   |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Preference shares







    converted                          |  |                             | 5,301   |                               |  |                               | (5,301 | )                                 |  |                                                | —    |                            |  |                                                    | —      |           
|Forfeited







    on Administration                          |  |                             | —       |                               |  |                               | (1,593 | )                                 |  |                                                | —    |                            |  |                                                    | —      |           
|Cancellation







    of convertible note                     |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | (574 | )                          |  |                                                    | —      |           
|Reclassified







    expired options                         |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | (1,232 | )         
|Dividends







    reinvested                                 |  |                             | —       |                               |  |                               | 257    |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Balance at June







    30, 2015                             |  |                             | 144,338 |                               |  |                               | 781    |                                   |  |                                                | —    |                            |  |                                                    | 2,104  |           
|                                                                |  |                             |         |                               |  |                               |        |                                   |  |                                                |      |                            |  |                                                    |        |           
|At July 1, 2013 (restated)                                      |  |                             | 109,046 |                               |  |                               | —      |                                   |  |                                                | 574  |                            |  |                                                    | 3,189  |           
|Profit/(loss) for period                                        |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Other comprehensive income                                      |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Total comprehensive income for the year                         |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|                                                                |  |                             |         |                               |  |                               |        |                                   |  |                                                |      |                            |  |                                                    |        |           
|Transactions with owners in their capacity as owners            |  |                             |         |                               |  |                               |        |                                   |  |                                                |      |                            |  |                                                    |        |           
|Shares issued                                                   |  |                             | 12,597  |                               |  |                               | 4,643  |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Share issue costs                                               |  |                             | (1,320  | )                             |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | —      |           
|Share-based payments for convertible notes                      |  |                             | —       |                               |  |                               | —      |                                   |  |                                                | —    |                            |  |                                                    | 147    |           
|Balance at June 30, 2014                                        |  |                             | 120,323 |                               |  |                               | 4,643  |                                   |  |                                                | 574  |                            |  |                                                    | 3,336  |           





F-4







Statement of changes in equity







(continued)



|For the year ended June 30                           |  | Ordinary shares  $’000 |         | Preference shares  $’000 |  | Convertible Notes  $’000 |   | Share options reserve  $’000 |  | Available-







for-sale reserve  $’000 |     | Translation reserve  $’000 |  | Retainedearnings(Accumulated







Losses)  $’000 |       | Total$’000
|---------------------------------------------------- |  | ---------------------- | ------- | ------------------------ |  | ------------------------ | - | ---------------------------- |  | ----------------------------------------- | --- | -------------------------- |  | -------------------------------------------------- | ----- | ----------
|At July 1, 2012 (restated)                           |  |                        | 108,509 |                          |  |                          | — |                              |  |                                           | 574 |                            |  |                                                    | 2,689 |           
|Profit/(loss) for period                             |  |                        | —       |                          |  |                          | — |                              |  |                                           |     |                            |  |                                                    | —     |           
|Other comprehensive income                           |  |                        | —       |                          |  |                          | — |                              |  |                                           |     |                            |  |                                                    | —     |           
|Total comprehensive income for the year              |  |                        | —       |                          |  |                          | — |                              |  |                                           |     |                            |  |                                                    | —     |           
|                                                     |  |                        |         |                          |  |                          |   |                              |  |                                           |     |                            |  |                                                    |       |           
|Transactions with owners in their capacity as owners |  |                        |         |                          |  |                          |   |                              |  |                                           |     |                            |  |                                                    |       |           
|Shares issued                                        |  |                        | 626     |                          |  |                          | — |                              |  |                                           |     |                            |  |                                                    | —     |           
|Share issue costs                                    |  |                        | (89     | )                        |  |                          | — |                              |  |                                           |     |                            |  |                                                    | —     |           
|Share-based payments for convertible notes           |  |                        | —       |                          |  |                          | — |                              |  |                                           |     |                            |  |                                                    | 500   |           
|Balance at June 30, 2013                             |  |                        | 109,046 |                          |  |                          | — |                              |  |                                           | 574 |                            |  |                                                    | 3,189 |           



The above statement of changes in equity should be read in conjunction







with the accompanying notes.





F-5







Statement







of cash flows



|                                                                      |  |      |    | Consolidated
|--------------------------------------------------------------------- |  | ---- | -- | ------------
|For the year ended June 30                                            |  | Note |    |             
|Cash flow from operating activities                                   |  |      |    |             
|Receipts from customers (inclusive of GST)                            |  |      |    |             
|Payments to suppliers and employees (inclusive of GST)                |  |      |    |             
|Payments for development costs                                        |  |      |    |             
|Finance costs                                                         |  |      |    |             
|Interest received                                                     |  |      |    |             
|Net cash flows (used)/provided in operating activities                |  |      | 10 |             
|                                                                      |  |      |    |             
|Cash flow from investing activities                                   |  |      |    |             
|Proceeds from sale of property, plant and equipment                   |  |      |    |             
|Purchase of property, plant and equipment                             |  |      |    |             
|Proceeds from the sale of intangible assets                           |  |      |    |             
|Cash forfeited during reorganisation                                  |  |      |    |             
|Proceeds from sale of investments                                     |  |      |    |             
|Payment for the purchase of controlled entities, net of cash acquired |  |      |    |             
|Net cash flows (used) / provided in investing activities              |  |      |    |             
|                                                                      |  |      |    |             
|Cash flow from financing activities                                   |  |      |    |             
|Proceeds from share issues                                            |  |      |    |             
|Proceeds from issue of convertible notes                              |  |      |    |             
|Convertible note issue costs                                          |  |      |    |             
|Proceeds from borrowings                                              |  |      |    |             
|Repayment of borrowings                                               |  |      |    |             
|Payment of finance lease liabilities                                  |  |      |    |             
|Net cash flows provided/(used) in financing activities                |  |      |    |             
|                                                                      |  |      |    |             
|Net (decrease) / increase in cash and cash equivalents                |  |      |    |             
|Cash and cash equivalents at beginning of period                      |  |      |    |             
|Cash and cash equivalents at end of period                            |  |      | 10 |             



The above statement of cash flows should be read in conjunction







with the accompanying notes.





F-6







Notes to the financial statements



|Note |                                                                       
|---- | ----------------------------------------------------------------------
|1    | Corporate information                                                 
|2    | Summary of significant accounting policies                            
|3    | Significant accounting judgements, estimates and assumptions          
|4    | Operating Segments                                                    
|5    | Reorganisation                                                        
|6    | Revenues from continuing operations and other income                  
|7    | Expenses                                                              
|8    | Income tax                                                            
|9    | Earnings per share                                                    
|10   | Cash and cash equivalents                                             
|11   | Trade and other receivables                                           
|12   | Inventories                                                           
|13   | Other assets                                                          
|14   | Available-for-sale, other financial assets and discontinued operations
|15   | Non-current assets – plant and equipment                              
|16   | Non-current assets – intangible assets and goodwill                   
|17   | Trade and other payables                                              
|18   | Interest-bearing loans and borrowings                                 
|19   | Provisions                                                            
|20   | Contributed equity                                                    
|21   | Reserves                                                              
|22   | Business Combinations                                                 
|23   | Financial risk management objectives and policies                     
|24   | Related party disclosure                                              
|25   | Key management personnel                                              
|26   | Share-based payments                                                  
|27   | Commitments                                                           
|28   | Events after the balance sheet date                                   
|29   | Parent entity Information                                             
|30   | Auditors’ remuneration                                                





F-7







Notes to the financial statements



| | 1. | Corporate information
| | -- | ---------------------



The consolidated financial statements of BlueNRGY







Group Limited (“BlueNRGY”, “the Parent” or “the Company”) (formerly CBD Energy Limited) for







the year ended June 30, 2015 were authorised for issue in accordance with a resolution of the Directors on December







2, 2015. The Directors have the power to amend and reissue the financial statements.



BlueNRGY is a company limited by shares, incorporated







in Australia, whose shares are publicly listed on the OTC Pink Current marketplace.



| | 2. | Summary of significant accounting policies
| | -- | ------------------------------------------



The principal accounting policies adopted in







the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to







all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of BlueNRGY







and its subsidiaries. BlueNRGY and its subsidiaries together are referred to in this financial report as the ‘Group’







or the ‘Consolidated Entity’.



| | (a) | Basis of preparation
| | --- | --------------------



The financial report is a general purpose financial







report, which has been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the







Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, modified by the







revaluation of available for sale financial assets, financial assets at fair value through profit or loss and liabilities (including







derivative instruments). BlueNRGY is a for-profit entity for the purpose of preparing the financial statements.



Compliance with Australian Accounting Standards







ensures that the financial statements and notes also comply with International Financial Reporting Standards.



The financial report is presented in Australian







dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated.



Going concern

The financial statements have been prepared







on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement







of liabilities in the ordinary course of business. Key financial data for the Group for the years ended June 30, 2015 and 2014







is disclosed below:



|Consolidated                                                     |  | Year ended







June 30, 2015







    







$’000 |        | Year ended







June 30, 2014







$’000
|---------------------------------------------------------------- |  | -------------------------------------------------------- | ------ | --------------------------------------------
|                                                                 |  |                                                          |        |                                             
|Cash at bank and in hand less overdraft                          |  |                                                          | 482    |                                             
|Net profit/(loss) for the year                                   |  |                                                          | 5,704  |                                             
|Net cash inflow/(outflow) from operating activities for the year |  |                                                          | (5,551 | )                                           
|Net current assets/(liabilities)                                 |  |                                                          | (4,637 | )                                           



The Group incurred net operating cash outflows







for the year ended June 30, 2014 and continued operating losses. These losses continued in the period after June 30, 2014 and on







November 14, 2014, by unanimous resolution of those members of its Board permitted to consider the matter and to vote, it was determined







that the Company and three of its Australian subsidiaries should be placed into voluntary administration (‘VA’) under







the Australian Corporations Act 2001 (the ‘Act’). Refer to Note 5 for further information. The VA process was concluded







on 27 January 2015.



The ability of the Group to continue as a going







concern and meet its debts and commitments as and when they fall due requires that it meets or exceeds operational budgets in the







future and raises funds from new loans and securities issues. Therefore, there is substantial doubt with regards to the Group’s







ability to continue as a going concern and therefore whether the Group will realise its assets and settle its liabilities at amounts







stated in the financial statements. In order to reduce or eliminate this doubt and continue operating, the Group is taking steps







to:





F-8







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (a) | Basis of preparation (continued)
| | --- | --------------------------------



Going concern (continued)



| | ● | Sustain net operating profits: BlueNRGY is continually reviewing costs structures of its businesses







and making the appropriate changes to maximise return on revenues generated. New business opportunities are assessed in order to







identify opportunities for growth and increased profitability.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Raise new debt and/or equity capital: BlueNRGY continues to discuss opportunities for further investment







with current equity holders.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



The Directors note that there is a risk that







some or all of the above activities may not be successful, however they believe that the Group has reasonable prospects of achieving







the above plans and as a consequence they have no intention to liquidate or cease trading.



The Directors have a responsibility to prepare







the financial statements in accordance with Accounting Standards, which requires entities to prepare financial statements on a







going concern basis unless the Directors intend to liquidate the entity, cease trading or have no realistic alternative but to







do so. No adjustments have been made to the financial statements relating to the recoverability and classification of the asset







carrying amounts or classification of liabilities that might be necessary should the Group not continue as a going concern.



| | (b) | Critical accounting estimates
| | --- | -----------------------------



The preparation of financial statements requires







the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying







the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions







and estimates are significant to the financial statements are disclosed in Note 3.



| | (c) | Changes in accounting policies and new standards and interpretations not yet adopted
| | --- | ------------------------------------------------------------------------------------



The Group has adopted new and amended Australian







Accounting Standards and AASB Interpretations as of 1 July 2014. There has been no material impact on the financial statements







of the Group from these new and amended Standards and Interpretations.



A number of new Standards, amendments to Standards







and Interpretations are effective for annual periods beginning after 1 July 2015, and have not been applied in preparing these







consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements







of the Group, except for:

| | ● | AASB 9 Financial Instruments which becomes mandatory for the Group’s 2016 consolidated







financial statements and could change the classification and measurement of financial instruments.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | AASB 15 Revenue which becomes mandatory for the Group’s 2018 consolidated financial







statements and could change the timing of revenue recognition by the Group.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------





The Group does not plan to adopt these Standards







early, and the extent of the impact of adopting these Standards has not been determined.



| | (d) | Basis of consolidation
| | --- | ----------------------



The consolidated financial statements comprise







the financial statements of BlueNRGY Group Limited and its subsidiaries as outlined in Note 24.



Subsidiaries are all those entities controlled







by the Group i.e. where the Group is exposed, or has rights, to variable returns from its involvement with the investee and has







the ability to affect those returns through its power over the investee. The existence and effect of potential voting rights that







are currently exercisable or convertible are considered when assessing whether the Group controls another entity.



The financial statements of the subsidiaries







are prepared for the same reporting period as the Company, using consistent accounting policies. In preparing the consolidated







financial statements, all intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group







transactions have been eliminated in full.



F-9









Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (d) | Basis of consolidation (continued)
| | --- | ----------------------------------



Subsidiaries are fully consolidated from the







date on which the Group obtains control and cease to be consolidated from the date on which control is transferred out of the Group.



The acquisition method of accounting is used







to account for business combinations by the Group (refer to Note 2(e)).



A change in the ownership interest of a subsidiary







that does not result in a loss of control is accounted for as an equity transaction.



| | (e) | Business combinations
| | --- | ---------------------



Business combinations are accounted for using







the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition







date fair value, and the amount of any non-controlling interest in the acquiree. Acquisition costs incurred are expensed and included







in administrative expenses.



When the Group acquires a business, it assesses







the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual







terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition







date. This includes the separation of embedded derivatives in host contracts by the acquiree.



If the business combination is achieved in







stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured at







fair value as at the acquisition date through profit or loss.



Any contingent consideration to be transferred







by the acquirer is recognised at fair value at the acquisition date. Contingent consideration is accounted for as a provision in







accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and subsequent changes to the fair value







of the contingent consideration is recognised in profit or loss. If the contingent consideration is classified as equity, it will







not be re-measured. Subsequent settlement is accounted for within equity.



All transaction costs incurred in relation







to a business combination are expensed to profit or loss.



| | (f) | Operating segments
| | --- | ------------------



Operating segments are reported in a manner







that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker







has been identified as the Board of Directors who ultimately make strategic decisions. Refer to Note 4 for details of segments







in which the Group operates.



| | (g) | Foreign currency translation
| | --- | ----------------------------



Items included in the financial statements







of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates







(‘the functional currency’). The consolidated financial statements are presented in Australian dollars which is BlueNRGY







Group Limited’s functional and presentation currency.



Foreign currency transactions are translated







into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities







denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.



All exchange differences in the consolidated







financial statements are taken to profit or loss except when they are deferred in equity when they are attributable to part of







the net investment in a foreign operation.



Non-monetary items that are measured at fair







value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation







differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.





F-10







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (h) | Revenue recognition
| | --- | -------------------



Revenue is recognised to the extent that







it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when







the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into







account contractually defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements







against specific criteria to determine if it is acting as principal or agent. The Group has concluded that it is acting as a







principal in all of its revenue arrangements. The specific recognition criteria described below must also be met before







revenue is recognised:



Domestic and commercial solar installation







fees

Installation fees are recognised once installation







is completed. Domestic and commercial solar installation revenues are derived from solar PV system sales to third parties. Part







of the consideration the Group receives in respect of a solar installation is generally in the form of a Small-scale Technology







Certificates (‘STCs’) that our customers assign to the Group. STCs assigned to the Group are initially measured as







an inventory asset at cost. When STCs are ultimately sold by the Group, incremental revenue might arise, being the difference between







the cost at which the STCs were recorded and the final price at which STCs have been traded by the Group. This incremental revenue







is reported as other income. Similarly, when STCs are sold at less than cost, the loss is reported within the cost of raw materials







in profit or loss, as it represents, in effect, a write down of the STCs inventory balance to its net realisable value.



Sale of products, materials and parts

Revenue from the sale of products, material







and parts is recognised upon the delivery of goods to customers.



Services

Revenue from the rendering of service is recognised







upon delivery of the service to the customers.



Construction contracts

Contract revenue and expenses are recognised







in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Under this







method, contract revenue is matched with the contract costs incurred in reaching the stage of completion.



When it is probable that a loss will arise







from a construction contract, the excess of expected total costs over expected total revenue is recognised immediately in profit







or loss. Where the outcome cannot be measured reliably, revenue is recognised only to the extent that related expenditure is recoverable.







The stage of completion of a contract is measured by reference to the recoverable costs incurred to date as a percentage of estimated







total costs for the contract.



Project revenue

Revenue from commercial and utility scale solar







projects and wind development projects is recognised when the risks and rewards have been transferred, which can vary depending







on the specifics of each arrangement that the Group has with its customers, and when revenue can be reliably measured.



Interest income

Interest income is recognised using the effective







interest method.



Other revenues

Other operating revenues are recognised as







they are earned and goods or services provided.



| | (i) | Income tax and other taxes
| | --- | --------------------------



The income tax expense or revenue for the period







is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted







by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.



Current tax assets and liabilities for the







current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on







the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or







substantively enacted by the reporting date.





F-11







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (i) | Income tax and other taxes (continued)
| | --- | --------------------------------------



Deferred income tax is provided on all temporary







differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting







purposes.



Deferred income tax liabilities are recognised







for all taxable temporary differences except:

| | ● | when the deferred income tax liability arises from the initial recognition of goodwill or of an







asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither







the accounting profit nor taxable profit or loss; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in respect of taxable temporary differences associated with investments in subsidiaries, associates







and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable







that the temporary differences will not reverse in the foreseeable future.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Deferred income tax assets are recognised







for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is







probable that taxable profit will be available against which the deductible temporary differences and the carried forward unused







tax credits and unused tax losses can be utilised, except:

| | ● | when the deferred income tax asset relating to the deductible temporary difference arises from







the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction,







affects neither the accounting profit nor taxable profit or loss; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | in respect of deductible temporary differences associated with investments in subsidiaries, associates







and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences







will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The carrying amount of deferred tax assets







is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will







be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at







each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred







tax asset to be recovered.



Deferred tax assets and liabilities are measured







at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates







(and tax laws) that have been enacted or substantively enacted at the reporting date.



Deferred tax assets and deferred tax liabilities







are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred







tax assets and liabilities relate to the same taxable entity and the same taxation authority.



Tax benefits acquired as part of a business







combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information







about facts and circumstances changed. The adjustment would either be treated as a reduction of goodwill (as long as it does not







exceed goodwill) if it was incurred during the measurement period or in profit or loss.



Tax consolidation legislation

BlueNRGY Group Limited and its wholly owned







Australian controlled entities implemented the tax consolidation legislation as of 1 July 2003.



In addition to its own current and deferred







tax amounts, BlueNRGY Group Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising







from unused tax losses and unused tax credits assumed from controlled entities in the tax-consolidated group.



Other taxes

Revenues, expenses and assets are recognised







net of the amount of GST except:

| | ● | when the GST incurred on a purchase of goods and services is not recoverable from the taxation







authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as







applicable; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | receivables and payables, which are stated with the amount of GST included.
| | - | ---------------------------------------------------------------------------





F-12







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (i) | Income tax and other taxes (continued)
| | --- | --------------------------------------



The net amount of GST recoverable from, or







payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.



Cash flows are included in the statement of







cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable







from, or payable to, the taxation authority is classified as part of operating cash flows. Commitments and contingencies are disclosed







net of the amount of GST recoverable from, or payable to, the taxation authority.



| | (j) | Impairment of assets
| | --- | --------------------



Goodwill







and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment







or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment







whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised







for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher







of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped







at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows







from other assets or groups of assets (‘cash generating units’). Non-financial







assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each







reporting period.



| | (k) | Cash and cash equivalents
| | --- | -------------------------



Cash and cash equivalents in the statement







of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less







that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.



For the purposes of the statement of cash flows,







cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank overdrafts







are included within interest-bearing loans and borrowings in current liabilities on the statement of financial position.



| | (l) | Trade and other receivables
| | --- | ---------------------------



Trade receivables are recognised initially







at original invoiced amounts, less an allowance for any uncollectible amounts. Settlement terms for trade receivables vary between







the business units and are generally in line with standard industry practice within each industry. They are presented as current







assets unless collection is not expected for more than 12 months after the reporting date.



Collectability of trade receivables is reviewed







on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified by reducing the carrying







amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence







that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial







difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency







in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment







allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. Cash







flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.



The amount of any impairment loss is recognised







in profit or loss as a separate expense category. When a trade receivable for which an impairment allowance had been recognised







becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts







previously written off are credited against other expenses in profit or loss.



| | (m) | Inventories
| | --- | -----------



Raw materials and stores

Inventories, which mainly comprise solar panels







and inverters, which are used in the residential solar businesses of the Group, are measured at the lower of cost and net realisable







value. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the







estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.



F-13









Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (m) | Inventories (continued)
| | --- | -----------------------



Small-scale Technology Certificates (‘STCs’)

As indicated in Note 2(h), STCs are initially







recognised at cost following the installation of a solar panel and the assignment of the STCs to the Group. STCs are subsequently







measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course







of business less the estimated costs necessary to make the sale.



Project work in progress

Project work in progress comprises commercial







solar scale projects and is valued at the lower of cost and net realisable value. Cost comprises staff salary costs and direct







expenses including direct material costs and contractor costs together with an appropriate proportion of overheads. Net realisable







value is based on estimated selling prices less further costs expected to be incurred to completion.



Construction contracts work in progress

Construction work in progress is valued at







cost, plus profit recognised to date, less provision for anticipated future losses and progress billings made under the contract.







Cost includes both variable and fixed costs relating to specific contracts, and those costs that are attributable to the contract







activity in general and that can be allocated on a reasonable basis.



| | (n) | Investments and other financial assets
| | --- | --------------------------------------



Investments and financial assets in the scope







of AASB 139 Financial Instruments: Recognition and Measurement are categorised as either financial assets at fair value







through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets. The classification







depends on the purpose for which the investments were acquired. Designation is re-evaluated at each reporting date, but there are







restrictions on reclassifying to other categories.



When financial assets are recognised initially,







they are measured at fair value, plus, in the case of assets not at fair value through profit or loss, directly attributable transaction







costs.



Recognition and derecognition

All regular way purchases and sales of financial







assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales







are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally







by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the







financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the







entity neither retains nor transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred







control of the asset.



Loans and receivables

Loans and receivables including loan notes







are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are







carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans







and receivables are derecognised or impaired. These are included in current assets, except for those with maturities greater than







12 months after balance date, which are classified as non-current.



Available-for-Sale investments

Available-for-sale investments are those non-derivative







financial assets, principally equity securities, that are designated as available-for-sale or are not classified as either financial







assets at fair value through profit or loss, loans and receivables, or held-to-maturity investments. After initial recognition







available-for-sale investments are measured at fair value with gains or losses being recognised as a separate component of equity







until the investment is derecognised or until the investment is determined to be impaired. If there is objective evidence of impairment







for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and







the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed







from equity and recognised in profit or loss.



F-14









Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (n) | Investments and other financial assets (continued)
| | --- | --------------------------------------------------



The fair values of investments that are







actively traded in organised financial markets are determined by reference to quoted market bid prices at the close of







business on the reporting date. For investments with no active market, fair values are determined using valuation techniques.







Such techniques include: using recent arm’s length market transactions; reference to the current market value of







another instrument that is substantially the same; discounted cash flow analysis and option pricing models making as much use







of available and supportable market data as possible and keeping judgemental inputs to a minimum.



| | (o) | Plant and equipment
| | --- | -------------------



Plant and equipment is stated at historical







cost less accumulated depreciation and any accumulated impairment losses.



The cost of fixed assets constructed within







the economic entity includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable







overheads. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,







only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item







can be measured reliably. All other repairs and maintenance are recognised in profit or loss as incurred.



Depreciation is calculated on a straight-line







basis over the estimated useful life of the specific assets as follows:



Computer hardware and software - 2 to 5 years

Motor vehicles - 5 years

Plant and equipment – 1 to 20 years

Furniture, fittings and office equipment –







2 to 5 years

Leased motor vehicles – 5 years

Leasehold improvements – 3 years



The assets’ residual values, useful lives







and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end.



Impairment

The carrying values of plant and equipment







are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances







indicate that the carrying value may be impaired.



The recoverable amount of plant and equipment







is the higher of fair value less costs to sell, and value in use. In assessing value in use, the estimated future cash flows are







discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money







and the risks specific to the asset.



For an asset that does not generate largely







independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the







asset’s value in use can be estimated to be close to its fair value.



An impairment exists when the carrying value







of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written







down to its recoverable amount.



For plant and equipment, impairment losses







are recognised in profit or loss.



Derecognition

An item of plant and equipment is derecognised







upon disposal or when no further future economic benefits are expected from its use or disposal.



Any gain or loss arising on de-recognition







of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included







in profit or loss in the year the asset is derecognised.



F-15









Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (p) | Leases
| | --- | ------



The determination of whether an arrangement







is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the







arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset



Finance leases, which transfer to the Group







substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease







at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned







between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining







balance of the liability. Finance charges are recognised as an expense in profit or loss.



Capitalised leased assets are depreciated over







the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will







obtain ownership by the end of the lease term.



Operating lease payments are recognised as







an expense in profit or loss on a straight-line basis over the lease term.



| | (q) | Goodwill and other intangibles
| | --- | ------------------------------



Goodwill

Goodwill acquired in a business combination







is initially measured at cost of the business combination, being the excess of the consideration transferred over the fair value







of the net identifiable assets acquired and liabilities assumed.



After initial recognition, goodwill is measured







at cost less any accumulated impairment losses.



Goodwill is reviewed for impairment annually







or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.



For the purpose of impairment testing, goodwill







acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units,







or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether







other assets or liabilities of the Group are assigned to those units or groups of units.



Impairment is determined by assessing the recoverable







amount of the cash-generating unit or group of cash-generating units, to which the goodwill relates.



BlueNRGY Group Limited performs its impairment







testing as at 30 June each year or more frequently where there are indicators of impairment. Further details on the methodology







and assumptions used are outlined in Note 16.



When the recoverable amount of the cash-generating







unit or group of cash-generating units is less than the carrying amount, an impairment loss is recognised. When goodwill forms







part of a cash-generating unit or group of cash-generating units and an operation within that unit is disposed of, the goodwill







associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss







on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed







of and the portion of the cash-generating unit retained.



Impairment losses recognised for goodwill are







not subsequently reversed.



Intangibles other than Goodwill

Intangible assets acquired separately or in







a business combination are initially measured at cost. The cost of an intangible asset acquired in a business combination is its







fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated







amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs,







are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.



The useful lives of intangible assets other







than goodwill are assessed to be finite. Intangible assets with finite lives are amortised over the useful life and tested for







impairment whenever there is an indication that the intangible asset may be impaired.





F-16







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (q) | Goodwill and other intangibles (continued)
| | --- | ------------------------------------------



The amortisation period and the amortisation







method for an intangible asset with a finite useful life are reviewed at least once each reporting period. Changes in the expected







useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively







by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense







on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of







the intangible asset.



Development Costs

Research costs and costs that do not meet the







definition of development costs for the purpose of Accounting Standards are expensed as incurred. An intangible asset arising from







development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing







the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the







asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the







ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial







recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated







amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit







from the related project.



Gains or losses arising from de-recognition







of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and







are recognised in profit or loss when the asset is derecognised.



| | (r) | Pensions and other post-employment benefits
| | --- | -------------------------------------------



The company contributes to defined contribution







superannuation funds on behalf of employees at the required statutory rates.



| | (s) | Trade and other payables
| | --- | ------------------------



Trade and other payables are carried at amortised







cost. Due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the







Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in







respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within terms negotiated with







suppliers.



| | (t) | Interest-bearing loans and borrowings
| | --- | -------------------------------------



All interest bearing loans and borrowings are







initially recognised at the fair value of the consideration received less directly attributable transaction costs.



After initial recognition, interest-bearing







loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment







of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.



Borrowings are classified as current liabilities







unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance date.



| | (u) | Convertible notes
| | --- | -----------------



On issuance of convertible notes, an assessment







is made as to whether the convertible notes contain an equity instrument or whether the whole instrument should be classified as







a financial liability.



When it is determined that the whole instrument







is a financial liability and no equity instrument is identified (for example for foreign-currency-denominated convertible notes),







the conversion option is separated from the host debt and classified as a derivative liability. The carrying value of the host







contract (a contract denominated in a foreign currency) at initial recognition is determined as the difference between the consideration







received and the fair value of the embedded derivative. The host contract is subsequently measured at amortised cost using the







effective interest rate method. The embedded derivative is subsequently measured at fair value at the end of each reporting period







through profit or loss. The convertible note and the derivative are presented as a single number on the statement of financial







position within interest-bearing loans and borrowings.





F-17







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (u) | Convertible notes (continued)
| | --- | -----------------------------



When it is determined that the instrument contains







an equity component based on the terms of the contract, on issuance of the convertible notes the fair value of the liability component







is determined using a market rate for an equivalent non-convertible bond. This amount is classified as a financial liability, measured







at amortised cost (net of transaction costs) until it is extinguished on conversion or redemption. The remainder of the proceeds







is allocated to the conversion option that is recognised and included in equity. Transaction costs are deducted from equity, net







of associated income tax. The carrying amount of the conversion option is not re-measured in subsequent years.



| | (v) | Provisions and employee benefits
| | --- | --------------------------------



Provisions are recognised when the Group has







a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying







economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.



Employee entitlements - wages, salaries,







and annual leave

Liabilities for wages and salaries, including







non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date, are recognised in respect







of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities







are settled.



Employee entitlements - long service leave

The liability for long service leave is recognised







and measured as the present value of expected future payments to be made in respect of services provided by employees up to the







reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience







of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date







on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash







outflows.



| | (w) | Share-based payment transactions
| | --- | --------------------------------



The Group provides benefits to its employees







(including senior executives) in the form of share-based payments, whereby employees render services in exchange for shares or







rights over shares (‘equity-settled transactions’).



The cost of these equity-settled transactions







with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The







fair value is determined by using a Black-Scholes or Binomial model, further details of which are given in Note 26.



In valuing equity-settled transactions, no







account is taken of any vesting conditions, other than conditions linked to the price of the shares of BlueNRGY Group Limited (‘market







conditions’) if applicable.



The cost of equity-settled transactions is







recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions







are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the







vesting date).



At each subsequent reporting date until vesting,







the cumulative charge to profit or loss is the product of:

(i) the grant date fair value of the award;

(ii) the current best estimate of the number







of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and







the likelihood of non-market performance conditions being met; and

(iii) the expired portion of the vesting period.



The charge to profit or loss for the period







is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry







to equity.



Until an award has vested, any amounts recorded







are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to







a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other







conditions are satisfied. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only







conditional upon a market condition.



F-18









Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (w) | Share-based payment transactions (continued)
| | --- | --------------------------------------------



If the terms of an equity-settled award are







modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for







any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the







employee, as measured at the date of modification.



If an equity-settled award is cancelled, it







is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised at that







date. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it







is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous







paragraph.



The dilutive effect, if any, of outstanding







options is reflected as additional share dilution in the computation of diluted earnings per share (see Note 9).



| | (x) | Contributed equity
| | --- | ------------------



Ordinary shares and preference shares are classified







as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net







of tax, from the proceeds.



| | (y) | Earnings per share
| | --- | ------------------



Basic earnings per share is calculated as net







profit or loss attributable to shareholders, adjusted to exclude costs of servicing equity (other than dividends), divided by the







weighted average number of ordinary shares.



Diluted earnings per share adjusts the figure







used in the determination of basic earnings per share to take into account:

| | ● | the after income tax effect of interest and other financing costs associated with dilutive potential







ordinary shares, and
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | ● | the weighted average number of additional ordinary shares that would have been outstanding assuming







the conversion of all dilutive potential ordinary shares.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (z) | Parent entity financial information
| | --- | -----------------------------------



The financial information for the parent entity,







BlueNRGY Group Limited, disclosed in Note 29 has been prepared on the same basis as the consolidated financial statements, except







as set out below.



Investments in subsidiaries

Investments in subsidiaries are accounted for







at cost less any impairment charge.



Tax consolidation legislation

BlueNRGY Group Limited and its wholly owned







Australian controlled entities have implemented the tax consolidation legislation.



The







entities have also entered into a tax funding agreement under which the wholly-owned







entities fully compensate BlueNRGY Group Limited for any current tax payable assumed and are compensated by BlueNRGY Group Limited







for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred







to BlueNRGY Group Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts







recognised in the wholly-owned







entities’ financial statements.



The amounts receivable/payable under the tax







funding agreement are due upon receipt of the funding advice from the head entity, which is issued as soon as practicable after







the end of each financial year. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are







recognised as current amounts receivable from or payable to other entities in the group.



| | (aa) | Rounding of amounts
| | ---- | -------------------



The company is of a kind referred to in Class







Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts







in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Class Order to the







nearest thousand dollars, or, in certain cases, the nearest dollar.





F-19







Notes to







the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------





| | (ab) | Prior Years Restated
| | ---- | --------------------



The information in these financial statements







in relation to 2014 and 2013 has been restated in relation to operations that were reclassified as “discontinued operations”







in 2015.



| | 3. | Significant accounting judgements, estimates and assumptions
| | -- | ------------------------------------------------------------



Estimates and judgements are continually evaluated







and are based on historical experience and other factors, including expectations of future events that may have a financial impact







on the entity and that are believed to be reasonable under the circumstances.



The Group makes estimates and assumptions concerning







the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and







assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within







the next financial year are discussed below.



| | (a) | Critical accounting estimates and assumptions
| | --- | ---------------------------------------------



Recovery of deferred tax assets

During the year ended June 30, 2015, pursuant







to AASB 112 Income Taxes, the Company reassessed its estimate of the probability that future taxable profits will be available







against which the Group can utilise its unused tax losses and deductible temporary differences in future periods and deferred tax







assets recognised at that date were derecognised.



Impairment of goodwill and other intangibles

The Group determines whether goodwill and other







intangiblesare impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating







unit(s) to which the goodwill or other intangible assets are allocated. The assumptions used in this estimation of recoverable







amount and the carrying amount of goodwill and other intangibles including a sensitivity analysis are shown in Note 16.



Project work in progress

Project work in progress is capitalised in







accordance with the accounting policy in Note 2(m). Initial capitalisation of costs is based on management’s judgment that







technological and economical feasibility is confirmed, usually when a project has reached a defined milestone. Determination of







the amounts to be capitalised is made on a case-by-case basis giving regard to previous experience of the Group in similar projects







and contractual arrangements. At June 30, 2015 the carrying amount of capitalised project work in progress was $110,000 (2014:







$325,000).



Share-based payment transactions

The Group measures the cost of equity-settled







transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The







fair value is determined using a Black-Scholes or Binominal model, with the assumptions detailed in Note 26.



The Group measures the cost of equity-settled







transactions with regards to warrants issued to lenders using an un-modified binominal lattice model giving consideration to the







dilution impact of the shares issued upon conversion of the warrants as well as other options on issue.



Contingent consideration

Under the terms of the Membership Interest







Purchase Agreement between the Group and its subsidiary, BlueNRGY LLC, the Group was obligated to create a management incentive







pool of ordinary shares and, subject to vesting conditions, issue all such shares to the named parties. Identified within this







pool of ordinary shares were 4,011,324 shares ($191,000) unallocated staff incentive shares to be issued to beneficiaries as directed







by parties to the Agreement.



F-20









Notes to







the financial statements



| | 4. | Operating segments
| | -- | ------------------



The Group has identified its operating segments







based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing







performance and in determining the allocation of resources.



The consolidated entity’s operating companies







are organised and managed separately according to the nature of the products and services they provide, with each segment offering







different products and serving different markets.



The principal activities of segments within







the consolidated entity were:

| | ● | Solar PVprovides engineering design, supply and installation services to retail, commercial







and utility-scale domestic and international customers with professional engineering solutions to make effective use of solar power.







Domestic products and services are generally small-scale solar power solutions suited to residential and small to medium enterprise







applications. International products and services are generally focused on utility-scale solar generation system projects.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Parmacprovides a full range of mechanical services and air-conditioning services in support







of developers, builders and commercial tenants at the mid-tier level. Their specialty is working within existing mechanical services







infrastructure and tight deadlines to deliver high-quality commercial grade air-conditioning solutions.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Monitoring & Performance Analytics provide an integrated, device-agnostic energy monitoring







solution to maximize profitability for any solar PV or wind installation. An all-in-one monitoring portal, users are provided with







the most comprehensive suite of tools to remotely configure and track energy production.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | RAPS/Technology Solutionsincludes operating remote area power systems (‘RAPS’)







as well as the inclusion of other operations that utilise the Group’s patents relating to carbon block energy storage technology







and other intellectual property. The Chatham Island wind project is included in the RAPS segment.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ● | Corporateprovides administrative and other services required to support the BlueNRGY group.







This includes the Corporate Executive Team, Finance, Human Resources and Legal departments.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Primary reporting – business segments



|2015                                                          |  | Solar







    PV$’000 |        | Parmac$’000 |  | Monitoring







    & Performance Analytics$’000 |        | RAPS$’000 |  | Corporate$’000 |      | Consoli-dated$’000
|------------------------------------------------------------- |  | ------------------------ | ------ | ----------- |  | -------------------------------------------------- | ------ | --------- |  | -------------- | ---- | ------------------
|Revenue







    outside the economic entity                |  |                          | 3,062  |             |  |                                                    | 12,242 |           |  |                | 167  |                   
|Other







    income                                       |  |                          | 2,148  |             |  |                                                    | (892   | )         |  |                | —    |                   
|Total







    income from continuing operations            |  |                          | 5,210  |             |  |                                                    | 11,350 |           |  |                | 167  |                   
|Total







    income from discontinued operations          |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|Total







    income                                       |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|                                                              |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|Segment







    loss before tax from continuing operations |  |                          | (8,525 | )           |  |                                                    | (1,069 | )         |  |                | (724 | )                 
|Income







    tax (expense)/benefit                       |  |                          | —      |             |  |                                                    | —      |           |  |                | —    |                   
|Net







    loss after tax from continuing operations      |  |                          | (8,525 | )           |  |                                                    | (1,069 | )         |  |                | (724 | )                 
|Net







    profit from discontinued operations            |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|Net







    profit after tax                               |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|                                                              |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|Depreciation







    and Amortisation                      |  |                          | (46    | )           |  |                                                    | (138   | )         |  |                | (57  | )                 
|Impairment of asset                                           |  |                          | (6,200 | )           |  |                                                    | —      |           |  |                | —    |                   
|                                                              |  |                          |        |             |  |                                                    |        |           |  |                |      |                   
|Total







    Assets                                       |  |                          | 719    |             |  |                                                    | 3,066  |           |  |                | 338  |                   
|Total







    Liabilities                                  |  |                          | 1,772  |             |  |                                                    | 3,028  |           |  |                | 909  |                   





F-21









Notes to







the financial statements



Primary reporting – business segments (continued)



|2014                                                        |  |  |       |   |  |  |        |   |  |  |   | 
|----------------------------------------------------------- |  |  | ----- | - |  |  | ------ | - |  |  | - | 
|Revenue outside the economic entity                         |  |  | 1,924 |   |  |  | 10,188 |   |  |  | — | 
|Other income                                                |  |  | 1,560 |   |  |  | 14     |   |  |  | — | 
|Total income from continuing operations                     |  |  | 3,484 |   |  |  | 10,202 |   |  |  | — | 
|Total income from discontinued operations                   |  |  |       |   |  |  |        |   |  |  |   | 
|Total income                                                |  |  |       |   |  |  |        |   |  |  |   | 
|                                                            |  |  |       |   |  |  |        |   |  |  |   | 
|Segment profit/(loss) before tax from continuing operations |  |  | 263   |   |  |  | (823   | ) |  |  | — | 
|Income tax (expense)/benefit                                |  |  | —     |   |  |  | —      |   |  |  | — | 
|Net profit/(loss) after tax from continuing operations      |  |  | 263   |   |  |  | (823   | ) |  |  | — | 
|Net loss from discontinued operations                       |  |  |       |   |  |  |        |   |  |  |   | 
|Net loss after tax                                          |  |  |       |   |  |  |        |   |  |  |   | 
|                                                            |  |  |       |   |  |  |        |   |  |  |   | 
|Depreciation and Amortisation                               |  |  | (70   | ) |  |  | (80    | ) |  |  | — | 
|Impairment of asset                                         |  |  | —     |   |  |  | —      |   |  |  | — | 
|                                                            |  |  |       |   |  |  |        |   |  |  |   | 
|Segment assets of continuing operations                     |  |  | 1,180 |   |  |  | 2,234  |   |  |  | — | 
|Segment assets of discontinued operations                   |  |  |       |   |  |  |        |   |  |  |   | 
|Total Assets                                                |  |  |       |   |  |  |        |   |  |  |   | 
|Segment liabilities of continuing operations                |  |  | 1,350 |   |  |  | 2,332  |   |  |  | — | 
|Segment liabilities of discontinued operations              |  |  |       |   |  |  |        |   |  |  |   | 
|Total Liabilities                                           |  |  |       |   |  |  |        |   |  |  |   | 



| | 5. | Reorganisation
| | -- | --------------



On November 14, 2014, by unanimous resolution







of those members of its Board permitted to consider the matter and to vote, it was determined that the Company and three of its







Australian subsidiaries were:

| | (i) | insolvent or likely to become insolvent in the future;
| | --- | ------------------------------------------------------



| | (ii) | should be placed into voluntary administration (‘VA’) under the Australian Corporations







Act 2001 (the ‘Act’), and
| | ---- | ------------------------------------------------------------------------------------------------------------------------



| | (iii) | Said Jahani and Trevor Pogroske from Grant Thornton be appointed as joint and several administrators







(referred to hereinafter in the singular as ‘Administrator’) pursuant to section 436A of the Act.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The three Australian subsidiaries of the Company







that entered VA were CBD Solar Labs Pty Ltd, Westinghouse Solar Pty Ltd and KI Solar Pty Ltd, which, together with the Company







are referred to as the VA Companies. As a result of the Administrator’s appointment, the powers of the directors of the VA







Companies were suspended and the Administrator took control of the affairs of the companies subject to the appointment.



On December 24, 2014 two deeds of company arrangement







under the Act (collectively, the ‘Reorganisation Plans’) were signed. The Reorganisation Plans became effective on







January 27, 2015 along with a variation to the Reorganisation Plans.



The Reorganisation Plans provided, among other







things, that:

| | (i) | creditor claims and contingent liabilities of the VA Companies were extinguished and creditors







received newly issued ordinary shares of the Company; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | investors infused US$1 million ($1,064,000) into the Company in order to meet the requirements







of the Deed Funds set forth in the Reorganisation Plans.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------





The Deed Funds were used to pay creditor claims.







Creditors of the Company received US$610,000 ($649,000) and creditors of the Company’s subsidiary, Westinghouse Solar Pty







Ltd, US$390,000 ($415,000).



As a consequence of the Reorganisation Plans,







the Company and its subsidiary, Westinghouse Solar Pty Ltd, exited voluntary administration and resumed management by their Boards







of Directors (the ‘Board’). The following subsidiaries were directly impacted as a result of the Reorganisation Plans







and were deconsolidated: CBD Labs Pty Ltd, Energy Bonds Plc, Secured Energy Bonds Plc, Secured Energy Bonds II Plc, KI Solar Pty







Ltd, SEB Mercury Limited and SEB Venus Limited.





F-22







Notes to the financial statements







| | 5. | Reorganisation (continued)
| | -- | --------------------------



On December 12, 2014, by unanimous resolution







of those members of the Company’s Board permitted to consider the matter and to vote, it was determined that a further eight







Australian subsidiaries of the Company and their respective subsidiaries be voluntary liquidated. These companies were CBD Solar







Pty Ltd, eco-Kinetics Group Pty Ltd, eco-Kinetics Pty Ltd, eco-Kinetics



NSW Pty Ltd, eco-Kinetics Victoria Pty Ltd,







eco-Kinetics Northern Territory Pty Ltd, eco-Kinetics Energy Systems Pty Ltd, National Solar Installations Pty Ltd, Remote Area







Power Systems Pty Ltd, eco-Kinetics Netherlands Cooperatief UA, eco-Kinetics Netherlands Holding BV and eco-Kinetics South Pacific







Ltd. These subsidiaries have been classified as “discontinued operations”.



The Company’s other subsidiaries continued







to operate outside the VA process.



The impact of the VA process is disclosed in







these financial statements as follows:





|                                                                                                          |  |  | Note |  |  |  | 2015$’000 | 
|--------------------------------------------------------------------------------------------------------- |  |  | ---- |  |  |  | --------- | 
|                                                                                                          |  |  |      | 
|1.	Included in Net profit (loss) for the period                                                           |  |  |      |  |  |  |           | 
|(i)	Other income                                                                                          |  |  | 6    |  |  |  | 1,981     | 
|(ii)	Profit (loss) from discontinued operations                                                           |  |  | 14   |  |  |  | 20,227    | 
|                                                                                                          |  |  |      |  |  |  |           | 
|Total impact on net assets at 30 June 2015                                                                |  |  |      |  |  |  | 22,208    | 
|                                                                                                          |  |  |      |  |  |  |           | 
|2.	Included as transactions with owners in their capacity as owners in the Statement of Changes in Equity |  |  |      |  |  |  |           | 
|(i)	Preference shares forfeited                                                                           |  |  |      |  |  |  | 1,593     | 
|(ii)	Cancellation of equity portion of convertible note                                                   |  |  |      |  |  |  | 574       | 
|                                                                                                          |  |  |      |  |  |  |           | 
|Total impact on Retained Earnings (Accumulated losses)                                                    |  |  |      |  |  |  | 24,375    | 





| | 6. | Revenues from continuing operations and other income
| | -- | ----------------------------------------------------



|                                                     |  | Consolidated
|---------------------------------------------------- |  | ------------
|                                                     |  |             
|                                                     |  |             
|Revenue from sales and services                      |  |             
|                                                     |  |             
|Other income                                         |  |             
|Gain on financial liabilities measured at fair value |  |             
|Debt extinguishment 1                                |  |             
|Other income                                         |  |             
|                                                     |  |             





1Refer to Note 5.





F-23









Notes







to the financial statements





| | 7. | Expenses
| | -- | --------





|                                            |  | Consolidated
|------------------------------------------- |  | ------------
|                                            |  |             
|Employee benefits expense                   |  |             
|Salaries and wages                          |  |             
|Defined contribution superannuation expense |  |             
|Other employee benefits expense             |  |             
|                                            |  |             
|                                            |  |             
|Amortisation and depreciation               |  |             
|Depreciation – property, plant & equipment  |  |             
|Amortisation – development costs            |  |             
|                                            |  |             
|Impairment of assets                        |  |             
|Investment in wind projects 1               |  |             
|Investment in Barefoot Power                |  |             
|Investment in Solar                         |  |             
|Other 2                                     |  |             
|                                            |  |             



1 The investment in the Taralga







Wind Farm was fully impaired to $Nil in 2014.

2 The investment in Andalay Solar,







a US listed company, has been written down to $Nil in the current year.



|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  |             
|Other expenses                                           |  |             
|Bad and doubtful debts                                   |  |             
|Compliance and consultants                               |  |             
|Loss/(gain) on disposal of assets                        |  |             
|Insurance                                                |  |             
|Occupancy expenses                                       |  |             
|Travel costs                                             |  |             
|Other expenses                                           |  |             
|                                                         |  |             
|                                                         |  |             
|Net finance costs                                        |  |             
|Interest income                                          |  |             
|Interest expense                                         |  |             
|Dividends on Preference shares classified as liabilities |  |             
|Share option expenses                                    |  |             
|Foreign exchange (gain)/loss                             |  |             
|                                                         |  |             





F-24







Notes







to the financial statements









| | 8. | Income tax
| | -- | ----------



|                                                                                        |  | Consolidated
|--------------------------------------------------------------------------------------- |  | ------------
|                                                                                        |  |             
|                                                                                        |  |             
|(a)	Income tax benefit/(expense)                                                        |  |             
|Current tax expense                                                                     |  |             
|Deferred tax benefit/(expense)                                                          |  |             
|Income tax benefit/(expense)                                                            |  |             
|                                                                                        |  |             
|Income tax expense is attributable to:                                                  |  |             
|Loss from continuing operations                                                         |  |             
|Profit/(loss) from discontinuing operations                                             |  |             
|                                                                                        |  |             
|                                                                                        |  |             
|(b)Numerical







    reconciliation of income tax expense to prima facie tax payable |  |             
|Loss before income tax from continuing operations                                       |  |             
|Profit/(loss) before income tax from discontinuing operations                           |  |             
|                                                                                        |  |             
|Tax at the Australian tax rate of 30%                                                   |  |             
|                                                                                        |  |             
|Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: |  |             
|Expenditure not allowable for income tax purposes                                       |  |             
|Tax benefit (not recognised) now recognised                                             |  |             
|Income tax expense                                                                      |  |             



The Group offsets tax assets and liabilities







if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax







assets and deferred tax liabilities relate to income taxes levied by the same tax authority.



| | (c) | Tax losses
| | --- | ----------



The Group generated revenue tax profits totalling







$11,027,000 (reduction to deferred asset of $3,308,000). Deferred tax assets relating to tax losses totalling $16,613,000 (2014:







$19,921,000) are available to the Group for offset against future taxable income. In addition, the Group has carried forward capital







tax losses totalling $4,867,000 (2014: $4,867,000).



| | (d) | Unrecognised temporary differences
| | --- | ----------------------------------



The temporary differences not recognised at







June 30, 2015 and 2014 relate primarily to tax losses referred to in (c). There are no other material temporary differences.



| | (e) | Franking credits
| | --- | ----------------



At June 30, 2015 the Group has $834,000 of







available franking credits (2014: $834,000).





F-25







Notes







to the financial statements





| | 9. | Earnings per share
| | -- | ------------------



The following reflects the income used in the







basic and diluted earnings per share computations:



|                                                                                                             |  | Consolidated
|------------------------------------------------------------------------------------------------------------ |  | ------------
|                                                                                                             |  |             
|                                                                                                             |  |             
|(a) Earnings used in calculating earnings per share                                                          |  |             
|Net loss from continuing operations attributable to ordinary equity holders of the parent                    |  |             
|Net profit/(loss) from discontinued operations attributable to ordinary equity holders of the parent         |  |             
|Net profit/(loss) attributable to ordinary equity holders of the parent                                      |  |             
|                                                                                                             |  |             
|                                                                                                             |  |             
|(b) Weighted average number of shares                                                                        |  |             
|Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share   |  |             
|Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share |  |             
|                                                                                                             |  |             
|                                                                                                             |  |             
|(c) Earnings per share                                                                                       |  |             
|Basic earnings per share from continuing operations                                                          |  |             
|Basic earnings per share from discontinued operations                                                        |  |             
|Basic earnings per share                                                                                     |  |             
|                                                                                                             |  |             
|Diluted loss per share from continuing operations                                                            |  |             
|Diluted earnings/(loss) per share from discontinued operations                                               |  |             
|Diluted earnings/(loss) per share                                                                            |  |             



Basic earnings per share amounts are calculated







by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary







shares outstanding during the year.



Diluted earnings per share amounts are calculated







by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares







outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive







potential ordinary shares into ordinary shares.





F-26







Notes







to the financial statements



| | 9. | Earnings per share (continued)
| | -- | ------------------------------



All share options on issue at 30 June 2014







and 30 June 2015 were anti-dilutive and were excluded from the calculation of diluted earnings per share:



All the convertible notes issued in 2014 were







anti-dilutive. Refer to Note 18 for details of convertible notes issued.



| | 10. | Cash and cash equivalents
| | --- | -------------------------



|                                                                    |  | Consolidated
|------------------------------------------------------------------- |  | ------------
|                                                                    |  |             
|                                                                    |  |             
|Cash at bank and in hand                                            |  |             
|Cash at bank and in hand for continuing operations                  |  |             
|                                                                    |  |             
|(a) Reconciliation of net loss to net cash flow from operations     |  |             
|Profit (loss) after tax                                             |  |             
|Adjustment for non-cash items:                                      |  |             
|Depreciation and amortisation                                       |  |             
|Impairment of intangibles                                           |  |             
|Impairment of financial assets and joint venture assets             |  |             
|Gain on debt extinguishment                                         |  |             
|Share-based payments expense                                        |  |             
|Non-cash items relating to convertible notes                        |  |             
|Loss on sale of property, plant and equipment and intangible assets |  |             
|Unrealised losses/(gains) on foreign exchange                       |  |             
|Bad debts written off and provision for impairment of receivable    |  |             
|Changes in assets and liabilities:                                  |  |             
|Trade and other receivables                                         |  |             
|Inventories                                                         |  |             
|Other assets                                                        |  |             
|Other non-current assets                                            |  |             
|Trade and other payables                                            |  |             
|Provisions                                                          |  |             
|Net cash from/(used in) operating activities                        |  |             
|                                                                    |  |             
|(b) Non-cash financing and investing activities                     |  |             
|Share-based payments                                                |  |             
|Equity settled – payables and borrowings                            |  |             
|Acquisition of plant and equipment by means of finance leases       |  |             



The Group’s exposure to interest rate risk is discussed in







Note 23. The maximum exposure to credit risk at the end of the reporting period is the carrying amount.





F-27







Notes







to the financial statements









| | 11. | Trade and other receivables
| | --- | ---------------------------





|                  |  | Consolidated
|----------------- |  | ------------
|                  |  |             
|Current           |  |             
|Trade receivables |  |             
|Other receivables |  |             
|                  |  |             



| | (a) | Past due but not impaired
| | --- | -------------------------



As at June 30, 2015, trade receivables past







due but not considered impaired are: $255,000 (2014: $234,000). Payment terms on these amounts have not been re-negotiated. Direct







contact with the relevant debtor has been made and the Group is satisfied that payment will be received in full. Since balance







date $167,977 of these past due amounts have been received.



Other balances within trade and other receivables







do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.





|                                                                             |  |  | Total







$’000 |  |  |  | 0-30 Days  $’000 |  |  |  | 30-60 Days $’000 |  |  |  | > 60 Days $’000 | 
|---------------------------------------------------------------------------- |  |  | ------------------ |  |  |  | ---------------- |  |  |  | ---------------- |  |  |  | --------------- | 
|At June 30, the ageing analysis of trade receivables past due is as follows: |  |  |                    |  |  |  |                  |  |  |  |                  |  |  |  |                 | 
|2015







    Consolidated                                                 |  |  | 255                |  |  |  | —                |  |  |  | 127              |  |  |  | 128             | 
|2014 Consolidated                                                            |  |  | 234                |  |  |  | —                |  |  |  | 177              |  |  |  | 57              | 



| | 12. | Inventories
| | --- | -----------





|                         |  | Consolidated
|------------------------ |  | ------------
|                         |  |             
|Raw materials and stores |  |             
|Work in progress         |  |             
|STCs                     |  |             
|                         |  |             







F-28







Notes to the financial statements



| | 13. | Other assets
| | --- | ------------



| |             | Consolidated
| | ----------- | ------------
| |             |             
| | Current     |             
| | Prepayments |             
| | Deposits    |             
| | Other       |             
| |             |             
| |             |             
| | Non-current |             
| | Deposits    |             



| | 14. | Available-for-sale, other financial assets and discontinued operations
| | --- | ----------------------------------------------------------------------



Available-for-sale and other financial assets



|              |  | Consolidated
|------------- |  | ------------
|              |  |             
|Non-current   |  |             
|Andalay Solar |  |             
|              |  |             



The investment in Andalay Solar, a US listed







company, has been written down to $Nil at balance date.



Discontinued operations



On August 30, 2013, BlueNRGY’s 100% owned







subsidiary Capacitor Technologies Pty Ltd (‘Captech’) was disposed of for $1,788,000 resulting in a loss on sale of







$8,000.



As disclosed in Note 5, a number of subsidiaries







were deconsolidated in the VA process.





|                                                                        |  | Consolidated
|----------------------------------------------------------------------- |  | ------------
|                                                                        |  |             
|Current                                                                 |  |             
|Revenue                                                                 |  |             
|Other income 1                                                          |  |             
|Expenses                                                                |  |             
|Profit/(loss) before income tax                                         |  |             
|Income tax expense                                                      |  |             
|Profit/(loss) after income tax of discontinued operation                |  |             
|                                                                        |  |             
|Assets classified as held for sale                                      |  |             
|Liabilities directly associated with assets classified as held for sale |  |             



1 Other income in 2015 comprises debt forgiveness and







extinguishment.





F-29







Notes







to the financial statements



| | 15. | Plant and equipment
| | --- | -------------------



|                                             |  | Consolidated
|-------------------------------------------- |  | ------------
|                                             |  |             
|Computer hardware & software                 |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total computer hardware & software           |  |             
|                                             |  |             
|Motor vehicles                               |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total motor vehicles                         |  |             
|                                             |  |             
|Plant and equipment                          |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total plant and equipment                    |  |             
|                                             |  |             
|Furniture, fittings & office equipment       |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total furniture, fittings & office equipment |  |             
|                                             |  |             
|Leased motor vehicles                        |  |             
|At cost                                      |  |             
|Accumulated amortisation                     |  |             
|Total leased motor vehicles                  |  |             
|                                             |  |             
|Leasehold improvements                       |  |             
|At cost                                      |  |             
|Accumulated amortisation                     |  |             
|Total leasehold improvements                 |  |             
|                                             |  |             
|Total property, plant and equipment          |  |             
|At cost                                      |  |             
|Accumulated amortisation/depreciation        |  |             
|Total property, plant and equipment          |  |             





F-30









Notes







to the financial statements



| | 15. | Plant and equipment (continued)
| | --- | -------------------------------



Reconciliation of carrying amounts at the beginning and end of







the year



|                                                                |  |  | Computer hardware & software







$’000 |   |  |  | Motor vehicles







$’000 |   |  |  | Plant & equipment 







$’000 |   |  |  | Furniture, fittings & office equipment







$’000 |   |  |  | Leased motor vehicles







$’000 |   |  |  | Leasehold improve-







ments







$’000 |   |  |  | Total







$’000 |  
|--------------------------------------------------------------- |  |  | ----------------------------------------- | - |  |  | --------------------------- | - |  |  | ------------------------------- | - |  |  | --------------------------------------------------- | - |  |  | ---------------------------------- | - |  |  | -------------------------------------------- | - |  |  | ------------------ | -
|Year Ended June 30, 2015                                        |  |  |                                           |   |  |  |                             |   |  |  |                                 |   |  |  |                                                     |   |  |  |                                    |   |  |  |                                              |   |  |  |                    |  
|At July 1, 2014 net of accumulated depreciation and impairment  |  |  | 328                                       |   |  |  | 5                           |   |  |  | 1,912                           |   |  |  | 160                                                 |   |  |  | 336                                |   |  |  | 101                                          |   |  |  | 2,842              |  
|Additions through Business Combination                          |  |  | 2                                         |   |  |  | 101                         |   |  |  | 18                              |   |  |  | 27                                                  |   |  |  | —                                  |   |  |  | 7                                            |   |  |  | 155                |  
|Additions                                                       |  |  | 4                                         |   |  |  | 26                          |   |  |  | 29                              |   |  |  | 9                                                   |   |  |  | —                                  |   |  |  | 43                                           |   |  |  | 111                |  
|Disposals                                                       |  |  | (90                                       | ) |  |  | (1                          | ) |  |  | (2                              | ) |  |  | (98                                                 | ) |  |  | (60                                | ) |  |  | (63                                          | ) |  |  | (314               | )
|Transfers                                                       |  |  | —                                         |   |  |  | —                           |   |  |  | —                               |   |  |  | 4                                                   |   |  |  | —                                  |   |  |  | (4                                           | ) |  |  | —                  |  
|Depreciation charge for the year                                |  |  | (94                                       | ) |  |  | (38                         | ) |  |  | (134                            | ) |  |  | (45                                                 | ) |  |  | (84                                | ) |  |  | (43                                          | ) |  |  | (438               | )
|At June 30, 2015 net of accumulated depreciation and impairment |  |  | 150                                       |   |  |  | 93                          |   |  |  | 1,823                           |   |  |  | 57                                                  |   |  |  | 192                                |   |  |  | 41                                           |   |  |  | 2,356              |  
|                                                                |  |  |                                           |   |  |  |                             |   |  |  |                                 |   |  |  |                                                     |   |  |  |                                    |   |  |  |                                              |   |  |  |                    |  
|Year ended June 30, 2014                                        |  |  |                                           |   |  |  |                             |   |  |  |                                 |   |  |  |                                                     |   |  |  |                                    |   |  |  |                                              |   |  |  |                    |  
|At July 1, 2013 net of accumulated depreciation and impairment  |  |  | 304                                       |   |  |  | 13                          |   |  |  | 2,074                           |   |  |  | 127                                                 |   |  |  | 333                                |   |  |  | 109                                          |   |  |  | 2,960              |  
|Additions                                                       |  |  | 131                                       |   |  |  | —                           |   |  |  | —                               |   |  |  | 73                                                  |   |  |  | 167                                |   |  |  | 35                                           |   |  |  | 406                |  
|Disposals                                                       |  |  | (1                                        | ) |  |  | —                           |   |  |  | (26                             | ) |  |  | —                                                   |   |  |  | (67                                | ) |  |  | (10                                          | ) |  |  | (104               | )
|Transfers                                                       |  |  | —                                         |   |  |  | 5                           |   |  |  | —                               |   |  |  | —                                                   |   |  |  | (5                                 | ) |  |  | —                                            |   |  |  | —                  |  
|Depreciation charge for the year                                |  |  | (106                                      | ) |  |  | (13                         | ) |  |  | (136                            | ) |  |  | (40                                                 | ) |  |  | (92                                | ) |  |  | (33                                          | ) |  |  | (420               | )
|At June 30, 2014 net of accumulated depreciation and impairment |  |  | 328                                       |   |  |  | 5                           |   |  |  | 1,912                           |   |  |  | 160                                                 |   |  |  | 336                                |   |  |  | 101                                          |   |  |  | 2,842              |  





F-31









Notes







to the financial statements



| | 16. | Goodwill and intangible assets
| | --- | ------------------------------



Reconciliation of carrying amounts at the beginning and end of the







year



|                                                                |  |  | Develop- ment Costs  $’000 |   |  |  | Goodwill







$’000 |   |  |  | Total







$’000 |  
|--------------------------------------------------------------- |  |  | -------------------------- | - |  |  | --------------------- | - |  |  | ------------------ | -
|Year ended June 30, 2015                                        |  |  |                            |   |  |  |                       |   |  |  |                    |  
|At July 1, 2014 net of impairment                               |  |  | —                          |   |  |  | 7,666                 |   |  |  | 7,666              |  
|Additions through Business Combination 1                        |  |  | 260                        |   |  |  | 12,338                |   |  |  | 12,598             |  
|Impairment charge                                               |  |  | —                          |   |  |  | (6,200                | ) |  |  | (6,200             | )
|Amortisation                                                    |  |  | (48                        | ) |  |  | —                     |   |  |  | (48                | )
|At June 30, 2015 net of accumulated amortisation and impairment |  |  | 212                        |   |  |  | 13,804                |   |  |  | 14,016             |  
|                                                                |  |  |                            |   |  |  |                       |   |  |  |                    |  
|At June 30, 2015                                                |  |  |                            |   |  |  |                       |   |  |  |                    |  
|Cost (gross carrying amount)                                    |  |  | 350                        |   |  |  | 25,261                |   |  |  | 25,611             |  
|Accumulated amortisation                                        |  |  | (138                       | ) |  |  | (11,457               | ) |  |  | (11,595            | )
|Net carrying amount                                             |  |  | 212                        |   |  |  | 13,804                |   |  |  | 14,016             |  
|                                                                |  |  |                            |   |  |  |                       |   |  |  |                    |  
|Year ended June 30, 2014                                        |  |  |                            |   |  |  |                       |   |  |  |                    |  
|At July 1, 2013 net of impairment                               |  |  | —                          |   |  |  | 7,666                 |   |  |  | 7,666              |  
|At June 30, 2014 net of accumulated amortisation and impairment |  |  | —                          |   |  |  | 7,666                 |   |  |  | 7,666              |  
|                                                                |  |  |                            |   |  |  |                       |   |  |  |                    |  
|At June 30, 2014                                                |  |  |                            |   |  |  |                       |   |  |  |                    |  
|Cost (gross carrying amount)                                    |  |  | —                          |   |  |  | 19,123                |   |  |  | 19,123             |  
|Accumulated amortisation                                        |  |  | —                          |   |  |  | (11,457               | ) |  |  | (11,457            | )
|Net carrying amount                                             |  |  | —                          |   |  |  | 7,666                 |   |  |  | 7,666              |  





1Refer to Note 22 for the







details of business combinations.







Goodwill



Goodwill is allocated to the Group’s







cash-generating units (‘CGUs’) identified to the operating segments. A segment-level summary of the goodwill is presented







below:





|                      |  | Consolidated
|--------------------- |  | ------------
|                      |  |             
|                      |  |             
|Solar PV              |  |             
|Monitoring &          |  |             
|Performance Analytics |  |             
|Parmac                |  |             
|                      |  |             



The Group performs its impairment testing as







at 30 June each year or more frequently where there are indicators of impairment. In conducting this review of goodwill, the Group







has considered the results of two valuation approaches: 1) value-in-use calculations; and 2) the relationship between the Company’s







market capitalisation (based on the implied capitalisation from the most recent equity issues from January 2015 to the date of







this report) and its book value.



At 30 June 2015, an impairment charge of $6,200,000







was recorded against the Solar PV CGU goodwill based on the value in use calculations performed.





F-32







Notes







to the financial statements









| | 16. | Goodwill and intangible assets (continued)
| | --- | ------------------------------------------



Key assumptions used in value in use calculations

The recoverable amount of the CGUs based on







a value in use calculation uses cash flow projections as at 30 June of the reporting period based on financial budgets.



The calculation of value-in-use relies upon







the following assumptions:





|                       |  |  | Monitoring & Performance Analytics |   |  |  | Solar |   |  |  | Parmac |  
|---------------------- |  |  | ---------------------------------- | - |  |  | ----- | - |  |  | ------ | -
|Pre-tax discount rate  |  |  | 24.5                               | % |  |  | 24.5  | % |  |  | 24.5   | %
|Perpetuity growth rate |  |  | 3                                  | % |  |  | 0     | % |  |  | 3      | %



The calculation of value in use is most sensitive







to the following assumptions:



| | ● | earnings before interest, tax, depreciation & amortisation (EBITDA);
| | - | --------------------------------------------------------------------



| | ● | discount rates; and
| | - | -------------------



| | ● | growth rate used to extrapolate cash flows beyond the budget period.
| | - | --------------------------------------------------------------------



Earnings before interest, tax, depreciation







& amortisation (EBITDA) – EBITDA forecasts are based on projections for the forthcoming 2 year period, then extrapolated







for a further 3 years. The basis for these projections is the recent historical performance of the CGU’s adjusted for any







non-recurring revenue or cost items. This is then overlaid with the impact of changes to revenue streams, gross margins and cost







structures which have either now been put in place or are underway.



Discount rates - discount rates reflect







an estimate of the Group’s time value of money. This is the benchmark used by the Group to assess operating performance and







to evaluate future investment proposals. In determining appropriate discount rates, regard has been given to the weighted average







cost of capital of the entity as a whole. The business risks specific to each unit are reflected in their individual cash flow







estimates rather than the discount rate.



Growth rate estimates - these are based







on published industry research such as IbisWorld for Electricity Generation in the case of the Solar CGU and Industrial







Building Construction for Parmac and independent research publications for monitoring and performance analytics.



Sensitivity to changes in value-in-use assumptions



The implications of the key assumptions on







the recoverable amount are discussed below:



|Input         |  | Sensitivity Applied                  |  | Revised Goodwill Valuation 
|------------- |  | ------------------------------------ |  | ---------------------------
|              |  |                                      |  | Solar







PV







$000
|EBITDA        |  | 25% shortfall in EBITDA achievement  |  |                            
|Growth rate   |  | Long term growth rate of 0%          |  |                            
|Discount rate |  | 3% increase to discount rate applied |  |                            





F-33







Notes







to the financial statements







| | 17. | Trade and other payables
| | --- | ------------------------





|                            |  | Consolidated
|--------------------------- |  | ------------
|                            |  |             
|Current                     |  |             
|Trade payables              |  |             
|Accruals and other payables |  |             
|                            |  |             



Fair value



Due to the short-term nature of these payables,







their carrying value is assumed to approximate their fair value.



| | 18. | Interest-bearing loans and borrowings
| | --- | -------------------------------------





|                      |  | Note |    | Consolidated
|--------------------- |  | ---- | -- | ------------
|                      |  |      |    |             
|Current - secured     |  |      |    |             
|Other loans 1         |  |      |    |             
|Convertible notes 2   |  |      |    |             
|Finance leases        |  |      | 27 |             
|                      |  |      |    |             
|Current – unsecured   |  |      |    |             
|Other loans 3         |  |      |    |             
|                      |  |      |    |             
|Non-current – secured |  |      |    |             
|Finance leases        |  |      | 27 |             
|Preference shares4    |  |      |    |             
|                      |  |      |    |             



1 Other loans - secured



The other loans balance as at June 30, 2015







consists of two third-party loans, provided to subsidiaries within the Group.



An amount of $521,000 (US$360,000) is secured







by the borrower’s right, title and interest in and to all of the tangible and intangible property of Green Earth Developers







LLC. Interest is payable on this loan at the rate of 6% per annum. The loan is repayable on the tenth business day following receipt







of written notice from the lender of such a demand. As at the date of this report, no such demand had been received from the lender.





An amount of $708,000 (US$493,000) is secured







by the borrower’s right, title and interest to all its receivables. Interest is payable on this loan at 2% per month. The







loan is repayable on the tenth business day following receipt of written notice from the lender of such a demand. As at the date







of this report, no such demand had been received from the lender.



The other loans balance as at June 30, 2014







is secured by a 2nd ranking fixed and floating charge over all otherwise unencumbered assets of the Group. Interest was payable







on this loan at the penalty rate of 15%. On execution of the Deed of Company Arrangement on December 24, 2014 the loan balance







was fully extinguished.



2 Convertible notes

BlueNRGY issued 635 9.75% convertible notes







for US$6,350,000 ($6,756,000) in May 30, 2012 and August 2012, referred to as the Series 1 notes. The equity portion of the convertible







notes has been accounted for in equity. The maturity date of these notes was 36 months after the date of issue. The notes were







transferable by the note holders and were convertible into ordinary shares of the Company at the option of the holder. The conversion







price when issued was $15.90. The notes were secured by a first ranking fixed and floating charge over the assets of BlueNRGY,







subject to the priority liens previously granted under the trade finance facility.





F-34









Notes to the financial statements



| | 18. | Interest-bearing loans and borrowings (continued)
| | --- | -------------------------------------------------



In February 2013, the Company entered into







an amended and restated agreement with the secured convertible note holders. From an accounting point of view, this renegotiation







amounted to an extinguishment of the previously issued notes and the recognition of a new debt which resulted in an additional







expense of $1,168,000 that was recognised in profit or loss at June 30, 2013.



As a result of a default event at June 30,







2013, at maturity the notes became subject to a redemption premium equal to 20% of the principal which was reflected in the carrying







value of the notes at June 30, 2013.



On September 30, 2013 BlueNRGY issued 95 additional







Series 1 convertible notes with a total face value of US$950,000 ($1,010,000).



During the 2014 financial year a total of $6,190,000







reductions were made to the Series 1 convertible note balances as follows:



| | ● | cash repayment of $1,840,000 from the proceeds of the sale of Captech
| | - | ---------------------------------------------------------------------



| | ● | exchange of $2,135,000 of notes into Series A Preference Shares
| | - | ---------------------------------------------------------------



| | ● | exchange of notes with a face value and accrued interest and fees of $2,215,000 into ordinary shares







of the Company
| | - | --------------------------------------------------------------------------------------------------------------------------



On execution of the Deed of Company Arrangement







on December 24, 2014, the convertible notes were fully extinguished.



The convertible notes are presented on the balance sheet as follows:

|                                                                                            |  | Consolidated
|------------------------------------------------------------------------------------------- |  | ------------
|                                                                                            |  |             
|                                                                                            |  |             
|Face value of convertible note (equivalent to cash redemption amount)                       |  |             
|Derivative on convertible note (Conversion options and associated warrants) – at fair value |  |             
|Borrowing costs - amortised balance                                                         |  |             
|Carrying Value                                                                              |  |             





3 Other loans - unsecured

The other loans balances as at June 30, 2015







are unsecured, repayable on demand and interest free. As at the date of this report, no demand for repayment had been received







from the lender.



4Preference Shares



On execution of the Deed of Company Arrangement on December 24,







2015, two of the Group’s subsidiaries Parmac Air-Conditioning and Mechanical Services Pty Limited (Parmac) and Chatham Island







Wind Limited (CIWL) issued 3,600,000 US$1.00 non-voting, redeemable preference shares (‘RPS’). The RPS are convertible







in into Company Ordinary Shares whole or in part at any time after June 30, 2015 at a price of US$0.03785 per share and are restricted







to the extent that such conversion would result in any holder having more than 20% of the outstanding ordinary shares in the Company.







RPS will receive an annual dividend of 4% per annum payable on December 31 each year. If dividends cannot be paid in cash, further







RPS will be issued to satisfy the dividend amount. Subsidiary Preference Shares are redeemable by the Company, in whole or in part,







at the Company’s sole election. The holder of the RPS may, at its discretion, force redemption through the sale of Parmac







or CIWL if the RPS have not been converted or redeemed by that date. The RPS are classified as a liability on the Statement of







Financial Position as there exists an obligation for the issuer to deliver either cash or another financial asset to the holder







Fair values



With the exception of the convertible notes







in 2014, the carrying amount of the Group’s current and non-current borrowings approximates their fair values.



Risk exposures



Details of the Group’s exposure to risks







arising from the current and non-current borrowings relating to interest rate and foreign exchange risk are set out in Note 23.





F-35







Notes







to the financial statements







| | 19. | Provisions
| | --- | ----------



|                      |  | Consolidated
|--------------------- |  | ------------
|                      |  |             
|                      |  |             
|Current               |  |             
|Employee entitlements |  |             
|                      |  |             
|Non-current           |  |             
|Employee entitlements |  |             





| | 20. | Contributed equity
| | --- | ------------------





|                                                |  | Consolidated
|----------------------------------------------- |  | ------------
|                                                |  |             
|                                                |  |             
|Ordinary share capital, issued and fully paid   |  |             
|Class A Preferred shares, issued and fully paid |  |             
|Class B Preferred shares, issued and fully paid |  |             
|Value of conversion rights – convertible notes  |  |             
|                                                |  |             





F-36







Notes







to the financial statements





| | 20. | Contributed equity (continued)
| | --- | ------------------------------



|                                                |  | 2015 |                             | 2014
|----------------------------------------------- |  | ---- | --------------------------- | ----
|                                                |  |      | Number







    of shares |     
|Movement in ordinary shares                     |  |      |                             |     
|Balance at the beginning of the year            |  |      | 4,718,133                   |     
|Issue of shares under share purchase agreements |  |      | 65,323,647                  |     
|Issue as consideration or business combinations |  |      | 161,147,338                 |     
|Reorganisation – shares issued                  |  |      | 96,028,937                  |     
|Issue in exchange for debt or services          |  |      | 8,240,997                   |     
|Issue from conversion of preference A shares    |  |      | 587,500                     |     
|Issue from conversion of preference B shares    |  |      | 50,101,202                  |     
|Forfeiture on consolidation                     |  |      | —                           |     
|Reorganisation – shares not yet issued          |  |      | 23,778,071                  |     
|Transaction costs                               |  |      | —                           |     
|Balance at the end of the year                  |  |      | 409,925,825                 |     
|                                                |  |      |                             |     
|Movement in preference A shares on issue        |  |      |                             |     
|Balance at the beginning of the year            |  |      | 435                         |     
|Issue of preference A shares                    |  |      | —                           |     
|Conversion to ordinary shares                   |  |      | (235                        | )   
|Conversion to preference B shares               |  |      | (200                        | )   
|Balance at the end of the year                  |  |      | —                           |     
|                                                |  |      |                             |     
|Movement in preference B shares on issue        |  |      |                             |     
|Balance at the beginning of the year            |  |      | —                           |     
|Issue of preference B shares                    |  |      | 4,285                       |     
|Conversion from preference A shares             |  |      | 200                         |     
|Conversion to ordinary shares                   |  |      | (2,484                      | )   
|Dividends reinvested                            |  |      | 99                          |     
|Forfeiture on Administration                    |  |      | (1,500                      | )   
|Balance at the end of the year                  |  |      | 600                         |     
|                                                |  |      |                             |     
|Movements in Convertible notes                  |  |      |                             |     
|Balance at beginning of the year                |  |      | —                           |     
|Cancellation of convertible note                |  |      | —                           |     
|Balance at the end of the year                  |  |      | —                           |     



Terms and conditions of contributed equity



Ordinary shares







have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from







the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Covenants contained within







the Preferred Shares on issue prevent BlueNRGY Group Limited from making dividend payments without the prior approval of the Preference







Shareholders.



Ordinary shares entitle their







holder to one vote, either in person or by proxy, at a meeting of the Company.



Class A Preferred Shares

Class A Preferred Shares have







a liquidation preference over the Company’s Ordinary shares, are non-voting (except with respect to any Class A Preferred







Stock matters) and are convertible at any time into Ordinary shares, in whole or in part, at each holder’s option. The number







of Ordinary shares into which each Class A Preferred Share is convertible is determined by dividing the face value of each Class







A Preferred Share by US$4.00. There are no dividend rights attached to the Class A Preferred Shares. The Class A Preferred Shares







are redeemable by the Company, in whole or in part, at the Company’s sole election.





F-37







Notes to the financial statements



| | 20. | Contributed







                                         equity (continued)
| | --- | ------------------------------------------------------------------------------



Class







B Preferred Shares

Class







B Preferred Shares have a liquidation preference over the Company’s Ordinary shares, are non-voting (except with respect







to any Class B Preferred Stock matters) and are convertible at any time into Ordinary shares, in whole or in part, at each holder’s







option. The number of Ordinary shares into which each Class B Preferred Share is convertible is determined by dividing the face







value of each Class B Preferred Share plus accrued but unpaid dividends by US$0.05. Class B Preferred Shares have a right to receive







dividends on March 31, June 30, September 30 and December 31 each year at an annual rate calculated on the face value of 8% from







the date of issuance through January 31, 2015, after which date no dividends shall accrue. Dividends may be paid, at the Company’s







option, in cash or ordinary shares. The Class B Preferred Shares are redeemable by the Company, in whole or in part, at the Company’s







sole election.



Unissued







Ordinary Shares

Subsequent







to balance date these Ordinary Shares have been issued.



Convertible







Notes

Refer







Note 18.



Share







options

Options







over ordinary shares: The following options (including conversion rights on convertible notes) to purchasefully paid ordinary shares in the Company were outstanding at June 30:



|Grant







Date |                                   | Expiry Date |  | ExercisePrice ($) |          | Balance at beginning of the yearNo. |  | Granted during the yearNo. |       | Exercised during the yearNo. |  | Forfeited during the yearNo. |         | Vested and exercisable at end of the yearNo.
|----------------- | --------------------------------- | ----------- |  | ----------------- | -------- | ----------------------------------- |  | -------------------------- | ----- | ---------------------------- |  | ---------------------------- | ------- | --------------------------------------------
|                  | 2015                              |             |  |                   |          |                                     |  |                            |       |                              |  |                              |         |                                             
|                  | 01/11/11                          |             |  |                   | 31/12/14 |                                     |  |                            | 75.00 |                              |  |                              | 1,167   |                                             
|                  | 28/05/12                          |             |  |                   | 28/05/15 |                                     |  |                            | 8.25  |                              |  |                              | 66,667  |                                             
|                  | 31/0.5/12                         |             |  |                   | 30/05/17 |                                     |  |                            | 3.90  |                              |  |                              | 117,705 |                                             
|                  | 12/12/12                          |             |  |                   | 12/12/17 |                                     |  |                            | 15.90 |                              |  |                              | 3,930   |                                             
|                  | 12/12/12                          |             |  |                   | 12/12/17 |                                     |  |                            | 3.902 |                              |  |                              | 11,792  |                                             
|                  | 30/12/12                          |             |  |                   | 30/12/17 |                                     |  |                            | 15.90 |                              |  |                              | 43,164  |                                             
|                  | 13/02/13                          |             |  |                   | 30/05/17 |                                     |  |                            | 3.90  |                              |  |                              | 153,939 |                                             
|                  | 18/06/14                          |             |  |                   | 15/12/19 |                                     |  |                            | 5.34  |                              |  |                              | 72,400  |                                             
|                  | Total                             |             |  |                   |          |                                     |  |                            |       |                              |  |                              | 470,764 |                                             
|                  | Weighted average exercise price $ |             |  |                   |          |                                     |  | 6.11                       |       |                              |  | —                            |         |                                             



Share







options (continued)

|Grant Date |          | Expiry Date |  | Exercise Price ($) |          | Balance at beginning of the yearNo. |  | Granted during the yearNo. |       | Exercised during the yearNo. |  | Forfeited during the yearNo. |         | Vested and exercisable at end of the yearNo.
|---------- | -------- | ----------- |  | ------------------ | -------- | ----------------------------------- |  | -------------------------- | ----- | ---------------------------- |  | ---------------------------- | ------- | --------------------------------------------
|           | 2014     |             |  |                    |          |                                     |  |                            |       |                              |  |                              |         |                                             
|           | 28/11/08 |             |  |                    | 27/11/13 |                                     |  |                            | 60.00 |                              |  |                              | 30,667  |                                             
|           | 21/12/10 |             |  |                    | 19/12/13 |                                     |  |                            | 60.00 |                              |  |                              | 40,000  |                                             
|           | 01/11/11 |             |  |                    | 31/12/14 |                                     |  |                            | 75.00 |                              |  |                              | 1,167   |                                             
|           | 28/05/12 |             |  |                    | 28/05/15 |                                     |  |                            | 8.251 |                              |  |                              | 66,667  |                                             
|           | 31/05/12 |             |  |                    | 30/05/17 |                                     |  |                            | 3.90  |                              |  |                              | 117,705 |                                             
|           | 12/12/12 |             |  |                    | 12/12/17 |                                     |  |                            | 15.90 |                              |  |                              | 3,930   |                                             
|           | 12/12/12 |             |  |                    | 12/12/17 |                                     |  |                            | 3.902 |                              |  |                              | 11,792  |                                             
|           | 30/12/12 | /           |  |                    | 30/12/17 |                                     |  |                            | 15.90 |                              |  |                              | 43,164  |                                             
|           | 13/02/13 |             |  |                    | 30/05/17 |                                     |  |                            | 3.90  |                              |  |                              | 153,939 |                                             
|           | 18/06/14 |             |  |                    | 15/12/19 |                                     |  |                            | 5.34  |                              |  |                              | —       |                                             
|           | Total    |             |  |                    |          |                                     |  |                            |       |                              |  |                              | 469,031 |                                             
|           |          |             |  |                    |          |                                     |  |                            |       |                              |  |                              | 14.35   |                                             





F-38







Notes to the financial statements



| | 20. | Contributed







                                         equity (continued)
| | --- | ------------------------------------------------------------------------------



1These options were repriced down from $15.90 to $8.25 following the restructuring of the series 1 convertible notes.



2These options contain a feature whereby their exercise price is reduced to match the price of any subsequent equity issues







at a lower price than their exercise price. During the year, 117,705 options were repriced down from $15.90 to $8.25 and subsequently







from $8.25 to $3.90. 153,939 options were repriced down from $8.25 to $3.90.



Capital







management

When







managing capital, management’s objective is to ensure that the entity continues as a going concern as well as to maintain







optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that







ensures the lowest cost of capital available to the entity.



The







Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.



Management







adjusts the capital structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly







changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new







shares or sell assets to reduce debt. As at June 30, 2015, the company had negative net equity.



| | 21. | Reserves
| | --- | --------







|                                                                           |  | Consolidated                       
|-------------------------------------------------------------------------- |  | -----------------------------------
|                                                                           |  | Share options reserve







 $’000
|At July 1, 2014                                                            |  |                                    
|Current year translation                                                   |  |                                    
|Transfer to Retained profits (Accumulated losses) on expiration of options |  |                                    
|At June 30, 2015                                                           |  |                                    
|                                                                           |  |                                    
|At July 1, 2013 (restated)                                                 |  |                                    
|Share based payments - borrowing & underwriting agreements                 |  |                                    
|Impairment of available for sale asset                                     |  |                                    
|Current year translation                                                   |  |                                    
|At June 30, 2014                                                           |  |                                    



Share







options reserve

The







share options reserve is used to record the value of share based payments provided to employees and directors as part of their







remuneration and options granted as part of borrowing agreements. No options were granted during 2015 (2014: 72,400 options as







remuneration to underwriters). The reserve also records the re-pricing of options previously issued. Refer Note 20.



Available-for-sale







reserve

Changes







in the fair value and exchange differences arising on translation of investments, such as equities, classified as available for







sale financial assets are recognised in other comprehensive income, and accumulated in a separate reserve within equity. Amounts







are reclassified to profit or loss when the associated assets are sold or impaired.



Translation







reserve

Exchange







differences arising on translation of a foreign controlled entity are recognised in other comprehensive income as described in







Note 2(g) and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the







net investment is disposed of.





F-39







Notes



to the financial statements



| | 22. | Business







                                         Combinations
| | --- | ---------------------------------------------------------------------



|(a) | Acquisition of







    Green Earth Developers LLC (GED)
|--- | ----------------------------------------------------------



On







July 7 2014, the Company completed the acquisition of 100% of shares issued by Green Earth Developers LLC (“GED”)







through a wholly owned US subsidiary CBD Acquisition Holdings Inc. GED is US based and is recognised for delivering high-quality,







turnkey renewable energy projects, with a focus on large commercial and utility-scale solar projects. GED forms part of the Solar







CGU.



Details







of purchase consideration, net liability acquired and goodwill at acquisition date are as follows:



|Purchase consideration                 |  | Quantity |           |       | Price |  |                    | Total |  |                     | Total      |  
|-------------------------------------- |  | -------- | --------- | ----- | ----- |  | ------------------ | ----- |  | ------------------- | ---------- | -
|                                       |  |          |           | (US$) |       |  | $’000







(US$) |       |  | $’000







(AUD$) |           
|                                       |  |          |           |       |       |  |                    |      
|Cash                                   |  |          |           |       |       |  |                    |       |  |                     | 1,500      |  
|Shares – restricted                    |  |          | 416,666   |       |       |  | 3.35               |       |  |                     | 1,396      |  
|Total purchase consideration           |  |          |           |       |       |  |                    |       |  |                     | 2,896      |  
|                                       |  |          |           |       |       |  |                    |       |  |                     |            |  
|Assets and liabilities acquired        |  |          | Cost      |       |       |  |                    |       |  |                     | Fair value |  
|                                       |  |          | $’000 US$ |       |       |  |                    |       |  |                     | $’000 US$  |  
|Cash & cash equivalents                |  |          | 255       |       |       |  |                    |       |  |                     | 255        |  
|Trade & trade receivables              |  |          | 345       |       |       |  |                    |       |  |                     | 345        |  
|Work in progress                       |  |          | 374       |       |       |  |                    |       |  |                     | 374        |  
|Fixed assets                           |  |          | 79        |       |       |  |                    |       |  |                     | 79         |  
|Other receivables                      |  |          | 144       |       |       |  |                    |       |  |                     | —          |  
|Total assets                           |  |          | 1,197     |       |       |  |                    |       |  |                     | 1,053      |  
|                                       |  |          |           |       |       |  |                    |       |  |                     |            |  
|Accounts payable                       |  |          | 1,499     |       |       |  |                    |       |  |                     | 1,499      |  
|Net liability                          |  |          | (302      | )     |       |  |                    |       |  |                     | (446       | )
|                                       |  |          |           |       |       |  |                    |       |  |                     |            |  
|Goodwill on acquisition                |  |          |           |       |       |  |                    |       |  |                     | 3,342      |  
|Translation adjustment at balance date |  |          |           |       |       |  |                    |       |  |                     |            |  
|Goodwill at balance date               |  |          |           |       |       |  |                    |       |  |                     |            |  



|(b) | Acquisition







    of BlueNRGY LLC
|--- | --------------------------------------



On







January 27, 2015 the Company completed the acquisition of 100% of shares issued by BlueNRGY LLC, a US based provider of performance







monitoring, data analytics and operations and maintenance services for renewable energy projects. BlueNRGY LLC forms part of the







Monitoring and Performance Management CGU.



Details







of purchase consideration, net liability acquired and goodwill at acquisition date are as follows:





F-40







Notes to







the financial statements



| | 22. | Business







                                         Combinations (continued)
| | --- | ---------------------------------------------------------------------------------



|(b) | Acquisition of BlueNRGY LLC (continued)
|--- | ---------------------------------------



|Purchase consideration                               |  | Quantity |             |       | Price |  |             | Total |  |              | Total      |  
|---------------------------------------------------- |  | -------- | ----------- | ----- | ----- |  | ----------- | ----- |  | ------------ | ---------- | -
|                                                     |  |          |             | (US$) |       |  | $’000 (US$) |       |  | $’000 (AUD$) |           
|                                                     |  |          |             |       |       |  |             |      
|Shares – restricted                                  |  |          | 154,173,964 |       |       |  | 0.03785     |       |  |              | 5,835      |  
|Total purchase consideration                         |  |          |             |       |       |  |             |       |  |              | 5,835      |  
|                                                     |  |          |             |       |       |  |             |       |  |              |            |  
|Assets and liabilities acquired                      |  |          | Cost        |       |       |  |             |       |  |              | Fair value |  
|                                                     |  |          | $’000 US$   |       |       |  |             |       |  |              | $’000 US$  |  
|Cash & cash equivalents                              |  |          | 54          |       |       |  |             |       |  |              | 54         |  
|Trade & other receivables                            |  |          | 49          |       |       |  |             |       |  |              | 49         |  
|Inventory                                            |  |          | 20          |       |       |  |             |       |  |              | 20         |  
|Development costs, patents and fixed assets          |  |          | 265         |       |       |  |             |       |  |              | 265        |  
|Other receivables                                    |  |          | 5           |       |       |  |             |       |  |              | 5          |  
|Total assets                                         |  |          | 393         |       |       |  |             |       |  |              | 393        |  
|                                                     |  |          |             |       |       |  |             |       |  |              |            |  
|Accounts payable                                     |  |          | 533         |       |       |  |             |       |  |              | 533        |  
|Borrowings                                           |  |          | 53          |       |       |  |             |       |  |              | 353        |  
|Net liability                                        |  |          | (193        | )     |       |  |             |       |  |              | (493       | )
|                                                     |  |          |             |       |       |  |             |       |  |              |            |  
|Goodwill on acquisition                              |  |          |             |       |       |  |             |       |  |              | 6,328      |  
|Translation adjustment at balance date               |  |          |             |       |       |  |             |       |  |              |            |  
|Goodwill at balance date                             |  |          |             |       |       |  |             |       |  |              |            |  
|Total Goodwill at balance date for acquired entities |  |          |             |       |       |  |             |       |  |              |            |  



| | 23. | Financial







                                         risk management objectives and policies
| | --- | -------------------------------------------------------------------------------------------------



The







Group’s principal financial instruments comprise receivables, payables, loans, convertible notes, finance leases, available-for-sale







investments and cash and short-term deposits.



Risk







exposures and responses



The







Group manages its exposure to key financial risks in accordance with the Group’s financial risk management policy. The objective







of the policy is to support the delivery of the Group’s financial targets whilst protecting future financial security.



The







main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, price







risk, and liquidity risk. Primary responsibility for identification and control of financial risks rests with the Audit Committee







under the authority of the Board. The Board reviews and agrees policies for managing each of the risks identified below.



| | (a) | Interest







                                         rate risk
| | --- | ------------------------------------------------------------------



The







Group’s main interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Group to cash flow







interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk only if the borrowings







are carried at fair value, which is not the Group’s policy. There were no variable rate borrowings in 2015 and 2014.



At







reporting date, the Group had the following net exposure to Australian variable interest rate risk:



|                          |  | Consolidated
|------------------------- |  | ------------
|                          |  | 2015 $’000  
|Cash and cash equivalents |  |             





F-41







Notes to







the financial statements



| | 23. | Financial







                                         risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------------------------------------------------------



The







Group’s policy is to manage its finance costs using a mix of fixed and variable rate debt. At June 30, 2015, the Group had







borrowings of $7,000,000 (2014: $12,853,000). Where applicable, borrowings which attract interest do so at a fixed interest rate.







The Group constantly analyses its interest rate exposure. Within this analysis, consideration is given to potential renewals of







existing positions, alternative financing, and the mix of fixed and variable interest rates. The Group’s fixed rate borrowings







comprising the other loans and the convertible notes are carried at amortised cost.



Given







the levels of cash holdings in both 2015 and 2014, a 1% movement in interest rates, with all other variables held constant, would







have an immaterial impact



| | (b) | Foreign







                                         currency risk
| | --- | ---------------------------------------------------------------------

Foreign







currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes







in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the







Group’s operating activities, borrowings, and financial assets.



| | (b) | Foreign currency risk (continued)
| | --- | ---------------------------------

The







Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars was as follows:



|                            |  | USD







$’000 |        |   | GBP $’000 |  |     | EUR $’000 |  |  | NZD $’000 |   |  | AUD $’000 |     |   | Total $’000 | 
|--------------------------- |  | ---------------- | ------ | - | --------- |  | --- | --------- |  |  | --------- | - |  | --------- | --- | - | ----------- | 
|2015                        |  |                  |        |   |           |  |     |           |  |  |           |   |  |           |     |   |             | 
|Cash and cash equivalents   |  |                  | 142    |   |           |  | 36  |           |  |  | —         |   |  |           | —   |   |             | 
|Trade and other receivables |  |                  | 68     |   |           |  | —   |           |  |  | 2         |   |  |           | —   |   |             | 
|Trade and other payables    |  |                  | (2,456 | ) |           |  | 62  |           |  |  | (59       | ) |  |           | (91 | ) |             | 
|Borrowings                  |  |                  | (6,767 | ) |           |  | —   |           |  |  | —         |   |  |           | —   |   |             | 
|                            |  |                  |        |   |           |  |     |           |  |  |           |   |  |           |     |   |             | 
|2014                        |  |                  |        |   |           |  |     |           |  |  |           |   |  |           |     |   |             | 
|Cash and cash equivalents   |  |                  | 1,134  |   |           |  | 82  |           |  |  | 2         |   |  |           | —   |   |             | 
|Trade and other receivables |  |                  | —      |   |           |  | —   |           |  |  | —         |   |  |           | 58  |   |             | 
|Financial assets            |  |                  | 39     |   |           |  | —   |           |  |  | —         |   |  |           | —   |   |             | 
|Trade and other payables    |  |                  | (782   | ) |           |  | (14 | )         |  |  | (825      | ) |  |           | (42 | ) |             | 
|Borrowings                  |  |                  | (4,489 | ) |           |  | —   |           |  |  | —         |   |  |           | —   |   |             | 



Foreign currency sensitivity

The







following tables demonstrate the sensitivity to a reasonably possible change in the US dollar, the British pound and the Euro







against the AUD exchange rate, with all other variables held constant. The impact on the Group’s profit before tax is due







to changes in the fair value of monetary assets and liabilities. The Group’s exposure to foreign currency changes for all







other currencies is not material.



| |      |                |  | USD   |                             | GBP |       | EUR             
| | ---- | -------------- |  | ----- | --------------------------- | --- | ----- | ----------------
| |      | Change in rate |  |       | Effect on profit before tax |     |       | Effect on equity
| |      |                |  | $’000 |                             |     | $’000 |                 
| | 2015 |                |  |       | +10                         | %   |       |                 
| |      |                |  |       | -10                         | %   |       |                 
| |      |                |  |       |                             |     |       |                 
| | 2014 |                |  |       | +10                         | %   |       |                 
| |      |                |  |       | -10                         | %   |       |                 



The







Group does not apply hedge accounting. At June 30, 2015 and 2014, no forward contracts were in place.



| | (c) | Price







                                         risk
| | --- | ----------------------------------------------------------



The







Group has no significant exposure to price risk.





F-42







Notes to







the financial statements



| | 23. | Financial







                                         risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------------------------------------------------------



| | (d) | Credit







                                         risk
| | --- | -----------------------------------------------------------



Credit







risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables.







The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to







the carrying amount of these instruments. Exposure at balance date is addressed in each applicable Note.



The







Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy







third parties, and as such collateral is not requested, nor is it the Group’s policy to securitise its trade and other receivables.







It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures







including an assessment of their independent credit rating, financial position, past experience and industry reputation. In addition,







receivable balances are monitored on an ongoing basis.



There







are no significant concentrations of credit risk within the Group and financial instruments are spread amongst a number of organisations







to minimise the risk of default of counterparties.



| | (e) | Liquidity







                                         risk
| | --- | --------------------------------------------------------------

The







Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of a variety of







equity and debt instruments.



The







table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities







for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.



The







remaining contractual maturities of the Group’s financial liabilities are:



|                         |  | Less than 6 months $’000 |        |  | 6-12 months $’000 |  |    | Between 1-2 years $’000 |  |  | Between 2-5 years $’000 |  |  | Total contractual cash flows $’000 |     |  | Carrying amount of liability $’000 | 
|------------------------ |  | ------------------------ | ------ |  | ----------------- |  | -- | ----------------------- |  |  | ----------------------- |  |  | ---------------------------------- | --- |  | ---------------------------------- | 
|2015                     |  |                          |        |  |                   |  |    |                         |  |  |                         |  |  |                                    |     |  |                                    | 
|Trade and other payables |  |                          | 5,551  |  |                   |  | —  |                         |  |  | —                       |  |  |                                    | —   |  |                                    | 
|Borrowings               |  |                          | 6,767  |  |                   |  | —  |                         |  |  | —                       |  |  |                                    | —   |  |                                    | 
|Finance leases           |  |                          | 45     |  |                   |  | 49 |                         |  |  | 82                      |  |  |                                    | 91  |  |                                    | 
|                         |  |                          |        |  |                   |  |    |                         |  |  |                         |  |  |                                    |     |  |                                    | 
|2014                     |  |                          |        |  |                   |  |    |                         |  |  |                         |  |  |                                    |     |  |                                    | 
|Trade and other payables |  |                          | 8,403  |  |                   |  | —  |                         |  |  | —                       |  |  |                                    | —   |  |                                    | 
|Borrowings               |  |                          | 12,059 |  |                   |  | —  |                         |  |  | —                       |  |  |                                    | —   |  |                                    | 
|Finance leases           |  |                          | 59     |  |                   |  | 50 |                         |  |  | 151                     |  |  |                                    | 170 |  |                                    | 



Fair







value



The







methods for estimating fair value are outlined in the relevant notes to the financial statements.



The







Group uses various methods in estimating the fair value of financial instruments. The methods comprise:



Level







1 – the fair value is calculated using quoted prices in active markets.

Level







2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset







or liability, either directly (as prices) or indirectly (derived from prices).

Level







3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.





F-43







Notes to







the financial statements



| | 23. | Financial







                                         risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------------------------------------------------------



| | (e) | Liquidity







                                         risk (continued)
| | --- | --------------------------------------------------------------------------



The fair







value of the financial instruments as well as the methods used to estimate the fair value are summarised in the table below.



|                                 |  | 2015    |   | 2014
|-------------------------------- |  | ------- | - | ----
|Consolidated                     |  | Level 1 |   |     
|                                 |  | $’000   |   |     
|Financial assets                 |  |         |   |     
|Available-for-sale investments   |  |         | — |     
|                                 |  |         |   |     
|Financial liabilities            |  |         |   |     
|Derivatives on convertible notes |  |         | — |     



Quoted







market price represents the fair value determined based on quoted prices on active markets as at the reporting date. If one or







more of the significant inputs is not based on observable market data, the instrument is included in level 3.This is the case







for the embedded derivatives for the convertible notes which are valued based on a valuation techniques which are disclosed in







Note 18 and for available for sale financial assets disclosed in Note 14



The







following table presents the changes in level 3 instruments for the years ended June 30, 2015 and 2014:



|                                                                          |  | Unlisted equity securities (asset) |         |   | Embedded derivatives on convertible notes (liabilities) | 
|------------------------------------------------------------------------- |  | ---------------------------------- | ------- | - | ------------------------------------------------------- | 
|                                                                          |  |                                    |         |  
|Opening balance July 1, 2013                                              |  |                                    | 10,815  |   |                                                         | 
|Impairment of available-for-sale investment in profit or loss             |  |                                    | (10,000 | ) |                                                         | 
|Impairment of available-for-sale investment in other comprehensive income |  |                                    | (800    | ) |                                                         | 
|Gains recognised in profit or loss                                        |  |                                    | 24      |   |                                                         | 
|Closing balance June 30, 2014                                             |  |                                    | 39      |   |                                                         | 
|(Losses) / Gains recognised in profit or loss                             |  |                                    | (39     | ) |                                                         | 
|Closing balance June 30, 2015                                             |  |                                    | —       |   |                                                         | 





| | 24. | Related







                                         party disclosures
| | --- | -------------------------------------------------------------------------



| | (a) | Subsidiaries
| | --- | ------------



The







consolidated financial statements include the financial statements of BlueNRGY Group Limited and the material subsidiaries listed







in the following table.



|                                                      |  | % Equity Interest       
|----------------------------------------------------- |  | ------------------------
|Name                                                  |  | Country of Incorporation
|                                                      |  |                         
|BlueNRGY Group Limited                                |  | Australia               
|Parmac Air Conditioning & Mechanical Services Pty Ltd |  | Australia               
|BlueNRGY Renewable Solutions Pty Ltd 1                |  | Australia               
|Westinghouse Solar Limited                            |  | United Kingdom          
|BlueNRGY LLC 2                                        |  | USA                     
|Green Earth Developers LLC 3                          |  | USA                     
|Chatham Island Wind Ltd                               |  | New Zealand             





F-44







Notes to







the financial statements



| | 24. | Related







                                         party disclosures (continued)
| | --- | -------------------------------------------------------------------------------------



1formerly known as Westinghouse Solar Pty Ltd

2acquired 27 January 2015

3acquired 1 July 2014



Transactions







between the Company and its subsidiaries principally arise from the granting of loans and the provision of management and administration







services. All transactions undertaken during the financial year with subsidiaries are eliminated in the consolidated financial







statements.



| | (b) | Ultimate







                                         parent
| | --- | ---------------------------------------------------------------



BlueNRGY







Group Limited is the ultimate Australian parent entity and the ultimate parent of the Group.



| | (c) | Key







                                         management personnel
| | --- | ------------------------------------------------------------------------



Details







relating to key management personnel, including transactions with key management personnel and remuneration paid, are included







in Note 25.



| | (d) | Terms







                                         and conditions of transactions with related parties
| | --- | ---------------------------------------------------------------------------------------------------------



Sales







to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normal commercial







terms unless otherwise stated.



| | 25. | Key







                                         management personnel
| | --- | ------------------------------------------------------------------------



| | (a) | Compensation







                                         for key management personnel
| | --- | -----------------------------------------------------------------------------------------



|                             |  | Consolidated 
|---------------------------- |  | -------------
|                             |  | 2015







$
|                             |  |              
|Short-term employee benefits |  |              
|Post-employment benefits     |  |              
|Total compensation           |  |              



| | (b) | Option







                                         holdings of key management personnel
| | --- | -------------------------------------------------------------------------------------------



|             |  |                   |        |  |                                                |  |       |                   |  |  |                  | Vested at June 30
|------------ |  | ----------------- | ------ |  | ---------------------------------------------- |  | ----- | ----------------- |  |  | ---------------- | -----------------
|             |  | Balance at July 1 |        |  | Granted







as







remune-







ration |  |       | Options exercised |  |  | Net other change |                  
|2015         |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|Executives   |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|J Greer      |  |                   | 1,000  |  |                                                |  | —     |                   |  |  | —                |                  
|             |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|2014         |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|Directors    |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|G. McGowan   |  |                   | 20,000 |  |                                                |  | —     |                   |  |  | —                |                  
|Sub-total    |  |                   | 20,000 |  |                                                |  | —     |                   |  |  | —                |                  
|             |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|Executives   |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|Y. Brodsky 1 |  |                   | 667    |  |                                                |  | —     |                   |  |  | —                |                  
|J. Greer     |  |                   | —      |  |                                                |  | 1,000 |                   |  |  | —                |                  
|Sub-total    |  |                   | 667    |  |                                                |  | 1,000 |                   |  |  | —                |                  
|             |  |                   |        |  |                                                |  |       |                   |  |  |                  |                  
|Total        |  |                   | 20,667 |  |                                                |  | 1,000 |                   |  |  | —                |                  



F-45







Notes to







the financial statements



| | 25. | Key







                                         management personnel (continued)
| | --- | ------------------------------------------------------------------------------------



|             |  | Vested at June 30
|------------ |  | -----------------
|             |  | Balance at July 1
|2013         |  |                  
|Directors    |  |                  
|M. Vaile2    |  |                  
|G. McGowan   |  |                  
|Sub-total    |  |                  
|             |  |                  
|Executives   |  |                  
|Y. Brodsky   |  |                  
|A. McClaren2 |  |                  
|E. Cywinski2 |  |                  
|Sub-total    |  |                  
|             |  |                  
|Total        |  |                  





1Changes







for Mr Brodsky in 2014 are in relation to the disposal of Captech.

2Changes







for M. Vaile, A. McClaren and E. Cywinski in 2013 relate to resignations.



| | (c) | Shareholdings







                                         of key management personnel
| | --- | -----------------------------------------------------------------------------------------



Shares held







in BlueNRGY Group Limited (number)



|                        |  | Balance at July 1 |         |  | Granted







as remuneration |  |   | On exercise of Options |  |  | Net other change |  |  | Balance at June 30 |            
|----------------------- |  | ----------------- | ------- |  | ------------------------------ |  | - | ---------------------- |  |  | ---------------- |  |  | ------------------ | -----------
|2015                    |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|Directors               |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|G. McGowan 1            |  |                   | 275,377 |  |                                |  | — |                        |  |  | —                |  |  |                    | (275,377   
|C. Botto                |  |                   | 14,947  |  |                                |  | — |                        |  |  | —                |  |  |                    | 1,560,272  
|W. Morro                |  |                   | 30,448  |  |                                |  | — |                        |  |  | —                |  |  |                    | 23,352,048 
|T. Barlow 1             |  |                   | 15,107  |  |                                |  | — |                        |  |  | —                |  |  |                    | (15,107    
|Y. Cotrel               |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 49,024,413 
|J.







    Chapple 2 |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | —          
|J







    Donohue 3  |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 1,560,889  
|                        |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|Executives              |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|J. Greer 1              |  |                   | 18,508  |  |                                |  | — |                        |  |  | —                |  |  |                    | (18,508    
|E. Cotrel               |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 25,130,955 
|R. Pillinger            |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 5,000,000  
|Total                   |  |                   | 354,387 |  |                                |  | — |                        |  |  | —                |  |  |                    | 105,319,585
|                        |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|2014                    |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|Directors               |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|G.







    McGowan4  |  |                   | 59,665  |  |                                |  | — |                        |  |  | —                |  |  |                    | 215,712    
|C. Botto                |  |                   | 1,667   |  |                                |  | — |                        |  |  | —                |  |  |                    | 13,280     
|W. Morro                |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 30,448     
|T. Barlow 5             |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 15,107     
|                        |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|Executives              |  |                   |         |  |                                |  |   |                        |  |  |                  |  |  |                    |            
|Y. Brodsky 6            |  |                   | 707     |  |                                |  | — |                        |  |  | —                |  |  |                    | (707       
|J. Greer 5              |  |                   | —       |  |                                |  | — |                        |  |  | —                |  |  |                    | 18,508     
|Total                   |  |                   | 62,039  |  |                                |  | — |                        |  |  |                  |  |  |                    | 292,348    





F-46







Notes to the financial statements



| | 25. | Key







                                         management personnel (continued)
| | --- | ------------------------------------------------------------------------------------



1Changes for Messrs McGowan, Barlow and Greer relate to their respective resignations.



2Mr. Chapple was appointed and resigned as a Director during the course of the year to June 30, 2015. At the time of his







resignation, Mr. Chapple held 850,000 ordinary shares in BlueNRGY directly and an entity in which he has a beneficial interest







held 15,852,048 ordinary shares.



3Excludes 7,722,918 ordinary shares held by an entity in which Mr. Donohue has a beneficial interest.



4Includes shares held directly by Mr. McGowan and shares held by entities in which Mr. McGowan has disclosed to the Company







that he holds an interest in.



5Changes for Mr. Barlow and Mr. Greer in 2014 relate to the issue of 15,107 and 18,508 ordinary shares in BlueNRGY in lieu







of outstanding director’s fees and services rendered respectively.



6Changes for Mr Brodsky in 2014 are in relation to the disposal of Captech.



| | (d) | Loans







                                         to key management personnel
| | --- | ---------------------------------------------------------------------------------



There







were no loans to directors or key management personnel during the year ending June 30, 2015 (2014: None).



| | (e) | Loans







                                         from key management personnel
| | --- | -----------------------------------------------------------------------------------



Related







Parties

During







the year ended June 30, 2015 an entity related to Mr. William Morro loaned US$284,000 to the Group. The loan, unanimously approved







by the Company’s Board, matures on July 15, 2016 and may be repaid earlier at the Company’s sole discretion. The loan







is convertible into Ordinary Shares at a conversion price of US$0.03785 per share and interest is payable at a rate of 15% per







annum. The loan may be assigned to another qualified party at the lender’s discretion. At June 30, 2015 interest of US$6,814







had accrued, but not been paid, on the loan.



In







2014 TRW Pty Limited, an entity in which a former Director, Mr. Gerry McGowan has a direct interest, loaned $500,000 to the Company.







The loan was repaid to TRW Pty Ltd on June 23, 2014. TRW Pty Ltd was paid a $25,000 transaction fee for the provision of this







loan. No interest was charged on the loan.



| | (f) | Transactions







                                         with Sligo Investments Limited
| | --- | -------------------------------------------------------------------------------------------



During







the year ended June 30, 2014 the Company entered into a series of transactions with Sligo Investments Limited. These transactions







were all conducted with Mr McGowan acting as the sole intermediary between the Company and Sligo. The Company and its Board of







Directors have been unable to determine the identity of the parties who either own or control Sligo and have also been unable







to determine the incorporation status of Sligo. Despite attempts to determine the facts surrounding Sligo, the Company cannot







be assured that it is not a related entity to Mr McGowan.



In







October 2013, Sligo loaned the Company $900,000 for working capital purposes under a loan agreement between Sligo and the Company.







An arrangement fee of $70,000 and interest of $6,410 was charged on the loan prior to its repayment in December 2013. Under the







sole direction of Mr McGowan, the repayment was made to TRW Pty Limited in satisfaction of this loan, as confirmed by documentation







received from Sligo subsequent to the repayment.



| | (g) | Transactions







                                         with Solon AG
| | --- | --------------------------------------------------------------------------



An







amount of $676,000 was paid to Solon AG in December 2013 which was solely initiated by Mr Gerry McGowan outside of the customary







approval processes of the Company. Mr McGowan represented to the Company that the payment was a deposit for a future order of







Solar PV panels from Solon, however the Company has been unable to confirm that such an order was placed or accepted. Despite







attempts to independently verify the nature of this transaction and the validity of the supporting documentation, the Company







has been unable to do so and cannot be assured that it was not made for the personal benefit of Mr McGowan. A payment was received







by the Company in October 2014 for $680,000 from a third party. Documentation was provided to the Company in relation to this







transaction which stated that this payment was consideration for the assignment of the alleged deposit by Solon to the party remitting







the payment. In absence of definitive information to the contrary the amount of $676,000 is recorded within Other Assets in the







Statement of Financial Position at June 30, 2014. The funds received in October 2014 were credited against Other Assets in the







absence of additional information to contradict this accounting treatment.



F-47







Notes to







the financial statements



| | 25. | Key management personnel (continued)
| | --- | ------------------------------------



| | (h) | Other transactions and balances with key management personnel and their related parties
| | --- | ---------------------------------------------------------------------------------------



During the current and previous financial year,







the Group transacted with related entities of directors, other than in their capacity as director, as follows:



| | (i) | In April 2015 one of the Group’s subsidiaries, Parmac, secured a line of credit with an affiliate







of William Morro for up to US$0.5 million. As of June 30, 2015, the facility was fully drawn. Refer Note 181
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | During the year ended June 30, 2015 the following Directors, or their related entities, subscribed







to purchase ordinary shares under a Securities Purchase Agreement as follows:
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Director             |  |  | Subscription Amount







US$ |  |  |  | Subscription Price Per Share US$ |  |  |  | Number of Ordinary Shares Issued | 
|-------------------- |  |  | ------------------------------ |  |  |  | -------------------------------- |  |  |  | -------------------------------- | 
|Mr Yves-Regis Cotrel |  |  | 450,000                        |  |  |  | 0.03785                          |  |  |  | 11,889,036                       | 
|Mr William Morro     |  |  | 600,000                        |  |  |  | 0.03785                          |  |  |  | 15,852,048                       | 



| | (iii) | The following Directors and Executives, or their related entities, who were shareholders in BlueNRGY







LLC at the time of its acquisition by the Company were issued ordinary shares under the Purchase Agreement as follows. This transaction







occurred before these individuals were appointed the Board of Directors or as Executives of the Company:
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Director                    |  |  | Number of Ordinary Shares Issued | 
|--------------------------- |  |  | -------------------------------- | 
|Mr Yves-Regis Cotrel (1)(2) |  |  | 36,285,377                       | 
|Mr Emmanuel Cotrel(2)       |  |  | 19,130,955                       | 
|Jack Donohue(3)             |  |  | 2,463,896                        | 



(1)Included in the shares issued to Mr.







Yves-Regis Cotrel were 7,965,997 shares issued in exchange for a loan of US$301,513 Mr. Cotrel had provided to BlueNRGY LLC prior







to its acquisition by the Company. The exchange price was US$0.03785 per share.

(2)Excludes 7,430,381 shares owned by Rymes







Investment Company in which both Yves-Regis Cotrel and Emmanuel Cotrel share an ownership.

(3)Includes allocation of 7,012,029 shares







owned by Coastalview Partners in which Mr. Donohue holds a 25% interest.



| | (iv) | The share purchase agreement with BlueNRGY LLC included provisions whereby 24,050,000 ordinary







shares were allocated upon consummation of the acquisition to company executives, key employees and advisors and nominated directors







(subsequently confirmed) as a performance incentive. Those allocations are as follows:
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Director or KMP   |  |  | Number of Ordinary







Shares Issued | 
|----------------- |  |  | --------------------------------------- | 
|Directors         |  |  |                                         | 
|William Morro     |  |  | 7,500,000                               | 
|Carlo Botto       |  |  | 1,500,000                               | 
|John Chapple      |  |  | 850,000                                 | 
|John Donohue      |  |  | 850,000                                 | 
|Yves-Regis Cotrel |  |  | 850,000                                 | 
|                  |  |  |                                         | 
|KMP               |  |  |                                         | 
|Richard Pillinger |  |  | 5,000,000                               | 
|Emmanuel Cotrel   |  |  | 6,000,000                               | 



F-48







Notes to







the financial statements





| | 25. | Key management personnel (continued)
| | --- | ------------------------------------



| | (v) | During the financial year ending June 30, 2015 TRW Holdings Pty Ltd, an entity in which Mr Gerry







McGowan has a direct interest, received payments for executive services provided by Mr. McGowan and for reimbursement of travel







expenses and other operating disbursements incurred on behalf of the company. The total amount paid or payable to TRW Holdings







Pty Ltd including GST for services other than the services of Mr. McGowan acting as Managing Director was $121,300 (2014: $560,920).







All the payments made in 2015 and $346,965 of the payments made in 2014 were made outside of the Company’s customary approval







processes and were purported by Mr McGowan to be for reimbursement of costs incurred on behalf of the company paid by TRW Holdings







Pty Ltd. The Company has not been provided with adequate documentation by Mr McGowan or TRW Holdings Pty Limited to determine whether







or not these costs represent bona fide costs incurred on behalf of the Company. These payments have been recognised as an expense







in profit or loss for the year ended June 30, 2014.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vi) | During the year ended June 30, 2014 a payment deferral and debt forgiveness agreement required







that a creditor balance be assigned to TRW Holdings Pty Ltd, under the tri-party arrangement with the creditor and TRW Holdings.







TRW Holdings neither gained nor lost from the transaction and the Company made all payments that were obligated to be made under







that agreement to satisfy the original creditor claim in full. The Company received a Deed of Release and Forgiveness for the full







amount of this debt from TRW Holdings Pty Ltd dated as of December 20, 2013.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vii) | During the year ended June 30, 2014 the Company paid Pitt Capital Partners Limited, an entity in







which a former director, Todd Barlow, has a direct interest, fees for corporate services of $180,290.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (viii) | During the year ended June 30, 2014 CapTech paid Brodpower Pty Ltd A$58,025 for contract maintenance







and repair services. Mr Yuri Brodsky was the Managing Director of CapTech prior to its sale and had an ownership interest in Brodpower







Pty Ltd.
| | ------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-49







Notes to







the financial statements



| | 26. | Share-based payments
| | --- | --------------------



| | (a) | Recognised share-based payment expenses
| | --- | ---------------------------------------



The expense relating to options is shown in







the table below:



|                                                                                          |  | Consolidated
|----------------------------------------------------------------------------------------- |  | ------------
|                                                                                          |  |             
|                                                                                          |  |             
|Expense







    arising from equity-settled share-based payment financing transactions |  |             





| | (b) | Types of share-based payments
| | --- | -----------------------------



There were no options issued during the year







ended June 30, 2015. The options issued during the year ended June 30, 2014 relate to options/warrants that have been issued as







part of the remuneration to underwriters during the Group’s first capital raise on Nasdaq. 72,400 options with an exercise







price of $US5.00 were issued. The weighted average remaining contractual life of issued options outstanding at year-end was 3.2







years.



| | (c) | Summaries of options granted as share based payments
| | --- | ----------------------------------------------------



The following table illustrates the number







(“No.”) and weighted average exercise prices (“WAEP”) of, and movements in, share options issued during







the year:



|                                                    |  | 2015







    No. |         |   |  | 2015







    WAEP







    $ |      |  |  | 2014







    







    No. |         |   |  | 2014







    WAEP







    $ |      
|--------------------------------------------------- |  | ------------------- | ------- | - |  | --------------------------------- | ---- |  |  | ------------------------------- | ------- | - |  | --------------------------------- | -----
|                                                    |  |                     |         |   |  |                                   |      | 
|Outstanding







    at the beginning of the year |  |                     | 316,824 |   |  |                                   | 7.19 |  |  |                                 | 315,091 |   |  |                                   | 19.46
|Granted







    during the year 1                |  |                     | —       |   |  |                                   | —    |  |  |                                 | 72,400  |   |  |                                   | 5.34 
|Expired







    during the year                  |  |                     | (67,834 | ) |  |                                   | 9.40 |  |  |                                 | (70,667 | ) |  |                                   | 60.00
|Outstanding







    at the end of the year       |  |                     | 248,990 |   |  |                                   | 6.59 |  |  |                                 | 316,824 |   |  |                                   | 7.19 





| | (d) | Option pricing model
| | --- | --------------------



The fair value of the equity-settled share







options granted for the year ended June 30, 2014 were estimated as at the date of grant using a binomial model taking into account







the terms and conditions upon which the options were granted. The fair value was derived from the binomial model using the closing







share price of BlueNRGY Group Limited ordinary shares on grant date, Australian Government Long-term bond interest rates as published







by the Reserve Bank of Australia as a proxy for the risk-free interest rate, having regard for the bond maturity that is most closely







aligned to the period of time remaining until the options expiry date, and the option exercise prices and quantities as noted above.



The model inputs for options granted during







the year ended June 30, 2014 included:

|                                                  |  | As part of







remuneration







to underwriters
|------------------------------------------------- |  | -----------------------------------------------------
|                                                  |  |                                                      
|Number of options granted                         |  |                                                      
|Consideration for options granted                 |  |                                                      
|Exercise price                                    |  | $                                                    
|Grant date                                        |  |                                                      
|Expiry date                                       |  |                                                      
|Share price at grant date                         |  | $                                                    
|Expected price volatility of the Company’s shares |  |                                                      
|Expected dividend yield                           |  |                                                      
|Risk-free interest rate                           |  |                                                      



The expected price volatility is based on the historical five-year







volatility of the Company’s share price.



F-50









Notes to







the financial statements



| | 26. | Share-based payments (continued)
| | --- | --------------------------------



The model inputs for options granted during that year were:

|                                                  |  |   | Unsecuredloan, referNote 18 |   |  |   | Convertible notes, referNote 18 |   |  |   | Convertible notes, referNote 18 |  
|------------------------------------------------- |  | - | --------------------------- | - |  | - | ------------------------------- | - |  | - | ------------------------------- | -
|                                                  |  |   |                             |   |  |  
|Number of options granted                         |  |   | 11,793                      |   |  |   | 43,164                          |   |  |   | 3,931                           |  
|Consideration for options granted                 |  |   | Nil                         |   |  |   | Nil                             |   |  |   | Nil                             |  
|Exercise price                                    |  | $ | 15.90                       |   |  | $ | 15.90                           |   |  | $ | 15.90                           |  
|Grant date                                        |  |   | 24 Dec 2012                 |   |  |   | 30 Dec 12                       |   |  |   | 24 Dec 2012                     |  
|Expiry date                                       |  |   | 12 Dec 2017                 |   |  |   | 30 Dec 17                       |   |  |   | 12 Dec 2017                     |  
|Share price at grant date                         |  | $ | 6.00                        |   |  | $ | 6.00                            |   |  | $ | 6.00                            |  
|Expected price volatility of the Company’s shares |  |   | 131                         | % |  |   | 131                             | % |  |   | 131                             | %
|Expected dividend yield                           |  |   | 0                           | % |  |   | 0                               | % |  |   | 0                               | %
|Risk-free interest rate                           |  |   | 3.0                         | % |  |   | 3.0                             | % |  |   | 3.0                             | %



| | 27. | Commitments and Contingent Liabilities
| | --- | --------------------------------------



Operating lease commitments – Group







as lessee

Operating leases are entered into as a means







of acquiring access to office premises and office equipment. Rental payments are generally fixed, but with inflation escalation







clauses on which contingent rentals are determined. No purchase options exist in relation to operating leases and no operating







leases contain restrictions on financing or other leasing activities. A renewal option in connection with the office leases exists.



Future minimum rentals payable under non-cancellable







operating leases as at 30 June are as follows:

|                                                       |  | Consolidated
|------------------------------------------------------ |  | ------------
|                                                       |  |             
|                                                       |  |             
|Within







    one year                             |  |             
|After







    one year but not more than five years |  |             
|Total







    minimum lease payments                |  |             



Finance lease commitments - Group as lessee



The finance leases relate to the leasing of







motor vehicles. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments







are as follows:



|                                            |  | Consolidated
|------------------------------------------- |  | ------------
|                                            |  |             
|                                            |  |             
|Within one year                             |  |             
|After one year but not more than five years |  |             
|Total minimum lease payments                |  |             
|Less amounts representing finance charges   |  |             
|Present value of minimum lease payments     |  |             
|                                            |  |             
|Current liability                           |  |             
|Non-current liability                       |  |             
|Total                                       |  |             



Contingent Liabilities

In December 2014 a class action securities suit was filed
in a US federal court against BlueNGRY Group Limited (“BGL”, formerly CBD Energy Limited), various current and former
officers and directors, the underwriters of an equity raising conducted by the Group in 2014 and the previous auditors of the
Group. In August 2015, the Complaint was amended to include one of the Group’s continuing subsidiaries, CBD Energy (USA)
Limited. The Complaint is in relation to shares issued by the Group to the public in October 2014, and the lodgment and later
withdrawal of the financial reports for the years ended 30 June 2012 and 2013 signed by Directors on 2 November 2012 and 27 November
2013 respectively due to errors identified by Directors and the previous auditors. A claim has not been quantified in the Complaint.
The Complaint against BGL was extinguished pursuant to the terms of the DOCA (refer Note 5). CBD Energy (USA) Limited and the
relevant current and former Directors and Officers of BGL are covered by an insurance policy for such claims, however, the policy
includes an excess and a maximum insured amount. Further legal costs and any amount determined as being payable in relation to
the Complaint against CBD Energy (USA) Limited and the relevant current and former Directors and Officers of BGL, may need to
be funded in part or in whole by the Group.  The outcome of the potential action cannot be determined at this time, 
and a liability has not been recognised in these financial statements in relation to the Complaint.







F-51







Notes







to the financial statements



| | 28. | Events after the balance sheet date
| | --- | -----------------------------------



Transactions

On September 14, 2015 the Company formed a







new U.S. subsidiary that entered into a material definitive agreement pursuant to which it acquired, on September 16, 2015 (the







“Draker Transaction”) the monitoring platform, accounts receivable, inventory, plant, property and equipment and certain







other assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including the Draker name, trademark,







and all copyrights then owned by the Sellers. Immediately subsequent to the Draker Transaction, the Company’s acquisition







subsidiary changed its name to Draker Corporation and the names of the Sellers were changed to delete the Draker name. Draker Corporation







paid approximately US$2.24m to the sellers and assured the seller’s secured indebtedness of approximately US$0.18m.



Financing

In conjunction with the Draker Transaction, the Company issued 39,630,119







ordinary shares, issued Subsidiary Preferred Shares having a face value of $1.0 million and a conversion price of US$0.03785, provided







the holder of Subsidiary Preferred Shares an additional investment right expiring December 31, 2015 to purchase up to an additional







$1.0 million of Subsidiary Preferred Shares on the same terms, and issued warrants having a term of three years to acquire 26,420,080







ordinary shares at an exercise price of $0.056775 per share.



On October 10, 2015 the Board set the previously
approved share consolidation ratio at 80:1.



Listed status

On July 23, 2015 the Company was notified of







its delisting from the NASDAQ Stock exchange.



On September 9, 2015 the Company recommenced







trading on the OTC Market.



Board and Executive Changes

On July 31, 2015 Mr John F. Donohue resigned
from the Board of Directors and related Committees he had been appointed to.





F-52







Notes to







the financial statements



| | 29. | Parent entity information
| | --- | -------------------------



| | (a) | Summary financial information
| | --- | -----------------------------



The individual financial statements for the parent entity show
the following aggregate amounts:



|                                   |  |  | 2015$’000 |   |  |  | 2014 $’000 |  
|---------------------------------- |  |  | --------- | - |  |  | ---------- | -
|Current assets                     |  |  | 219       |   |  |  | 1,317      |  
|Total assets                       |  |  | 10,774    |   |  |  | 4,623      |  
|Current liabilities                |  |  | (2,526    | ) |  |  | (17,775    | )
|Total liabilities                  |  |  | (2,551    | ) |  |  | (27,030    | )
|Net assets/(liabilities)           |  |  | 8,223     |   |  |  | (22,407    | )
|                                   |  |  |           |   |  |  |            |  
|Issued capital                     |  |  | 145,119   |   |  |  | 125,540    |  
|Accumulated losses                 |  |  | (139,000  | ) |  |  | (151,283   | )
|Reserves                           |  |  | 2,104     |   |  |  | 3,336      |  
|Total shareholders’ equity         |  |  | 8,223     |   |  |  | (22,407    | )
|                                   |  |  |           |   |  |  |            |  
|Profit/(loss) of the parent entity |  |  | 12,539    |   |  |  | (26,262    | )



| | (b) | Guarantees entered into
                                         by the parent entity
| | --- | -------------------------------------------------------------------------------------



The parent entity provided a financial
guarantee to bond holders of Energy Bonds and Secured Energy Bonds for any amounts that remain outstanding on due payment dates.
This guarantee was extinguished on execution of the Deed of Company Arrangement on December 24, 2014.



| | (c) | Contractual commitments
                                         for the acquisition of property, plant or equipment
| | --- | --------------------------------------------------------------------------------------------------------------------



As at June 30, 2015, the parent entity
had no contractual commitments for the acquisition of property, plant or equipment (2014: Nil).





F-53







Notes to







the financial statements



| | 30. | Auditors’ remuneration
| | --- | ----------------------



The auditor of BlueNRGY Group Limited is HLB Mann Judd.



|                                                                                                                            |  | Consolidated
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------
|                                                                                                                            |  |             
|Amounts paid or payable to the Company’s auditors                                                                           |  |             
|- an
    audit or review of the financial statements of the entity (2014: for the years ended June 30, 2014, 2013 and 2012) |  |             



The following amounts were paid or payable to the previous auditor
of BlueNRGY Group Limited, PricewaterhouseCoopers.



|                                                                   |  | Consolidated
|------------------------------------------------------------------ |  | ------------
|                                                                   |  |             
|Amounts paid or payable to the Company’s auditors                  |  |             
|-
    an audit or review of the financial statements of the entity |  |             







F-54









ITEM  19. EXHIBITS





|ExhibitNumber |                         |                                                                                                                                                                               |      | Incorporated
    by Reference |         | Filed
    orFurnishedHerewith
|------------- | ----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----------------------------- | ------- | -----------------------------
|              | Exhibit
    Description |                                                                                                                                                                               | Form |                               | Exhibit |                              
|1.1           |                         | Constitution,
    as amended, dated December 20, 2000                                                                                                                         |      | 20-F                          |         | 1.1                          
|1.2           |                         | Certificate
    of Registration dated March 11, 2010.                                                                                                                         |      | 20-F                          |         | 1.2                          
|1.3           |                         | Certificate
    of Registration on Change of Name dated March 20, 2015.                                                                                                       |      | 20-F                          |         | 1.3                          
|4.1           |                         | CBD
    Energy Limited 2014 Equity Plan                                                                                                                                       |      | F-1/A                         |         | 10.25                        
|4.2           |                         | Form
    of Securities Purchase Agreement, dated as of July 25, 2014                                                                                                          |      | 6-K                           |         | 99.1                         
|4.3           |                         | Form
    of Warrant, dated as of July 25, 2014                                                                                                                                |      | 6-K                           |         | 99.2                         
|4.4           |                         | First
    Amendment to Securities Purchase Agreement, made as of August 19, 2014.                                                                                             |      | 6-K                           |         | 99.1                         
|4.5           |                         | Deed
    of Company Arrangement of CBD Energy Limited, dated December 24, 2014.                                                                                               |      | 6-K/A                         |         | 10.1                         
|4.6           |                         | Deed
    of Variation of the Deed of Company Arrangement of CBD Energy Limited, dated January 27, 2015.                                                                       |      | 6-K/A                         |         | 10.2                         
|4.7           |                         | Deed
    of Company Arrangement of Westinghouse Solar Pty Limited, dated December 24, 2014.                                                                                   |      | 6-K/A                         |         | 10.3                         
|4.8           |                         | Deed
    of Variation of the Deed of Company Arrangement of Westinghouse Solar Pty Limited, dated January 27, 2015.                                                           |      | 6-K/A                         |         | 10.4                         
|4.9           |                         | Amended
    and Restated Membership Interest Purchase Agreement, dated January 27, 2015                                                                                       |      | 6-K/A                         |         | 10.5                         
|4.10          |                         | Form
    of Subscription Agreement, dated January 27, 2015                                                                                                                    |      | 6-K/A                         |         | 10.6                         
|4.11          |                         | Rights
    and Preferences of CBD Series B Preferred Shares as amended January 27, 2015                                                                                       |      | 6-K/A                         |         | 10.7                         
|4.12          |                         | Acquisition
    Agreement dated September 16, 2015 between BlueD Acquisition Corporation (now known as Draker Corporation) and Draker, Inc.
    and Draker Laboratories, Inc. |      | 6-K                           |         | 4.1                          
|4.13          |                         | Form
    of Engineering, Procurement, and Construction Agreement between Panasonic Enterprise Solutions Company and Green Earth Developers                                    |      |                               |         |                              
|4.14          |                         | Exchange
    and Compensation Deferral Agreement with Emmanuel Cotrel, dated November 30, 2015.                                                                               |      |                               |         |                              
|4.15          |                         | Exchange
    and Compensation Deferral Agreement with William Morro, dated November 30, 2015.                                                                                 |      |                               |         |                              
|4.16          |                         | Unsecured
    Convertible Promissory Note with WHI Retirement Savings Plan Trust and WHIRSP – Columbus LLC, dated November 30, 2015
    (William Morro).                      |      |                               |         |                              
|4.17          |                         | Warrant
    held by ESOL, B.V. with Initial Exercise Date of December 31, 2015 (Draker Transaction).                                                                          |      |                               |         |                              
|8.1           |                         | For
    a list of all of our subsidiaries, see Item 4.C., Organization Structure.                                                                                             |      |                               |         |                              
|11.1          |                         | Code
    of Conduct and Ethics.                                                                                                                                               |      | 20-F                          |         | 11.1                         
|12.1          |                         | Certification
    of Principal Executive Officer pursuant to Rule 13a-14(a).                                                                                                  |      |                               |         |                              
|12.2          |                         | Certification
    of Principal Financial Officer pursuant to Rule 13a-14(a).                                                                                                  |      |                               |         |                              
|13.1*         |                         | Certification
    of Principal Executive Officer pursuant to 18 U. S. C. Section 1350.                                                                                        |      |                               |         |                              
|13.2*         |                         | Certification
    of Principal Financial Officer pursuant to 18 U. S. C. Section 1350.                                                                                        |      |                               |         |                              





* In accordance with SEC Release 33-8238, Exhibits 13.1 and
13.2 are being furnished and not filed.















SIGNATURES



The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign thisannual report on its behalf.





| |     | BlueNRGY Group Limited        
| | --- | ------------------------------
| |     |                               
| | By: | /s/ William Morro             
| |     | Name: William Morro           
| |     | Title: Managing Director      
| |     | (Principal Executive Officer) 
| |     |                               
| |     |                               
| | By: | /s/ Richard Pillinger         
| |     | Name: Richard Pillinger       
| |     | Title: Chief Financial Officer
| |     | (Principal Financial Officer) 





Date: December 9, 2015