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



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



For the fiscal year ended June 30,
2014



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 11
        32 Martin Place
        Sydney 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: +061-2-9037-1149

E-mail: rpillinger@cbdenergy.com.au

(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 |  | NASDAQ Capital Market                 
|---------------------------- |  | --------------------------------------
|(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, 2014, 4,718,133 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 ̈Nox



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 ̈Nox



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 ̈Nox



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 ̈Nox



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  filerx
|------------------------ | ------------------ | -----------------------



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 ̈ | OtherxAustralian Accounting Standards
|-------- |  | ------------------------------------------------------------------------------------------------------ | -------------------------------------



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 18x



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 ̈Nox













|FORWARD-LOOKING STATEMENTS |     
|-------------------------- | ----
|                           |     
|PART I                     | 1   
|                           |     
|                           | Item
|                           |     
|                           | Item
|                           |     
|                           | Item
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           | Item
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           | Item
|                           |     
|                           | Item
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           | Item
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     
|                           |     













| | Item | 7.   | Major Shareholders and Related Party Transactions          | 95 
| | ---- | ---- | ---------------------------------------------------------- | ---
| |      |      |                                                            |    
| |      | 7.A  | Major Shareholders                                         | 95 
| |      |      |                                                            |    
| |      | 7.B  | Related Party Transactions                                 | 95 
| |      |      |                                                            |    
| |      | 7.C  | Interests of Experts and Counsel                           | 99 
| |      |      |                                                            |    
| | Item | 8.   | Financial Information                                      | 99 
| |      |      |                                                            |    
| |      | 8.A  | Consolidated Statements and Other Financial Information    | 99 
| |      |      |                                                            |    
| |      | 8.B  | Significant Changes                                        | 100
| |      |      |                                                            |    
| | Item | 9.   | The Offer and Listing                                      | 104
| |      |      |                                                            |    
| |      | 9.A  | Offer and Listing Details                                  | 104
| |      |      |                                                            |    
| |      | 9.B  | Plan of Distribution                                       | 104
| |      |      |                                                            |    
| |      | 9.C  | Markets                                                    | 104
| |      |      |                                                            |    
| |      | 9.D  | Selling Shareholders                                       | 104
| |      |      |                                                            |    
| |      | 9.E  | Dilution                                                   | 104
| |      |      |                                                            |    
| |      | 9.F  | Expenses of the Issue                                      | 104
| |      |      |                                                            |    
| | Item | 10.  | Additional Information                                     | 104
| |      |      |                                                            |    
| |      | 10.A | Share Capital                                              | 104
| |      |      |                                                            |    
| |      | 10.B | Memorandum and Articles of Association                     | 104
| |      |      |                                                            |    
| |      | 10.C | Material Contracts                                         | 105
| |      |      |                                                            |    
| |      | 10.D | Exchange Controls                                          | 105
| |      |      |                                                            |    
| |      | 10.E | Taxation                                                   | 106
| |      |      |                                                            |    
| |      | 10.F | Dividends and Paying Agents                                | 112
| |      |      |                                                            |    
| |      | 10.G | Statement by Experts                                       | 113
| |      |      |                                                            |    
| |      | 10.H | Documents on Display                                       | 113
| |      |      |                                                            |    
| |      | 10.I | Subsidiary Information                                     | 113
| |      |      |                                                            |    
| | Item | 11.  | Quantitative and Qualitative Disclosures about Market Risk | 113
| |      |      |                                                            |    
| | Item | 12.  | Description of Securities Other than Equity Securities     | 114
| |      |      |                                                            |    
| |      | 12.A | Debt Securities                                            | 114
| |      |      |                                                            |    
| |      | 12.B | Warrants and Rights                                        | 114
| |      |      |                                                            |    
| |      | 12.C | Other Securities                                           | 114
| |      |      |                                                            |    
| |      | 12.D | American Depositary Shares                                 | 114













|PART II  | 113 
|-------- | ----
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item
|         |     
|PART III | 119 
|         |     
|         | Item
|         |     
|         | Item
|         |     
|         | Item











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 summary consolidated financial data as of June
30, 2014, 2013 and 2012 and for the three years ended June 30, 2014, 2013 and 2012 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                                        |  | 2014 $’000   |        
|                                                                  |  |              |        
|Revenues from continuing operations                               |  |              | 14,065 
|Other income                                                      |  |              | 3,793  
|Cost of raw materials, consumables used, and contractors          |  |              | (5,727 
|Employee benefit expenses                                         |  |              | (10,557
|Compliance & consultants                                          |  |              | (4,793 
|Advertising and marketing                                         |  |              | (2,468 
|Travel costs                                                      |  |              | (872   
|Occupancy expenses                                                |  |              | (915   
|Provision for impairment of receivables and bad debts written off |  |              | (75    
|Other expenses                                                    |  |              | (3,255 
|Share of net loss of associates                                   |  |              | -      
|Depreciation and amortisation expenses                            |  |              | (632   
|Finance costs                                                     |  |              | (5,061 
|Break fee from terminated acquisition                             |  |              | -      
|Impairment loss on available-for-sale financial assets            |  |              | (4     
|Impairment of financial assets and interest in joint ventures     |  |              | (10,015
|Impairment of intangible assets                                   |  |              | -      
|Loss from continuing operations before income tax                 |  |              | (26,516
|Income tax benefit/(expense)                                      |  |              | -      
|Net loss for the period from continuing operations                |  |              | (26,516
|                                                                  |  |              |        
|Profit/(loss) from discontinued operations                        |  |              | 1,086  
|                                                                  |  |              |        
|Net loss for the period                                           |  |              | (25,430
|                                                                  |  |              |        
|Other comprehensive income                                        |  |              |        
|Items that may be reclassified to profit or loss                  |  |              |        
|Changes in the fair value of available-for-sale financial assets  |  |              | (800   
|Exchange differences on translation of foreign operation          |  |              | (68    
|Other comprehensive income for the period, net of tax             |  |              | (868   
|Total comprehensive loss for the period                           |  |              | (26,298



|                                                                                                                     |  |  | Dollars   |   |  |  | Dollars   |   |  |  | Dollars   |  
|-------------------------------------------------------------------------------------------------------------------- |  |  | --------- | - |  |  | --------- | - |  |  | --------- | -
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |  |           |   |  |  |           |   |  |  |           |  
|Basic earnings per share                                                                                             |  |  | (13.57    | ) |  |  | (5.84     | ) |  |  | (34.06    | )
|Diluted earnings per share                                                                                           |  |  | (13.57    | ) |  |  | (5.84     | ) |  |  | (34.06    | )
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |  |           |   |  |  |           |   |  |  |           |  
|Basic earnings per share                                                                                             |  |  | (13.02    | ) |  |  | (5.27     | ) |  |  | (35.24    | )
|Diluted earnings per share                                                                                           |  |  | (13.02    | ) |  |  | (5.27     | ) |  |  | (35.24    | )
|                                                                                                                     |  |  |           |   |  |  |           |   |  |  |           |  
|Weighted average number of ordinary shares outstanding                                                               |  |  |           |   |  |  |           |   |  |  |           |  
|Basic                                                                                                                |  |  | 1,953,691 |   |  |  | 1,596,246 |   |  |  | 1,553,483 |  
|Diluted                                                                                                              |  |  | 1,953,691 |   |  |  | 1,596,246 |   |  |  | 1,553,483 |  



1







Consolidated Balance Sheet Data:



|                        |  | 2014 |         |   | 2013       |  |        | 2012       | 
|----------------------- |  | ---- | ------- | - | ---------- |  | ------ | ---------- | 
|Amounts in A$(000)      |  |      |         |   | (restated) |  |        | (restated) | 
|Current assets          |  |      | 6,812   |   |            |  | 8,176  |            | 
|Non-current assets      |  |      | 11,915  |   |            |  | 24,724 |            | 
|Total Assets            |  |      | 18,727  |   |            |  | 32,900 |            | 
|                        |  |      |         |   |            |  |        |            | 
|Current liabilities     |  |      | 38,020  |   |            |  | 41,949 |            | 
|Non-current liabilities |  |      | 378     |   |            |  | 391    |            | 
|Total liabilities       |  |      | 38,398  |   |            |  | 42,340 |            | 
|                        |  |      |         |   |            |  |        |            | 
|Shareholders’ equity    |  |      | (19,671 | ) |            |  | (9,440 | )          | 



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.



2







|A$1.00 =  US$ amount shown
|--------------------------
|Fiscal Year ended June 30,
|2010                      
|2011                      
|2012                      
|2013                      
|2014                      



|           |  | HighRate |        |  | LowRate | 
|---------- |  | -------- | ------ |  | ------- | 
|2014 Month |  |          |        |  |         | 
|November   |  |          | 0.8809 |  |         | 
|December   |  |          | 0.8500 |  |         | 
|           |  |          |        |  |         | 
|2015 Month |  |          |        |  |         | 
|January    |  |          | 0.8212 |  |         | 
|February   |  |          | 0.7875 |  |         | 
|March      |  |          | 0.7874 |  |         | 
|April      |  |          | 0.8011 |  |         | 



(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.



3







Risks Related to our Financial Condition



We experienced
operating losses in fiscal years 2013, 2014 and, are continuing to experience operating losses that 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 business
segments recorded a loss from operations and impairment of asset values for the fiscal years ended June 30, 2013 and June 30, 2014
totaling A$7.6 million and A$25.4, 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$37.5 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 4B), 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 in the development 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 business currently exceed our revenues and it is unknown 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 small-scale
solar business in Australia under our own brand and are making plans to do so in the USA. 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 and small-scale solar 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
residential and commercial solar 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.



4







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 small scale solar
business requires investment in marketing and advertising activities to generate the 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 three months. The large-scale
solar 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 that are being constructed under the 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 Remote Area Power Systems, or RAPS, segment involves substantial upfront investment in generating
assets with realization of cash flows and profit over time. Our now-discontinued wind business unit typically required us to make
significant cash investments over multiple years before realizing revenue or cash flow. We currently lack the capital and liquidity
to adequately fund all of these businesses. Additional cash will be needed to fund any growth. Consequently, we have not been able
to operate our small-scale solar business above break-even levels for more than two years. Our project activities, particularly
in the large-scale solar sector have been constrained, leading to losses that are ongoing and an inability to 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 any benefit for our efforts. In addition, even if we are able to successfully complete such acquisitions,
if we have misjudged the value to our 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 our 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.



Australian Accounting
Standards accounting principles, 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 our 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.



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.





Although our convertible
notes, installment notes and other liabilities payable by our corporate parent and many of our subsidiaries were extinguished pursuant
to the DOCA, as of April 30, 2015, we had total outstanding debt (excluding current trade balances and accruals) at our operating
subsidiaries of approximately A$1.1 million. At our corporate parent and operating subsidiaries where there is an excess of current
liabilities over current assets the excess is approximately A$2.1 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.



5







Our Convertible Notes
outstanding at the end of our fiscal years ending 2012 2013 and 2014 that remained outstanding upon commencement of the VA were
extinguished pursuant to the DOCA.



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.



6







Notwithstanding write-offs of goodwill and intangibles
in our 2012, 2013 and 2014 fiscal years and in conjunction with the effectiveness of the DOCA, we continue to have recorded substantial
goodwill and intangibles asset value as the result of prior acquisitions and goodwill and intangibles 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. For
the two fiscal years ended June 30, 2012, we recorded impairments of goodwill and intangibles of A$11.5 million.



Additional impairments of good will were
recognized in conjunction with the effectiveness of the DOCA, with the result that our assets were comprised of A$15.9 million
of goodwill and intangibles on our unaudited internal financial statements as of the Emergence Date. In keeping with our accounting
policies, the value of goodwill and intangibles will again be reviewed as of June 30, 2015, the end of our 2015 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.



7









Our residential
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 residential 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. 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 model (the “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 for 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 our 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 our company’s and customers’ requirements.
All of our executive managers, including William Morro - Executive Chairman and Managing Director, Richard Pillinger - Chief Financial
Officer 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 our 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.



8







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 projects
are generally not sold pursuant to long-term agreements with, but instead are sold on a one-time purchase-order basis.  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 purchase orders for solar PV 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 large-scale solar projects and the possibility that
we may fail to obtain new large-scale 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 PV solar 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 because the reliability of the cash flows from owners of large
installations is generally perceived by financing sources to not be as high and the project development risk is greater. 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.



9







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 could cause us to fail to meet these performance criteria, resulting in
unanticipated and severe revenue and earnings losses and financial penalties.  Such delays are often caused by 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, 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.





10







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 PV solar 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
PV solar systems). 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 have sold 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. Our estimated
costs of warranty for all previously sold products, including the Oelmaier products, was A$0.2 million and A$0.4 million for the
fiscal years ended June 30, 2014 and 2013, respectively. 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 sales for the
foreseeable future.



While our legal obligations
to address future warranty claims was extinguished under the DOCAs that defined our Reorganization Plan (refer to Item 4.A. under
the heading “Voluntary Administration and Deed of Company Arrangement”), market pressures may require us to
expend resources to address warranty claims from our legacy residential solar customer base if we are going to grow the scale of
that business in the Australia. 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
Australian residential business. 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 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 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 PV solar businesses or a loss of market
acceptance that could threaten the financial viability of this business segment altogether.



11







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. 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 (refer to Item 4.A. under the heading “Recent Acquisitions”. Such activities accounted for approximately
2% and 22% of our consolidated revenue in fiscal years ended June 30, 2014 and June 30, 2013, 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;                                                                                                 
| |   |                                                                                                                        
| | • | work stoppages or strikes;                                                                                             
| |   |                                                                                                                        
| | • | unexpected changes in regulatory requirements;                                                                         
| |   |                                                                                                                        
| | • | wage and price controls;                                                                                               



12







| | • | 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.



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.



13







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, our 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;
| | - | -----------------------------------------------------------------



| | · | 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;
| | - | --------------------------------



14









| | · | 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 (refer to Item 4.A. under the heading “Recent Acquisitions”).
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.



Our 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 turnover 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, (refer to Item 4.A. under the heading “Voluntary Administration
and Deed of Company Arrangement”) 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.



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.



15







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, 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.



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 our Company related to the Texas and New York Actions are extinguished pursuant to the DOCA (refer to Item 4.A.
under the heading “Voluntary Administration and Deed of Company Arrangement”), but litigation against our prior
and current officers and directors may continue, causing the Company 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.



16









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 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 registered independent 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 United States
Securities and Exchange Commission (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 our company and lead to a decline in the price of our registered equity securities.



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.



17









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.



Our 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 solar PV business in Europe, other than the United Kingdom where government policies
are still favorable. 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
consequently will experience a material adverse effect on our operations and sales and on our financial condition generally.



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 occurring and is likely to reduce the demand for our services.



Many U.S. states, including
California, Nevada, and New Jersey, 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 have been implemented that 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.
We expect it 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 our customers, resulting in significant
reductions in demand for our products and services, which may negatively impact our sales.



18









All sectors served
by our 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, our 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. Residential solar projects undertaken in the 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:



| | · | 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.



19







Our proprietary
monitoring business, which we believe to have great strategic importance for our Company, is in the first stages of commercialization
and if it does not function as planned or gain rapid 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 has now been deployed to a few institutional customers
on a trial basis. Initial trial and feedback has been positive, but it is too early to tell whether customer acceptance will lead
to contracts that will generate material near-term revenues. The roll-out of the system to a broad spectrum of users will require
that we hire additional personnel to 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 competition to provide monitoring services. 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 to those we expect 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.



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.



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.





20







Solar and wind
energy are, in some jurisdictions, more expensive sources of energy than the wholesale cost of conventional alternatives and a
drop or stability in the retail 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 solar power capabilities is primarily driven by the cost and return on investment
resulting from solar power systems. 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
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; 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 PV solar 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 PV solar, 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, if we re-launch a
residential business in the USA where 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.



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.



21







Our business
benefits from the declining cost of solar panels, 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 solar PV 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.



Public opposition
to development of solar and wind farms, particularly in the USA, 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 USA and Australia where land is plentiful, it could significantly diminish
project opportunities and our potential for growth.



22









Regulations
applicable to the U.S. market may exacerbate competitive pressures for PV solar 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 reduce pricing and profits. Our solar development and servicing
initiatives in the United States may not succeed or be profitable as a result.



In our PV solar
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 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, 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
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. 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.



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.







23







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 USA; 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 our 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 USA 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 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 USA 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 our 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. Our 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.
| | - | ----------------------------------------------------------------------



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.



24







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 our 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 our 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.



There has been
a trading halt on our ordinary shares since November 13, 2014 and there can be no assurance that we will maintain our listing on
the NASDAQ Capital Market.



On November 13, 2014,
NASDAQ halted trading in the shares of the Company at a last price of $0.90 pending receipt of additional information requested
by NASDAQ.



As previously disclosed
in a Report of Foreign Private Issuer on Form 6-K filed on December 2, 2014, the Company received a delisting determination letter
from NASDAQ’s Listing Qualifications Department on November 25, 2014. The Company appealed the delisting determination and
appeared with counsel at a hearing before an independent NASDAQ Hearings Panel (the “Panel”) on January 8, 2015.



On January 26, 2015,
the Company received a letter from the Panel granting the Company’s request for continued listing on the NASDAQ Capital Market.
In order to maintain its listing, the Company is required to meet a series of deadlines including filing this Report. There can
be no assurance that NASDAQ will allow the Company to maintain its listing on the NASDAQ Capital Market.



If we do not
maintain our listing on the NASDAQ Capital Market, our ordinary shares will again trade on the OTCBB. When our ordinary
shares were traded on the OTCBB from February 2014 to June 2014, our ordinary shares did not trade on many days and the
highest trading volume recorded in a single day was 2,100 shares. There are no assurances that a broader or more active
public trading market for our ordinary shares will develop or be sustained. At any time when our shares do not trade on a
national exchange, liquidity may be reduced and our stock price could decline.



25







As a foreign
private issuer, we follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements applicable
to U.S. issuers, affording less protection to holders of our ordinary shares.



As a foreign private
issuer, we follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements. 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 of directors 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.



In June 2015, we plan to effect a
reverse stock split in a range of 1-for80 to 1-for-150 which could adversely affect the market liquidity of our ordinary shares,
impair the value of your investment and harm our business.



There are a number
of risks associated with the reverse stock split that we plan to effect in June 2015, including that the reverse stock split may
not result in a sustained increase in the per share price of our ordinary shares. We cannot predict whether the reverse stock split
will increase the market price for our ordinary shares on a sustained basis. The history of similar stock split combinations for
companies in like circumstances is varied, and we cannot predict whether:



| | · | the market price per share of our ordinary shares after the reverse stock split will result in a sustained rise in proportion to the reduction in the number of shares of our ordinary shares outstanding before the reverse stock split, i.e., that the post-split market price of our ordinary shares will equal or exceed the pre-split price multiplied by the split ratio;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the reverse stock split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | the reverse stock split 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 remain in excess of the US$1.00 minimum bid price as required by NASDAQ; or
| | - | -----------------------------------------------------------------------------------------------------------



| | · | that we will otherwise meet the requirements of NASDAQ for continued inclusion for trading on the NASDAQ Capital Market.
| | - | ------------------------------------------------------------------------------------------------------------------------



In addition, the split
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 reverse stock splits. If we issue additional shares in the future, it will likely result in the dilution of our existing
shareholders.



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.



26







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, Mr. Y-R Cotrel, Mr. Morro, and Mr. Chapple and they collectively
control over 50% of our outstanding ordinary shares as of May 29, 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 our
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.



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



27







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 our 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.



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.



28







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 and on December 19, 1996 changed our name to Asia Pacific Infrastructure
Limited. On March 28, 2000 our company’s name was again changed to CBD Online Limited to better reflect a revised focus on
the provision of internet connectivity and related services in Australia. Our name was again changed to CBD Energy Limited on December
6, 2002 to reflect a reemphasis of our prior strategic focus on energy-related businesses, planned new initiatives to acquire installation
and service contractors delivering energy-efficient commercial-scale climate control systems, and discontinuance of our internet
business. We entered Voluntary Administration in Australia, or VA, on November 14, 2014 and our corporate organization and liabilities
were restructured pursuant to a deed of company arrangement, or DOCA. As further described below under the heading “Voluntary
Administration and Deed of Company Arrangement”. We emerged from VA on January 27, 2015, but retained a strategic focus
on delivering solutions for renewable energy generation and energy-efficient climate-control systems. On March 20, 2015 our Company
name was changed to BlueNRGY Group Limited.





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 OTCBB 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 14, 2014 following commencement of the VA process. Due to
the delinquency of this Report and other concerns of The NASDAQ Capital Markets about whether we met and continue to meet the listing
requirements, trading in our ordinary shares has not yet resumed. Although we are endeavoring to complete the steps necessary to
allow our share to resume trading, there can be no assurance that our ordinary shares will continue to trade on The NASDAQ Capital
Market when trading recommences, or if trading will resume.



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.



On December 24, 2014, DOCAs approved by
requisite vote of creditors were signed for two of the VA Companies, specifically our 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.



29







The Reorganization Plans became effective
on January 27, 2015, when the required conditions of the DOCAs were satisfied. At that time, our Company and its subsidiary, Westinghouse
Solar Pty Ltd, emerged from VA, supervision by the Administrator ceased and management of the Company by its Board of Directors
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
and to the date of this report, the following changes were made to the Group’s Net Asset/Equity position (based on unaudited
values at November 14, 2014) and to the number of ordinary shares on issue:



|                                                                  |  | Net Asset
 Impact A$’000 |        |   | Ordinary
 Shares 
Issued | 
|----------------------------------------------------------------- |  | ------------------------ | ------ | - | ------------------------ | 
|                                                                  |  |                          |        |   |                          | 
|Execution of Deed of Company Arrangement:                         |  |                          |        |   |                          | 
|Extinguishment of Liabilities                                     |  |                          |        |   |                          | 
|·Trade and other payables                                         |  |                          | 11,025 |   |                          | 
|·Provisions                                                       |  |                          | 440    |   |                          | 
|·Loans and Borrowings                                             |  |                          | 26,017 |   |                          | 
|                                                                  |  |                          | 37,482 |   |                          | 
|                                                                  |  |                          |        |   |                          | 
|Total assets assigned to creditors/relinquished                   |  |                          | (4,678 | ) |                          | 
|                                                                  |  |                          |        |   |                          | 
|Issuance of Equity Post Execution of Deed of Company Arrangement: |  |                          |        |   |                          | 
|(excluding shares issued to creditors)                            |  |                          |        |   |                          | 
|Cash subscriptions (net of $1.2 million Deed Funding)             |  |                          | 1,089  |   |                          | 
|Acquisition of BlueNRGY                                           |  |                          | 6,011  |   |                          | 
|Exchange of Indebtedness (non-VA companies)                       |  |                          | 854    |   |                          | 
|                                                                  |  |                          |        |   |                          | 
|Total Increase
    in Net Assets/Equity from reorganisation       |  |                          | 40,758 |   |                          | 



Note: the above does not reflect changes
to equity position arising from operating activities post June 30, 2014.



Following the issuance of these ordinary
shares, the Company has 319,683,386 ordinary shares on issue, details of which are set forth in Item 8.B. under the heading “Issuance
of Shares”.



Recent Acquisitions



In conjunction with our Reorganization Plan, 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 it was serving 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



30









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 commercial
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.





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%.



In December 2011, in anticipation of acquiring, at a future
time, all of the outstanding equity of the company then known as Westinghouse Solar, Inc. (recently renamed Andalay Solar, Inc,
and referred to as Andalay Solar), we acquired 1,666,667 shares of its common stock. Our plans to pursue an acquisition of Andalay
Solar have since been abandoned. The Andalay Solar common stock we own now represents less than 1% of the outstanding shares of
the company and we anticipate disposing of these shares in an orderly manner as market conditions permit.



On January 1, 2010 we acquired the eco-Kinetics group of companies
to gain a larger market presence in the Australian solar sector in anticipation of major policy-driven growth. This acquisition
also enhanced our capabilities to undertake larger international solar development projects and boosted revenues in the segments
of our business devoted to small-scale solar development. As further discussed below, the companies in the eco-Kinetics Group were
liquidated or retained by the Administrator at the time our Reorganization Plan became effective.



In 2009 we acquired Larkden Pty Ltd. (Larkden) and the rights
to develop certain storage technologies owned by Larkden. Larkden and its related technologies have since been divested.



Recent Divestitures/Liquidations



Pursuant to the VA process that commenced on November 14, 2014
and the Reorganization Plan 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     



31









In August 2013, we sold our subsidiary, Capacitor Technologies
Pty Ltd. (“CapTech”), for total consideration of A$1.8 million.



During our 2013 fiscal year, our Board of Directors determined
that development and exploitation of the Larkden Technology was not a core strategy and was not practical in the near term given
our limited liquidity. 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. (Refer to Note 3(a) (vii) – Contingent Consideration included
in Section F). The balance of the payments of A$2.5 million, referred to as the Remaining Larkden Installments, are scheduled
to be received in three tranches on the anniversaries of the sale from 2015 to 2017. Rights to receive the Remaining Larkden Installments
were assigned to WHSP pursuant to our Reorganization Plan.



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 www.cbdenergy.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 are focused on the downstream implementation, collection and analysis of performance
data (sometimes referred to as data management), operation and maintenance of renewable power generation systems and
the delivery of 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:



| | · | Solar Photovoltaic (or PV) System Design & Installation
| | - | -------------------------------------------------------



| | o | Residential and small commercial solar, together sometimes referred to as small-scale solar.
| | - | --------------------------------------------------------------------------------------------



| | o | Large commercial and utility-scale solar, together sometimes referred to as large-scale solar.
| | - | ----------------------------------------------------------------------------------------------



| | · | Renewable Power Systems Data Management, Operations & Maintenance  (including our Chatham Island generating assets formerly included in our RAPS unit prior to emergence from VA)
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



32







| | · | Energy Efficiency/Technology Solutions (and RAPS prior to our emergence from VA)
| | - | --------------------------------------------------------------------------------



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.



Over the past four years, we actively diversified our solar
PV business geographically in order to capitalize on high expected demand for new renewable energy generation. We are now focusing
our expansion initiatives in the United States because we believe this country has a sustainable government policy framework, sound
legal and banking systems and, in certain states, significant mandated renewable energy targets and incentives, all of which create
opportunity for an experienced solar development business to grow rapidly and profitably. We believe that this geographic diversification,
in what we expect will be our most rapidly growing business segment, provides us with a natural hedge against changing government
policy and fluctuations in the Australian currency exchange rate. Our diversification initiatives during this period have involved
significant initial setup costs in the United States and the United Kingdom that have already been fully expensed.



Directly and with our GED subsidiary, acquired in July 2014,
we have completed one major commercial-scale solar PV installation in the United States and participated as a sub-contractor in
several small utility-scale installations aggregating more than 11MW. We are currently pursuing additional small utility-scale
projects and during our 2016 fiscal year we expect to re-launch sales of solar systems to consumers and to commercial customers
under our BlueNRGY brand. Our U.K. solar PV business remains fully operational on a small scale and is focused on solar deployments
for commercial and institutional customers and supporting our developing O&M business.



In conjunction with effecting our Reorganization Plan, we acquired
BlueNRGY LLC, a company focused data management, operations and maintenance for renewable power systems. The BlueNRGY data analytics
software is in the early stages of commercialization and testing with initial clients and prospective clients; the data management
business has started to record revenues and we expect those to grow as it scales up and integrates new clients and sites. BlueNRGY’s
O&M business is also small, but profitable, and we will endeavor to scale it rapidly in addition to having this team take over
management of our legacy assets such as 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 Remote Area Power Systems (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 Renewable Power Systems Data Management and 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 most of the construction of a 107MW, approximately A$290 million wind farm at Taralga in New South Wales.
Completion and commissioning of the Taralga project is expected in the second calendar quarter of 2015. 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. While we retained a 10% interest in project equity returns, the proceeds payable from that
ongoing participation must now be turned over to WHSP pursuant to the terms of the DOCA. New development activities in the wind
segment were curtailed upon emergence from VA, but we retained core competencies in the wind sector with some of the technical
and other personnel who worked on our Taralga and other wind developments.



33







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, 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. Our management believes, and our business planning assumes, that the current and near-term allocation
of investment in the sector will remain consistent with that observed for 2013. Given the pattern of continuing investment in the
renewable sector we expect the installed base of renewable assets to continue to cumulate rapidly



We are active in the solar, wind, and energy efficiency sectors
in specific geographies. In the solar market we have focused primarily on small-scale residential and commercial installations
in Australia and larger-scale commercial/small utility-scale installations in the United Kingdom and the United States. 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.



34







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 regarding 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





Over the 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 USA was charted by the Solar Energy Industry Association, or SEIA and is shown in Figure 3 below:



35









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:





Figure 4: Reduction in solar PV modules Prices in Australia







Source: “Solar Choice,” Australian Solar PV Installation
Brokers



36







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 trends in solar system pricing reflected in Figures 3 and
4 are typical of trends we have observed in other markets where we are active, including the United

Kingdom.



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



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:.



37







Figure 6: Index of U.S. retail electricity prices







Source: U.S. Energy Information Administration



The United Kingdom is also experiencing increasing electricity
costs, with the Department of Energy and Climate Change reporting in its December 19, 2013 update of Quarterly Energy Profile 2.2.1
that average domestic electricity bills increased by 39.3% between 2007 and 2013 and by 6.5% in 2013 as compared with 2012. The
March 2015 Quarterly Energy Profile disclosed that bills rose by an additional 2.6% in 2014 as compared with 2013.



Regulatory structures that incentivize solar installations
are prevalent, important to driving demand in the near-term, but declining in importance in the key markets we serve.



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 solar systems, are credited with a onetime allocation
of STCs when completed and 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 currently considering legislation that would leave the SRES program unchanged through
2020. The legislation has bipartisan support and our management expects that it will be adopted, but there is no assurance that
the proposal will be enacted or that government policy will not change.



38









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. The regulation currently being considered by Australian lawmakers would
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, if adopted, would create 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.





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 prior to year end 2016, followed by a downturn in the
pace of 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.



United Kingdom.In order to facilitate achievement of
an overall target for generation of renewable energy of 15% by 2020, the United Kingdom has instituted what we believe to be a
sustainable feed-in tariff structure for small-scale solar installations that ensures a positive economic return for homeowners
and investors who install such systems. Large-scale installations or ‘appropriately sited installations’ are currently
supported by the Renewable Obligation. The Renewable Obligation places an obligation on U.K. electricity suppliers to source a
portion of generation from renewable sources



As a result of market factors, the demand outlook for
solar installation growth is favorable in each of 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.



39







United States. We expect demand for residential solar
installations to grow rapidly in the United States and for more levels of commercial-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 is creates substantial
overall growth potential for participants in the U.S. market, including us.



United Kingdom. We believe demand for solar installations
in the United Kingdom will be sustained based on the U.K. government’s target of 15% renewable energy generation by 2020.
In support of this target, the U.K. government has implemented a Feed in Tariff, or FIT, scheme that is designed to promote a predictable
and stable environment for investors and consumers for solar systems up to 5MW. The U.K. Department of Energy and Climate Change
reported in its 2013 – 2014 Annual Report published in December 2014 that under the FIT scheme 470,983 installations had
occurred, 98.6% of which were solar PV and that these installations are continuing as at a steady pace averaging above 7,500 per
month.





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.



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:



40







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. We are not aware of any installers serving the large-scale commercial sub-sector that have
accumulated meaningful market share. In the USA, as well as in Australia and the United Kingdom, 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.



The U.K. residential market has some notable competitors such
as Solarcentury, however, we believe the market is dominated by smaller installation companies, many of whom function as subcontractors
for solar marketing companies. According to Microgeneration Certification, there were over 2,900 registered solar PV installers
in the United Kingdom in 2014.



Large-Scale Wind



Wind energy is currently the most economic source of large-scale
renewable energy and is easily scalable if suitable sites can be developed in the regions where power is needed. 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:



41







Figure 10 - Cumulative Installed Wind Capacity in Australia







Source:
Calculated from data available athttp://ramblingsdc.net/Australia/WindPower.html



To satisfy the Australian renewable energy target under the
pending legislation, 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.



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.



42







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.



Renewable Power Systems Data Management, Operations &
Maintenance



The addressable market for services targeting the data management,
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, small-scale (or commercial) 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 are the small-scale commercial, where system fleets are involved and the megawatt-scale
installations for both small and large fleet owners. Very large utility-scale projects with full-time operational personnel and
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 Solar Energy Industries Association Solar (SEIA) and that we believe to be representative of the concentration
of U.S. installations. The ownership category and geographical concentration 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:



Figure 12: Representative Solar PV Installations







Source: GTM Research and SEIA- US Solar Market Insight Report - 2014



43







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, Solarlog, Draker 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. The solar installations run by these companies are not within our addressable market. 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 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 are 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.



Numerous competitors for O&M services serve our addressable
utility-scale market, including Suns Up Solar and Next Phase Solar and 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 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 our O&M services for solar PV will emerge.



UK / 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 fragmented
but 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 begins in Europe, it could bolster the addressable market for our
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 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 are will continue



44







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. 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.



45







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:



Development track record - As the renewable
energy industry matures, execution track record 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 solar 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 70
MW of solar capacity worldwide through March 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 that is in
the final stages of construction. 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 in the USA and UK as well as Australia, have extensive knowledge of and experience
in the utility and energy sectors that gives us the credibility to effectively negotiate power purchase agreements and complex
EPC contracts for larger projects that we deem to be a critical factor for our success as a renewable energy project developer.
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.



Clear strategic focus – We have a
singular focus on downstream implementation, management and optimization of renewable energy and energy efficiency technologies
over their full life cycle, specifically: project origination and negotiation of power purchase agreements, or PPAs, system design
and technology integration, efficient procurement and installation, and post-commissioning performance measurement, operations
and maintenance. This positioning allows our 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 and to limit risks associated with relying on a single technology or supplier. 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.



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, the United States and the United Kingdom, which have robust legal systems and currencies; independent regulatory bodies; and stable policy agendas; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





46







| | · | types of revenue streams, ranging from project-related revenue, often with established customers who use
our services repeatedly, to recurring revenues from data management and O&M services with contracts that typically run for
multi-year periods.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Over time, and as we build scale in our business, 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
builds on our strengths and takes advantage of 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 on 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 reduces 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 to optimize system design. 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 other
system providers. With these insights, we are selectively nurturing strong direct relationships with leading manufacturers of best-in-class
components.



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 our systems, or the output from generation systems,
directly to electricity end users. In such cases, we have the opportunity to price our installations based on savings relative
to retail prices, as opposed to wholesale prices, and 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 data 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 realized no revenue yet from this strategy and there is no assurance
that we can do so, our management expects the value of our data base for renewable generation projects and the empirical information
it can provide to grow in value over time.



47







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 our company through acquisitions and intend to continue to do so (see “—Acquisitions” below).
We recently completed the acquisition of GED and BlueNRGY LLC and 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 corporate indebtedness. 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
is still in the initial stages of commercialization and requires additional investment in the software to satisfy competitive requirements
and to fund trials for prospective new customers. 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 for projects or 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 and trying to differentiate ourselves through use of the BlueNRGY brand the innovative technology we offer and the
quality of our service.



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 we are pursuing involve complex transactions and present significant financial,
managerial and operational challenges, including difficulty with integrating personnel and financial and other 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.



48







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 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 USA, 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



Solar PV- Residential and Small Commercial Solar



We are an installer of residential and commercial roof-top solar
PV systems in Australia and we are intending to apply our learning from the installation of over 17,000 residential systems in
Australia to capture a fraction of the fast-growing residential Solar PV market in the United States.



Since we entered the business of installing PV solar systems,
this component of 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 of less than 100kW. We dramatically increased
the scale of our activity in the small-scale solar segment in Australia with the 2010 acquisition of eco-Kinetics, a Queensland
based installation business.  Beginning around the start of our 2012 fiscal year, the residential installation market
in Australia, which represented approximately 70% of our solar revenue in our fiscal year ended June 30, 2012, experienced a dramatic
industry-wide downturn resulting from reductions in government incentives and subsidies at both the state and national level. This
had an immediate adverse impact on the revenues and operating results of our Australian residential solar business and on our company
as a whole.



In response to the revised policy environment in Australia,
we dramatically scaled back our small-scale solar operations there and made adjustments in our business model to reduce fixed costs,
lower inventory requirements, limit customer acquisition expense and shift some installation activities to qualified third parties.
Beginning in 2013, we began the transition of our product and marketing focus to offer solar PV systems to Australian home owners
under the Westinghouse® brand and early indications were that the brand and associated marketing program would gain sufficient
consumer acceptance to sustain the strategy of selling branded systems. Based on the favorable consumer reactions to the Westinghouse®
brand in Australia, we launched a small test of residential sales in the USA under the Westinghouse Solar name during the first
half of our 2014 fiscal year. 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 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.



49







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, as the 15 th
ranking Australian installer.



Going forward, we intend to market small-scale solar systems
directly to Australian purchasers 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 when 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 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, primarily in the residential /consumer
segment. We consider it essential to participate in this market 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. The key factor that allowed us to venture into
larger scale projects was the capability in EPC gained through the acquisition of eco-Kinetics in 2010. These capabilities 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
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 



50







| | – | 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 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 deferred payments terms are required
in 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.



Build, Own and Transfer (BOT)



Under the BOT model, which we employed in beginning in our 2013
fiscal year, we acquire the 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 do not have 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 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.



As shown in the table below, we and our acquired subsidiaries
have aggressively and more successfully pursued the large-scale solar projects business in the international arena, primarily through
the EPC model:



51









|Our Large-scale Solar PV installations*
|---------------------------------------
|                                       
|Country                                
|United States**                        
|Italy                                  
|United Kingdom***                      
|Germany***                             
|Fiji                                   
|Australia***                           
|Thailand                               



|Notes: | * Excludes projects completed by companies we acquired prior to the dates of their acquisition
|------ | ----------------------------------------------------------------------------------------------
|       | ** Includes 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 building large-scale solar PV projects have focused us on the potential opportunity for this line of business
in the United States and the United Kingdom and the highly fragmented markets facilitate our entry.



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 where the project is located. Such contracts, if awarded, are normally valid for multiple years and sometimes for the
life of these projects, but there is no assurance that an O&M contract will be awarded to the project constructor. Our track
record in winning O&M awards has been poor and we believe the acquisition of BlueNRGY LLC and the capabilities and processes
they have in the O&M arena will assist us to win a higher percentage of O&M awards for projects we construct.



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.



Renewable Power Systems Data Management, Operations &
Maintenance



The integration of BlueNRGY LLC with our company in conjunction
with our emergence from VA gives us enhanced capabilities that our management believes will allow us to access the large and 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 data management
technology is a powerful tool designed to provide asset owners and managers with the capability to cost-effectively collect, store
and analyze performance data on their systems over time with a high degree of granularity. It enables performance monitoring at
the system component level and overall, and can be applied across the full spectrum of component suppliers. Component performance
can be compared over time and across portfolios of projects, system performance can be compared across portfolios of assets and
design expectations, and correlations with external factors can be evaluated. 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.





52







BlueNRGY LLC was founded in 2012 and our data management system
is in the early stages of commercialization. It is currently operating in service with a small number of clients, who are testing
its capabilities and using its output to manage their renewable projects, which include a biogas plant and solar systems located
at several sites in Europe, the USA, Europe and China. We have also reached an agreement in principal to connect a wind project
on a trial basis, but this has not yet been activated. To meet local regulations regarding data security we have established server
and storage capacity in the USA, China and Europe to serve our initial cadre of clients. These clients are working with us closely
to refine the system capabilities and reporting. Initial reactions have been positive, particularly with respect to the latest
version of our software released in March 2015. A few of our data management customers have signed multi-year contracts for with
us for ongoing monitoring and data management services and others are expected to do so as their trial phases come to an end in
June and July 2015. There can be no assurance, however, that customers testing our data management system will enter into contracts
for its continued use.





During the first half of our 2016 fiscal year, which begins
July 1, 2015, we expect that our system development will have progressed to the point that we can begin actively marketing our
data management solution to a broad range of new customers, although there is no assurance that we can maintain this rollout schedule.
Our test customers comprise a utility and several owners of portfolios of renewable generating assets. These are the types of prospective
clients that, in addition to our own customers for Solar PV systems, we intend to target through direct sales in the next phase
of our system roll out in the USA, European and Australian markets. 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.





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. We have endeavored to offer similar services
to our clients for large-scale solar systems when the systems were constructed in regions where we have operations, but we have
generally not been successful in doing so in the past.



However, the proprietary BlueNRGY data management system greatly
enhances our ability to provide 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 BlueNRGY system to pinpoint maintenance requirements and to efficiently
schedule work. 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, our O&M specialists based in the USA have won one multi-year contract with a large
renewable asset manager and 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 and the UK. There
can be no assurance, however, that we will be successful expanding our O&M services business in the renewables sector.



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.



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.



53







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 owned the Taralga Project, we did assume the primary role in the project’s development process in October 2011 through
agreements with the original developer. Pursuant to those agreements we directed critical development activities until the project’s
sale to Banco Santander, an equity investor with sufficient financial resources to undertake the project’s construction.
Upon arranging the acquisition of the Taralga Project by Banco Santander in November 2012 and their subsequent investment in the
construction phase of the project, we received reimbursement for development expenses incurred, and an initial development fee.
We invested a fraction of our development fee in the ongoing project in exchange for a residual equity interest in the Taralga
Project that entitled us to a pro rata share of future profits earned either from the sale or continuing operation of the wind
farm in the future after payment of debt service and a preferred return to Banco Santander. Our ongoing financial interest in the
Taralga Project was conveyed to WHSP in January 2015 pursuant to our Reorganization Plan. .



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 our 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 2012 |  |                           | 87 | % |               | 
|Fiscal year 2013 |  |                           | 92 | % |               | 
|Fiscal year 2014 |  |                           | 84 | % |               | 



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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



54







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 enjoys higher margins in these business lines than it does as a general 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 described below. Due to divestitures
forced by our weak financial condition, 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.



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 VA process and DOCA.



During our fiscal year 2009, we acquired Larkden Pty., Ltd,
or Larkden, and the rights to use Larkden’s patents and know-how relating to energy storage technology, referred to as the
Larkden Technology, but we were not successful in exploiting it. We divested Larkden and the use rights to the Larkden Technology
in April 2013 to a group that we believe will be more effective than us with commercialization and we expect to receive future
payments related to the sale and linked to their success. The value of these future payments is reflected on our balance sheet
as of June 30, 2013 and was conveyed to WHSP under the DOCA. Our management retains a unique familiarity with remote project energy
storage requirements and the Larkden Technology and has an amicable relationship with the purchasers. Based on this, we remain
open to identifying opportunities to utilize the Larkden Technology, support it with our proprietary data management capabilities
and, to the extent practicable, use it in connection with renewable energy projects we develop. However, we are not currently developing
any projects using the Larkden Technology and there is no assurance that we will generate any revenue from the Larkden Technology
in the future.



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
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



55







| | · | 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 the demonstrated capabilities effectiveness in managing assets is In the future, 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.



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. CapTech’s revenues grew steadily during the later
years of our ownership, but it lacked the proprietary technology and distribution channels to build scale outside of the local
Australian market. Our management considered CapTech’s capabilities as being consistent with our goals of delivering energy
efficiency solutions to customers and potentially complementary to our solar and wind power project businesses. However, financial
circumstances following the end of our 2013 fiscal year compelled us to sell the business to generate cash. 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 is limited to 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.



Research and Development



We did not conduct research and development through the end
of our 2014 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.



56







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.



4.C.      Organization Structure



The table below lists, as of May 29,
2015, our material direct and indirect subsidiaries and the jurisdictions in which they are registered:



|Name                                                                    |  | Country of
 Incorporation |  | Principal 
Activity     |  | % |    
|----------------------------------------------------------------------- |  | ------------------------- |  | ----------------------- |  | - | ---
|BlueNRGY Group Limited Ltd                                              |  | Australia                 |  | Holding company         |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|BlueNRGY LLC                                                            |  | USA                       |  | Data Management O&M     |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|Parmac Air Conditioning & Mechanical Services Pty Ltd                   |  | Australia                 |  | Energy efficiency       |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|Westinghouse Solar Limited                                              |  | United Kingdom            |  | Solar                   |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|BlueNRGY Renewable Solutions Pty Ltd (f/k/a Westinghouse Solar Pty Ltd) |  | Australia                 |  | Solar                   |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|Chatham Island Wind Ltd                                                 |  | New Zealand               |  | Special purpose vehicle |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|Green Earth Developers LLC                                              |  | USA                       |  | Solar EPC               |  |   | 100
|                                                                        |  |                           |  |                         |  |   |    
|Westinghouse Solar Inc. (operations ceased)                             |  | USA                       |  | Solar Installations     |  |   | 100



4.D.      Property,
Plants and Equipment



Our facilities, as of May 29, 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                       |  | 250 sq-m                       
|United Kingdom |  | Fountain Court 2 Victoria Square, St
    Albans, Herts AL13TF, London |  | 40 sq-m                        
|USA            |  | 110 E. Broward Blvd, 19th Floor,
    Fort Lauderdale, FL 33301        |  | 350 sq-m                       
|USA            |  | 547 W. Charles St., Suite 100, Matthews,
    NC  28105                |  | 180 sq-m                       



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 April 30, 2015:



|          |  |                                                           |  | Approximate
    Size (sq-m) |  | PrimaryBusinessUnit
|--------- |  | --------------------------------------------------------- |  | --------------------------- |  | -------------------
|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           



57







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 June 30, 2014, we owned or held under
leases assets in the categories shown in the following table having an aggregate value of A$3.5 million, which comprised an “at
cost” total of A$6.9 million less depreciation and impairment of A$3.3 million



|Amounts in A$'000    |  |      |       |  |              |  |        |           | 
|-------------------- |  | ---- | ----- |  | ------------ |  | ------ | --------- | 
|                     |  |      |       |  | Accumulated  |  |        |           | 
|Asset Category       |  | Cost |       |  | Depreciation |  |        | Net Value | 
|Plant & Equipment    |  |      | 3,967 |  |              |  | (1,443 | )         | 
|Office and Leasehold |  |      | 1,879 |  |              |  | (1,234 | )         | 
|Motor Vehicles       |  |      | 1,018 |  |              |  | (656   | )         | 
|Total                |  |      | 6,864 |  |              |  | (3,333 | )         | 



Capital Expenditures



Our capital expenditures for property, plant and equipment for
the fiscal year ended June 30, 2014, 2013 and 2012 respectively were approximately A$0.5 million, A$0.3 million and A$0.6 million.



Included in the capital expenditure total for fiscal year 2014
was approximately A$0.4 million related to the construction of Solar PV projects of which ownership was retained by our UK subsidiaries.
Our other capital expenditures during that year were primarily for essential upgrades to our motor vehicle fleet in Parmac and
computer systems.



Our capital expenditures for fiscal year 2013 were constrained
by our financial situation and included A$0.3 million on computer software and hardware that we deemed essential to improving our
financial systems and controls, with the balance being distributed over the other asset categories.



Included in the capital expenditure total for fiscal year 2012
was approximately A$0.4 million related to equipment and leasehold improvements at our Queensland Solar PV assembly facility. In
fiscal year 2013 we determined the facility was not economically viable and ceased the operation. These assets were divested in
January 2015 pursuant to the Reorganization Plans.



ITEM 4A.  UNRESOLVED STAFF COMMENTS



Not applicable.



58







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.



59







5.A.           Operating
Results



We are an Australian corporation operating in the renewable
energy and energy-efficiency sectors. Our businesses are focused on the downstream implementation, collection and analysis of performance
data (sometimes referred to as data management), operation and maintenance of renewable power generation capacity and the delivery
of 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. Following our emergence from VA, we
have not been profitable, but we are taking active steps to grow revenue and attain profitability. Our activities are currently
divided among the following lines of business:



| | · | Solar Photovoltaic (or PV) – ranging from small scale residential up to megawatt-scale scale installations
| | - | ----------------------------------------------------------------------------------------------------------



| | · | Renewable Power Systems Data Management, Operations & Maintenance
| | - | -----------------------------------------------------------------



| | · | Energy Efficiency/Technology Solutions
| | - | --------------------------------------



Prior to the VA process through our fiscal years 2012 –
2014, 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 maintenance services.



In keeping with customary practice in Australia, our fiscal
years end on June 30. During the fiscal years ended June 30, 2014 (fiscal year 2014); June 30, 2013 (fiscal year 2013) and June
30, 2012 (fiscal year 2012), we incurred a net comprehensive loss of A$25.4 million, A$8.4 million and A$54.7 million respectively,
of which A$10.0 million, A$0.6 million and A$18.6 million for fiscal years 2014, 2013 and 2012 respectively were attributable to
asset impairments and a 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.



The breakdown of our revenues by segment is shown below for
fiscal years ended June 30, 2014, 2013 and 2012:



|                                           |  | Fiscal Year Ended June 30, |     
|------------------------------------------ |  | -------------------------- | ----
|                                           |  | 2014                       |     
|Amounts in A$(000) except as noted         |  | Revenue(A$millions)        |     
|Solar PV                                   |  |                            | 2.2 
|                                           |  |                            |     
|Large-scale Wind                           |  |                            | 1.3 
|                                           |  |                            |     
|Energy Efficiency/Technology Solutions     |  |                            |     
|Parmac                                     |  |                            | 10.2
|RAPS / Technology Solutions                |  |                            | 0.3 
|CapTech (discontinued operation)           |  |                            | 1.1 
|Total                                      |  |                            | 15.1
|                                           |  |                            |     
|Inter-company revenue elimination          |  |                            | -   
|Less: Revenue from discontinued operations |  |                            | (1.1
|Total reported revenue                     |  |                            | 14.1



60







Solar PV. Our business in the solar PV
segment has been dramatically affected by reductions in the cost of components, most notably solar panels, during our 2012 –
2014 fiscal years and thereafter (Refer to Item 4.A under the headings “Our Industry –The Solar PV Segment” and
“Description of our business segments — Solar PV Residential and Commercial Solar”) . The cost reductions were
largely passed through to customers by 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 our small-scale solar business between fiscal years
2012 and 2014 the impact on revenue and profitability was amplified as further discussed below.



Small-scale. Our residential solar business is concentrated
in Australia and is focused on retail or small-business 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 our company, are compelled to sell systems at market prices, which
can be volatile as a result of short-term fluctuations in supply and demand. Individual transactions are relatively small, averaging
less than A$8,000 during fiscal 2014 fiscal year and 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.





For a period prior to the 2012 fiscal year, the residential
market in Australia was strongly stimulated by unsustainable national and state government policies and subsidies in the form of
renewable energy certificates and high feed-in tariffs payable by utilities. Collectively, these initiatives resulted in a dramatic
spike in demand that propelled the small-scale solar industry in Australia. During our fiscal years ended June 30, 2012 and 2013,
government policies 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 received in the form of cash increased from less than 55% in the 2011 fiscal year to approximately 72% in fiscal year 2013,
dropped slightly to approximately 70% for the year ended June 30, 2014 and, we estimate, it will be at about the same level in
the current fiscal year and will remain at that level because of comparative stability in policies affecting SRECs.





61







During fiscal years 2012 and 2013 and 2014 we experienced cash
constraints that limited inventory availability to levels that were inadequate to satisfy order flow and limited our ability to
sustain advertising at levels required to maintain historical installation bookings. This led to a significant 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. The reduced gross margin contribution from lower revenues pushed our small-scale solar business into a loss position
during fiscal year 2012 that necessitated changes to make costs more variable. These changes reduced break-even activity levels
for this business consistent with our active small-scale solar orders during our 2013 fiscal year but still left us with a cost
structure that was too great in light of the continued decline in our solar PV revenues in our 2014 fiscal year and thereafter.
Consequently, we further reduced fixed costs in our solar PV units during the VA to a level that we believe will allow our Solar
PV line of business to contribute to profits at an annual revenue level above $3 million. Future 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 focused our sales and marketing efforts in Australia and the UK on commercial installations sized above 10kW, a
segment of the market that we believe to be less commoditized and less saturated than the residential segment and which is considered
to be a growth area in the Australian PV market. 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 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.



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, we evolved
our cost structure for this segment to be scalable, both up and down. Other than a core team of about key staff members who handle
project engineering and project sourcing, including, after June 30, 2014, the GED personnel based in the United States, we rely
heavily on outsourcing and sub-contractors working in markets where projects are constructed.



Until the end of our 2012 fiscal year, we undertook such large-scale
solar projects exclusively as an EPC contractor working for customer owners. In this role the company was and remains 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 3 months, and we are paid on a progress-payment basis or at sale
of a completed project. 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 is 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. Since the start of our 2014 fiscal year through the date of this filing, we have
had no large scale solar PV installations under contract, although we are in the bid process on several installations in the United
States through 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 ability of our subsidiaries involved with the installation of large-scale solar PV projects to bid
effectively was impaired during the VA process and this may create ongoing challenges to winning bids in the near future.



62







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. 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, based in the UK, has been reduced to two people
and they are also undertaking small-scale projects.





Renewable Power Systems Data Management, Operations &
Maintenance. 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 2012 – 2014 we were not in this business.
Our data management business in in the early stages of commercialization and requires development investment in excess of revenues.
It is therefore not contributing to corporate profits and is not expected to do so for at least the remainder of this calendar
year. There can be no assurances about when, if ever, the data management business will become profitable. Our O&M business
does contribute to profits, but the revenues in this line of business are not yet material to our overall operations. There can
be no assurance as to when or whether this line of business will be large enough to be material to our financial performance.





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 fiscal years 2012, 2013 and 2014 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 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. Since June 30, 2014 Parmac has been operating
at level that provides a small but positive contribution to our overall profitability.



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.



RAPS. During our 2012 – 2014 fiscal years, the
RAPS division undertook 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. From fiscal year 2010 to date, we have either disposed of all other 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 VA, so no revenue has been received or recognized from this project since November 2014. At present we are unable to project
the outcome of this dispute or whether we will realize any value from the Chatham Island Project Assets that are recorded in our
financial statements without provision for impairment.



In fiscal year 2012, we recognized a A$0.5 million license fee
related to the Larkden Technology, however, this was not paid because we and the licensee were in a legal dispute surrounding ownership
of certain improvements made to the Larkden Technology. We have subsequently recorded a 100% valuation allowance for the revenue
recorded during fiscal year 2012. We successfully defended the legal challenge and, despite being awarded certain costs, our company
still incurred approximately A$700,000 of legal costs that were not recovered and were expensed in 2012. 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 has been received
since 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. See Notes 3(a)(vii), 6(b) and 16(b) in our audited financial statements included elsewhere in this Report for further details
related to this matter.



63







CapTech. As described in “Our Business—Corporate
History—Recent Divestitures,” we divested CapTech in August 2013 and it will therefore not factor in our future financial
performance.



Large-scale wind.During our 2012 –
2014 fiscal years 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 were active in the Large-scale wind development
arena, 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.





We incurred early development expenditures in relation to the
107MW Taralga Project during fiscal year 2012. In October 2012, prior to commencement of project construction, we entered into
an agreement with Banco Santander pursuant to which Banco Santander acquired a majority interest in the Taralga Project from the
original owner and all of our development rights. As part of this transaction with Banco Santander, we were reimbursed for all
early development costs we had incurred and also earned a development fee, specified in the contract that entitled us to a cash
payment and allowed us to reinvest the balance for a continuing minority interest in the Taralga Project. The reimbursement and
cash portion of the development fee we received was approximately A$7.2 million. The balance of the development fee, which had
a recorded value of A$10.8 million, was earned in October 2012. We reinvested this fee as equity into the Taralga Project and as
a result 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 has been fully impaired at June 30, 2014, resulting in an impairment charge being recognized in the Statement
of Comprehensive income 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 2106 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 have
a major influence on all of our business segments other than Parmac.



| | · | 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



64







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 such as our company.



| | · | Government policies and mandates favoring energy efficiency and the use of renewable energy are further adding to 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.



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
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.



| | · | 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.



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 2015 and beyond.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Development of our data management business in the near term can only be funded from new capital infusions to our 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.
| | - | ------------------------------------------------------------------------------------------





65







| | · | Acquisitions (completed, abandoned and pending)
| | - | -----------------------------------------------



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 or pursued during fiscal year 2010 through fiscal year 2013 are as follows:



BlueNRGY LLC





On 27 January 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 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.





Green Earth Developers LLC (GED)



On 1 July 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.



eco-Kinetics entities



In January 2010, we acquired eco-Kinetics Group Pty Ltd, eco-Kinetics
Pty Ltd and their consolidated entities for A$6.0 million plus a contingent consideration of up to A$11.4 million. The management
team and facilities acquired provided a strong platform on which we could build our solar division. At the time of the acquisition,
eco-Kinetics operated a solar residential PV installation business across a number of states in Australia and had also completed
some larger scale solar PV installations internationally. The acquisition of eco-Kinetics and subsequent expansion utilizing our
then-available working capital was a primary driver of our rapid growth during the last half of fiscal year 2010 and fiscal year
2011. Some members of the eco-Kinetics staff and management team continue to be employed by us and remain a cornerstone of our
solar business, but all of the eco-Kinetics companies acquired in 2010 were liquidated or divested in the VA process. .



Neighborhood Energy Ltd.



During the fiscal year ended June 30, 2012, we entered into
an acquisition agreement for Neighborhood Energy Pty Ltd, an electricity retailer with a customer base that was expected to be
complementary to our renewable energy businesses. The transaction agreement obligated us to pay a termination payment of A$2.475
million if the transaction was not consummated. We did not consummate the acquisition due to a lack of suitable funding. We recognized
an A$2.475 million non-recurring expense in connection with this failed acquisition. There can be no assurance that we will be
able to avoid deal costs in the future for transactions that are not consummated.



Westinghouse Solar, Inc.



In December 2011, we made an investment in the common stock
of the company then known as Westinghouse Solar, Inc. (now renamed Andalay Solar, Inc.) in anticipation of subsequently negotiating
the acquisition of 100% of its equity. Until its termination in July 2013, we were party to a merger agreement with Westinghouse
Solar. We have taken a 100% valuation allowance for all capitalized expenses related to the transaction and our investment in Andalay
Solar common stock has been adjusted to realizable market value.



66







Results of Operations





Fiscal Year Ended June 30, 2014 Compared to Fiscal Year
Ended June 30, 2013 —Consolidated Results



|                                                                  |  | Year Ended June 30, |        
|----------------------------------------------------------------- |  | ------------------- | -------
|Amounts in A$(000) except as noted                                |  | 2014                |        
|                                                                  |  |                     |        
|                                                                  |  |                     |        
|Revenues from continuing operations                               |  |                     | 14,065 
|Operating Expenses                                                |  |                     |        
|Cost of raw materials, consumables and contractors                |  |                     | (5,727 
|Employee benefit expenses                                         |  |                     | (10,557
|Compliance & consultants                                          |  |                     | (4,793 
|Advertising and marketing                                         |  |                     | (2,468 
|Travel costs                                                      |  |                     | (872   
|Occupancy expenses                                                |  |                     | (915   
|Provision for impairment of receivables and bad debts written off |  |                     | (75    
|Other expenses                                                    |  |                     | (3,255 
|Depreciation and amortization expenses                            |  |                     | (632   
|Sub-total - operating costs                                       |  |                     | (29,294
|Other income                                                      |  |                     | 3,793  
|Finance costs                                                     |  |                     | (5,061 
|Impairments                                                       |  |                     | (10,019
|(Loss) / Profit before income tax                                 |  |                     | (26,516
|Income tax (expense) / benefit                                    |  |                     | -      
|Net (Loss)/profit from continuing operations                      |  |                     | (26,516
|Net profit / (loss) from discontinued operations                  |  |                     | 1,086  
|Net (Loss) / Profit for the period                                |  |                     | (25,430
|                                                                  |  |                     |        
|Other comprehensive income                                        |  |                     | (868   
|                                                                  |  |                     |        
|Total comprehensive loss                                          |  |                     | (26,298



Operating revenue



Total operating revenues from continuing operations decreased
from A$64.1 million for the year ended June 30, 2013 to A$14.1 million for the year ended June 30, 2014. The revenues for the year
ended June 30, 2013 included A$17.8 million of revenue related to the Taralga Project and A$18.8 million from the sale of a combined
6.4MW of large scale solar projects in Italy and New Jersey, USA. No large scale solar projects or wind farm developments were
sold in the year ended June 30, 2014.



67









|                                           |  | Revenue for Year EndedJune 30, |       
|------------------------------------------ |  | ------------------------------ | ------
|Amounts in A$(000) except as noted         |  | 2014                           |       
|                                           |  |                                |       
|Solar PV                                   |  |                                | 2,240 
|                                           |  |                                |       
|Large-scale Wind                           |  |                                | 1,308 
|Energy Efficiency/Technology Solutions     |  |                                |       
|CapTech (discontinued operation)           |  |                                | 1,076 
|Parmac                                     |  |                                | 10,188
|RAPS / Technology Solutions                |  |                                | 329   
|                                           |  |                                |       
|Total                                      |  |                                | 15,141
|                                           |  |                                |       
|Inter-company revenue elimination          |  |                                | -     
|Less: Revenue from discontinued operations |  |                                | (1,076
|                                           |  |                                |       
|Total reported revenue                     |  |                                | 14,065



Solar PV revenue declined by 92% from A$28.1 million for the
year ended June 30, 2012 to A$2.2 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. The majority of the solar PV revenue
for the year ended June 30, 2013 was derived from the sale of a 5MW solar farm in Italy for A$15.7 million and A$3.4 million of
revenue 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 and King Island solar
projects.





Discontinued operations (CapTech) revenue dropped as it was
no longer included in our reported revenue following its disposal in August 2013.





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:



68









|                                             |  | Year Ended June 30, |       
|-------------------------------------------- |  | ------------------- | ------
|Amounts in A$(000) except as noted           |  | 2014                |       
|                                             |  |                     |       
|                                             |  |                     |       
|Solar PV                                     |  |                     | 6,786 
|Large-scale Wind                             |  |                     | 601   
|Energy Efficiency/Technology Solutions       |  |                     |       
|Parmac                                       |  |                     | 11,025
|RAPS / Technology Solutions                  |  |                     | 319   
|Corporate                                    |  |                     | 10,567
|Inter-company cost of goods sold elimination |  |                     | (4    
|                                             |  |                     |       
|Total reported operating costs               |  |                     | 29,294



The 82% reduction in solar PV operating costs from A$38.1 million
for the year ended June 30, 20132 to A$6.8 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$4.2 million
to A$0.6 million for fiscal year 2014 as compared with A$4.8 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$0.3 million for the year ended June 30, 2014 were largely comprised of depreciation related to the Chatham
Island and King Island assets and are fixed in nature. In the year ended 30 June 2013 the RAPS division also included $0.2m of
amortization on the Larkden patents prior to their sale.



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$39.2 million for the year ended June 30, 2013 to A$5.7 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 85%, which correlates closely with the decrease in revenue
of 78%.



Employee benefit expense has been reduced by 29% from A$14.8
million for the year ended June 30, 2013 to A$10.6 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$4.5 million for the year ended June 30, 2013 to A$4.8 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.



Advertising and marketing expense increased to A$2.5 in the
year ended June 30, 2014 from $1.0 million in the prior year. These costs were largely attributable to the rebranding of the Solar
PV division to Westinghouse Solar and sponsorship of a professional sports team in Australia.



69







Travel costs were consistent at around A$0.9 million for both
fiscal years. 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 decreased by A$0.4 million from A$1.3 million
for the year ended June 30, 2013 to A$0.9 million for the year ended June 30, 2014 as a result of the consolidation of office and
warehouse facilities in the solar PV division to reduce costs in light of decreased sales activity.



Our provision for impairment of receivables and bad debts expense
was A$0.1 million for the year ended June 30, 2014 compared to an expense of $0.3 million for the same period in 2013. This resulted
from a lower debtors balance against which customary provisions were applied.



Total depreciation and amortization expense reduced from A$0.8
million for the year ended June 30, 2013 to A$0.6 million for the year ended June 30, 2014 as a result of the cessation of amortization
of the Larkden technology patents following their disposal in April 2013.



Other Income



We recognized A$3.8 million of other income in the year ended
June 30, 2014 as compared to A$4.2 million for the year ended June 30, 2013. The other income in the year ended June 30, 2014 was
attributable to a gain of A$3.0 million from the forgiveness of debt from certain creditors and the re-measurement of contingent
consideration payable in relation to the acquisition of eco-Kinetics in 2010 of $0.6 million. The other income in the year ended
June 30, 2013 was primarily 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$5.1 million and A$11.1 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 $6.0 million decrease
was made up of a A$1.5 million in interest expense for the year ended June 30, 2013 on the construction finance facility utilized
to fund the construction of the Italian solar project, which was repaid in December 2012, A$1.2 million of foreign exchange losses
on foreign currency denominated debt and A$3.3 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.



70







Fiscal Year Ended June 30, 2013 Compared to Fiscal Year
Ended June 30, 2012 —Consolidated Results



|                                                                  |  | Year Ended June 30, |        
|----------------------------------------------------------------- |  | ------------------- | -------
|Amounts in A$(000) except as noted                                |  | 2013                |        
|                                                                  |  | (Restated)          |        
|                                                                  |  |                     |        
|Revenues from continuing operations                               |  |                     | 64,130 
|Operating Expenses                                                |  |                     |        
|Cost of raw materials, consumables and contractors                |  |                     | (39,201
|Employee benefit expenses                                         |  |                     | (14,786
|Compliance & consultants                                          |  |                     | (4,519 
|Advertising and marketing                                         |  |                     | (1,010 
|Travel costs                                                      |  |                     | (931   
|Occupancy expenses                                                |  |                     | (1,258 
|Provision for impairment of receivables and bad debts written off |  |                     | (334   
|Other expenses                                                    |  |                     | (3,207 
|Share of net loss of associates                                   |  |                     | -      
|Depreciation and amortization expenses                            |  |                     | (808   
|Sub-total - operating costs                                       |  |                     | (66,054
|Other income                                                      |  |                     | 4,241  
|Finance costs                                                     |  |                     | (11,122
|Break fee from terminated acquisition                             |  |                     | -      
|Impairments                                                       |  |                     | (578   
|(Loss) / Profit before income tax                                 |  |                     | (9,383 
|Income tax (expense) / benefit                                    |  |                     | 65     
|Net (Loss)/profit from continuing operations                      |  |                     | (9,318 
|Net profit / (loss) from discontinued operations                  |  |                     | 911    
|Net (Loss) / Profit for the period                                |  |                     | (8,407 
|                                                                  |  |                     |        
|Other comprehensive income                                        |  |                     | 834    
|                                                                  |  |                     |        
|Total comprehensive loss                                          |  |                     | (7,574 



Operating revenue



Our total operating revenues from continuing operations increased
from A$43.6 million in the year ended June 30, 2012 to A$64.1 million in the year ended June 30, 2013. This net change was attributable
to increases in revenue in our Large-scale wind segments and in Parmac, offset by revenue declines in solar PV, as shown in the
table below:



|                                           |  | Revenue for Year EndedJune 30, |       
|------------------------------------------ |  | ------------------------------ | ------
|Amounts in A$(000) except as noted         |  | 2013                           |       
|                                           |  | (Restated)                     |       
|Solar PV                                   |  |                                | 28,107
|                                           |  |                                |       
|Large-scale Wind                           |  |                                | 18,557
|                                           |  |                                |       
|Energy Efficiency/Technology Solutions     |  |                                |       
|CapTech (discontinued operation)           |  |                                | 5,327 
|Parmac                                     |  |                                | 17,363
|RAPS / Technology Solutions                |  |                                | 323   
|                                           |  |                                |       
|Total                                      |  |                                | 69,677
|                                           |  |                                |       
|Inter-company revenue elimination          |  |                                | (220  
|Less: Revenue from discontinued operations |  |                                | (5,327
|                                           |  |                                |       
|Total reported revenue                     |  |                                | 64,130



71









Solar PV revenue declined by 13% from A$32.4 million for the
year ended June 30, 2012 to A$28.1 million for the year ended June 30, 2013 due to a 68% reduction in the number of small scale
residential installations from 3,800 to 1,200, coupled with an average 17% reduction in price per installation. The reduction in
the number of systems we installed in fiscal year 2013, as compared with fiscal year 2012, was attributable primarily to our inability
to provide sufficient working capital to this business unit to sustain a higher level of activity. The reduction in average revenue
achieved per installation was driven by falling costs of solar PV panels and inverters and lower STC prices in the market.



The decrease in the residential solar revenue in 2013 was offset
by A$19.8 million of large-scale solar PV revenue of for the year ended June 30, 2013 which was derived the sale of a 5MW solar
farm in Italy for A$15.1 million in December 2012, with the remainder being attributable primarily to recognition of A$3.4 million
of revenue related to an EPC contract for a solar project in New Jersey that was commenced during fiscal year 2013 and substantially
completed prior to June 30, 2013.



Revenue recognized in our Large-scale Wind segment 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.” No wind project sales occurred during our fiscal year ended June 30, 2012 and so related revenue was nil.



In our Energy Efficiency businesses, Parmac recorded an increase
in revenue of A$7.0 million from A$10.4 million for the year ended June 30, 2012 to A$17.4 million for the year ended June 30,
2013, which was attributable to the recovery of commercial construction activity across the Melbourne market due to improved economic
conditions and the award of several large contracts. The revenue increase at Parmac during fiscal year 2013 was partially offset
by reduced revenue in our RAPS business of A$0.3 million when compared with sales in the prior fiscal year. The decline in RAPS
revenue reflected a license fee relating to the Larkden technology recognized in 2012, which was not repeated in the 2013 financial
year. RAPS includes our Chatham Island wind generation installation, the revenue from which, was substantially unchanged in fiscal
years 2013 from that of fiscal year 2012.



The decline in CapTech sales (a discontinued operation sold
in August 2013) was related to an increased focus on equipment re-seller activities, which is a lower revenue, higher margin activity
than the project activities, which had been the focus in prior years.



Operating costs



Total operating costs including the cost of raw materials, consumables
and contractors for business segments are presented in the table below for each of our business segments:



|                                             |  | Year Ended June 30, |       
|-------------------------------------------- |  | ------------------- | ------
|Amounts in A$(000) except as noted           |  | 2013                |       
|                                             |  | (Restated)          |       
|                                             |  |                     |       
|Solar PV                                     |  |                     | 38,096
|Large-scale Wind                             |  |                     | 4,809 
|Energy Efficiency/Technology Solutions       |  |                     |       
|CapTech (discontinued operation)             |  |                     | 4,416 
|Parmac                                       |  |                     | 18,699
|RAPS / Technology Solutions                  |  |                     | 549   
|Corporate                                    |  |                     | 4,110 
|                                             |  |                     |       
|Total                                        |  |                     | 70,679
|                                             |  |                     |       
|Inter-company cost of goods sold elimination |  |                     | (210  
|Less: Discontinued operations                |  |                     | (4,416
|                                             |  |                     |       
|Total reported operating costs               |  |                     | 66,053



72







The reduction in solar PV operating costs from A$52.5 million
for the year ended June 30, 2012 to A$38.1 million for the year ended June 30, 2013 is predominantly reflective of the reduction
in installations by that division in fiscal year 2013 as compared with the prior fiscal year as well as lower levels of write-downs
on obsolete component inventory and STCs and losses on large projects. Overall, our operating costs fell at a slightly greater
rate than revenue for fiscal year 2013 as compared with fiscal year 2012 (a reduction of 27% as compared with a revenue reduction
of 13%) due to declines in unit costs of solar PV materials and differences in labor and other factor costs among the geographic
regions where large-scale projects were developed in each year.



Large-scale wind operating costs increased by A$4.8 million
for fiscal year 2013 from almost nil for the fiscal year 2012 due to our expensing of capitalized early-stage development costs
upon the purchase of the Taralga Project by Banco Santander in October 2012.



During the year ended June 30, 2013, Parmac’s expenses
increased by A$7.7 million to A$18.7 million as compared to A$11.0 million for the year ended June 30, 2012 and three percentage
points greater than the year-over-year increase in revenues. This adverse result was due primarily to unrecoverable cost overruns
on two major projects that resulted from change orders that our fixed price contracts did not permit us to rebill to customers.
RAPS costs included legal costs incurred in 2012 related to the defence of the Larkden storage technology patents and depreciation
of generating assets and patents of approximately A$0.5 million in both 2013 and 2012.



Corporate-level expenses not allocated to our business segments
were A$9.1 million lower in fiscal year 2013 as compared to fiscal year 2012 due to aggressive cost reduction initiatives undertaken
by our management.



Despite decreased revenues at CapTech (discontinued operation),
cost savings initiatives allowed this business unit to reduce costs by A$3.7 million or 46% for the fiscal year ended June 30,
2013 as compared with the fiscal year ended June 30, 2012.



Changes in the categories of operating expenditure are discussed
in more detail below.



The cost of raw materials, consumables and contractors used
decreased 8% from A$42.8million for the fiscal year ended June 30, 2012 to A$39.2 million for the fiscal year ended June 30, 2013
despite a 47% increase in our revenues for fiscal year 2013 as compared with fiscal year 2012. This disproportionate increase of
costs and revenue was attributable to the high gross margins associated with the Taralga Project, relative to that of our other
businesses and lower levels of obsolete component inventory and STC write-downs and losses on large projects.



Total employee compensation and benefits expense was little
changed, decreasing from A$15.4 million for the year ended June 30, 2012 to A$14.8 million for the year ended June 30, 2013 despite
the year-over-year increase in our overall revenue. This reduction reflects the success of productivity improvement and cost reduction
efforts implemented by our management during fiscal year 2013.



Expense in the compliance and consulting category was lower
by A$4.3 million for fiscal year 2013 as compared with fiscal year 2012 due to initiatives to control third-party advisory activity
and the absence in fiscal year 2013 of the following non-recurring costs incurred during fiscal year 2012:



| | · | Fees of approximately A$1.7 million incurred for capital raising activities
and the now-terminated merger with Andalay Solar (formerly known as Westinghouse Solar), including legal, professional and corporate
advisory fees in connection with these matters;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



73







| | · | Legal fees of approximately A$0.7 million expensed in relation to
the successful defense of the Larkden Technology patent disputes.
| | - | -----------------------------------------------------------------------------------------------------------------------------------



Advertising and marketing expense declined by A$1.3 million
from A$2.3 million for the fiscal year ended June 30, 2012 to A$1.0 million for the year ended June 30, 2013. The reduction in
this category of expense in fiscal year 2013 as compared with fiscal year 2012 was directly attributable to cutbacks in marketing
campaigns related to promotion of our small-scale solar PV business in Australia because we lacked the working capital to support
higher sales if demand was stimulated by advertising.



Travel costs were also reduced by A$0.6 million from A$1.5 million
for the fiscal year ended June 30, 2012 to A$0.9 million for the fiscal year ended June 30, 2013. This was made possible by less
international travel during our fiscal year 2013 for multiple senior executives due to lower levels of project activity in the
large-scale solar segment, more limited corporate fund-raising efforts and the termination of the merger transaction with Andalay
Solar (formerly known as Westinghouse Solar), all of which were focused in Europe or the United States.



Our office arrangements were substantially the same in the fiscal
years ended June 30, 2013 and 2012 and, as a result, our occupancy expenses were approximately A$1.2 million in both years.



Our provision for impairment of receivables and bad debts written
off declined to A$0.3 million for the year ended June 30, 2013 from A$1.3 million for the year ended June 30, 2012. Notable impairments
and bad debt write-offs experienced during fiscal year 2012 that were not repeated in fiscal year 2013 included approximately:



| | · | A$0.4 million related to a small number of commercial customers in
Australia whose businesses failed;
| | - | -----------------------------------------------------------------------------------------------------



| | · | A$0.6 million related to the write-off of a license fee due from the
use of our storage technology patents
| | - | ----------------------------------------------------------------------------------------------------------



Other expenses includes a number of significant items such as
costs of communications, insurance and unrealized losses on foreign exchange and losses on assets. Total other expenses remained
consistent between both fiscal years, despite the fact that our revenue was higher in fiscal year 2013 than in the prior year.





Until our emergence from VA in January 2015, we held non-controlling
interests in two land development projects, referred to as “associates,” and account for these interests under the
equity method. We also accounted for our non-controlling interest in Asian Renewables Energy Management Limited (AREM) under the
equity method prior to the acquisition of the remaining share capital in AREM in fiscal year 2012. AREM held an Australian Financial
Services License that was intended, but never used, to allow the group to transact in specific financial products related to energy
trading activity should it decide to do so in the future. AREM is not currently operating and has not conducted operations since
we acquired it and its financial results were consolidated. Our share of net losses in associates decreased from A$0.1 million
for the year ended June 30, 2012 to nil for fiscal year 2013 because 100% of the carrying value of our interests in associates
was fully impaired as of June 30, 2012 as further discussed below.





For the year ended June 30, 2013, total depreciation and amortization
expense was essentially unchanged from the prior fiscal year, at A$0.8 million.



Other Income



The A$0.4 million decrease in other income to A$4.2 million
for the year ended June 30, 2013 as compared with A$4.6 million in the year ended June 30, 2012 is a result of several factors,
some of which are offsetting. We also recorded increases in various sub-categories of other income from nil for fiscal year 2012
to the following for fiscal year 2013, notably: A$2.6 million related to gains on financial liabilities measured at fair value
(primarily liabilities for warrants issued in conjunction with our convertible notes);; A$0.5 million for gains on STCs and a A$0.4
million recovery of bad debt previously written off. These increases in other income were offset by the absence of any gain on
re-measurement of contingent consideration, a component of other income that was A$4.1 million in fiscal year 2012.



74







Finance Costs



We reported finance costs of A$11.1million and A$2.3 million
for the fiscal years ended June 30, 2013 and 2012, respectively. Finance costs comprise interest expenses, share option expenses
directly related to financing activities and foreign exchange differences on loan balances and year-over-year changes resulted
from the following factors:



| | · | Our interest expense increased from A$2.0 million in fiscal year 2012 to A$7.4 million in fiscal year 2013. The year-over-year increase was due primarily to (i) the accrual of interest on our high-cost construction loan facility, which was drawn during the last months of fiscal 2012 to fund the Italian solar projects and which remained outstanding for 6 months during 2013 while we worked to consummate the sale of those projects and (ii) greater interest accrued on our Series 1 Convertible Notes, which were outstanding for the full fiscal 2013 year as compared with only one month during fiscal year 2012, and which accrued interest at default rates of 15% for approximately 6 months of fiscal year 2013 (iii) A one-off penalty charge of $1.5 million relating to an uplift in the face value of the Series 1 convertible notes arising due to a default on those notes during the 2013 fiscal year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | In fiscal year 2013 we also incurred finance costs of A$2.3 million related to the restructuring of our
Series 1 Notes (defined and described below in Note 18(b)(i) to our audited financial statements included elsewhere in this Report).
No such costs applied in fiscal year 2012.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our Series 1 and Series 3 Notes were denominated in U.S. dollars and, as a result, we experienced an A$1.2 million foreign exchange loss on the principal balance of these notes as compared with an A$0.2 million exchange gain in the prior fiscal year due to declines in the relative value of the Australian dollar against the U.S. dollar during fiscal year 2013 and the higher average outstanding amount of U.S. dollar denominated notes.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The foregoing net increases in 2013 Finance costs were partially offset by a decline in share option expense to A$0.3 million for fiscal year 2013 from A$0.5 million for the fiscal year 2012. The share-based expense recognized in fiscal year 2013 was attributable solely to the issuance during the year of 58,887 options to acquire ordinary shares in connection with the restructuring of certain of our convertible notes and during fiscal year 2012 the issuance of 153,139 options to acquire our ordinary shares related to convertible note consummation and restructuring of our Series 2 Notes (the discussion below under “—Liquidity and Capital Resources—Indebtedness—Equity-linked Notes”).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Break Fee



In fiscal year 2012, we incurred an expense of A$2.5 million
related to the termination of a planned acquisition of an Australian energy retailer, Neighborhood Energy. There was no similar
cost during the fiscal year ended June 30, 2013.



Impairments





Total impairments decreased from A$16.1 million in fiscal year
2012 to A$0.6 million in fiscal year 2013. The impairment losses are categorized as impairment on available for sale financial
assets, impairment of financial assets and impairment of goodwill as detailed in Notes 7(d) and 7(e) to our audited financial statements
included elsewhere in this Report, as summarized below.





For the year ended June 30, 2012, we incurred an impairment
loss of A$0.4 million on available for sale financial assets, due to a decline in the market value of our investment in common
shares of Westinghouse Solar Inc. (now renamed Andalay Solar Inc.). A further impairment of this asset of A$0.6 million was recorded
for the fiscal year ended June 30, 2013.



Impairment of financial assets decreased from A$4.2 million
for the fiscal year ended June 30, 2012 to nil for the fiscal year ended June 30, 2013. In fiscal year 2012 we incurred an impairment
expense of A$3.9 million associated with recording a 100% valuation allowance for the carrying value of our land development projects.
This impairment was taken in fiscal year 2012 as a result of a perceived deterioration in the financial position of our investment
partner managing the projects; this evident financial weakness created significant uncertainty about the prospects of that partner
completing the development or achieving an exit price sufficient to enable funds invested to be recovered. In fiscal year 2012
we also incurred an impairment expense of A$0.3 million associated with recording a 100% valuation allowance for the carrying value
of our investments in the European solar joint ventures.



75







Impairment of intangible assets decreased from A$11.5 million
for the year ended June 30, 2012 to nil for the year ended June 30, 2013. Impairment of intangible assets during fiscal year 2012
resulted from the following:



| | · | goodwill in our solar PV segment was impaired by $11.1 million as further described in Note 16 to our audited financial statements included elsewhere in this document.;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | capitalized costs of A$0.2 million incurred previously to secure an exclusive license for the resale of a unique solar hot-water technology product in Australia because we determined that pursuing sales of this product was unlikely to be profitable; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | development costs of A$0.2 million  previously capitalized during the construction of a reference site for a solar PV tracking solution (referred to as the Portasol tracker) after we abandoned commercialization of this technology based on negative feedback with potential customers.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Profit/Loss Before Tax



We incurred a loss before tax from continuing operations of
A$9.4 million for the fiscal year ended June 30, 2013 as compared with a loss before tax of A$50.4 million for the fiscal year
ended June 30, 2012, a reduction of A$41.0 million. This was due to a A$11.7 million reduction in losses related to our solar PV
businesses (from A$20.1 million to A$8.4 million), the achievement of a A$13.7 million profit in our Large-scale Wind segment as
compared with nil for the prior fiscal year and a reduction in our net corporate overhead (including impairments and finance costs)
of A$16.3 million (from A$29.6 million to A$13.2 million), offset by an increase in losses at Parmac from A$0.6 million in fiscal
year 2012 to A$1.3 million in fiscal year 2013.



Income taxes



Income tax benefit for the year ended June 30, 2013 was A$0.1
million compared to an expense of A$2.5 million for our fiscal year 2012. In fiscal year 2012, we derecognized 100% of the A$2.3
million of deferred tax assets relating to tax losses that had been brought forward from previous years and did not record deferred
tax assets applicable to fiscal year 2012 losses. This treatment of deferred tax assets was the result of the application of our
accounting policies given uncertainty as to whether these losses would be recoverable in future years. The impact of this on the
fiscal year 2012 tax expense was that we recognized no tax benefit on the fiscal year 2012 losses, and we recorded an expense in
fiscal year 2012 equal to 100% of the tax asset value accumulated through the prior year. This remained the case for fiscal year
2013.



Net Income/Comprehensive Income





For fiscal year 2013 we also recorded other comprehensive income
of A$0.8 million, which reduced our total comprehensive loss to A$7.6 million. The other comprehensive income for fiscal year 2013
was comprised of A$800,000 in changes in the fair value of available-for-sale financial assets (the Taralga Project interests,
as calculated in accordance with Note 3(a)(vi) to our audited financial statements included elsewhere in this Report), plus exchange
differences applicable to the results of foreign operations of A$34,000. We had no other comprehensive income or loss for fiscal
year 2012 and so our total comprehensive loss for fiscal year 2012 was the same as our net loss for the year.





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, 2012, 2013 and 2014. 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.



76







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, 2012, 2013
and 2014 or that have significant potential to result in a material adjustment to the carrying amounts of assets and liabilities
during such fiscal years.



(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$31.2 million as of June 30, 2014. 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) Small-scale Solar Installations





Revenues for installation of residential and small commercial
solar PV systems to third parties recognized once installation is completed. Part of the consideration we receive in respect of
small solar installations is generally in the form of a Small-scale Technology Certificates, or STCs, which customers assign to
us. As indicated in Note 2(k) to our audited financial statements included elsewhere in this Report, the value ascribed to STCs
is based on the fair value at the time of assignment, which corresponds to the date of completion of the installation. The fair
value of STCs is determined by reference to the traded price of STCs at the time of assignment as well as other available market
and internal data. Given the time required to register and on-sell the STCs, this may vary from the price realized for the STCs
upon sale by us to third parties.



(ii) Sale of products, materials and parts



Revenue from the sale of products, material and parts is recognized
upon the delivery of goods to customers.



(iii) 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.



(iv) Project development revenue



Revenue from large-scale solar projects, wind and land development
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.



77







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) Inventory



(i) Net realizable value for STC inventories



STCs are initially recognized at fair value (the deemed cost)
on the date of the assignment of the STC to us following completion of the related solar panel installation. The value of the inventory
of STCs is subsequently measured at lower of cost or net realizable value. Net realizable value is the estimated selling price
in the ordinary course of business less the estimated costs necessary to make sell the STCs. Because the secondary market into
which we expect to sell STCs is thinly traded and volatile, judgment is applied when determining net realizable value at each measurement
date. This includes consideration of the number of STCs that we have available for sale, the estimated period it will take to sell
the STCs, potential forward sale contracts that we may have, if any, and observed or quoted STC market prices prior and subsequent
to the assignment date. Given the time required to register and sell the STCs, this may vary from the price actually realized for
the STCs upon sale. If STCs are sold at a price greater than the fair value at the time of assignment, the difference is recognized
as other income. If STCs are sold at a price lower than that recorded, the difference is recognized as a cost of raw material because
it represents, in effect, a write down of the (STC) inventory balance to realizable value.





For further details, see Note 12 to our audited financial statements
included elsewhere in this Report.



(d) 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,
2014 the carrying amount of capitalized project work in progress was $0.4 million as compared to $Nil at June 30, 2013 and A$12,762,000
at June 30, 2012.



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.



(e) Fair value measurement of contingent consideration



Contingent consideration, resulting from business combinations,
is valued at fair value at the acquisition date as part of the business combination. When the contingent consideration meets the
definition of a derivative and, thus, a financial liability, it is subsequently re-measured to fair value at each reporting date.
The determination of the fair value is based on discounted cash flows. The key assumptions take into consideration the probability
of meeting each performance target and the discount factor. The value of the contingent consideration is recorded in other payables
when the consideration amount is certain and as a provision when still subject to achievement of earn-out targets and material
uncertainty.



78









As part of the identification and measurement of assets and
liabilities in the acquisition of eco-Kinetics Pty Ltd, we identified an element of contingent consideration with a fair value
of A$11.4 million at the acquisition date in January 2010. The revaluation process resulted in an adjustment to the contingent
liability of A$4.1 million as of and for the year ended June 30, 2012 with a corresponding credit to income. (See Note 19 to our
audited financial statements included elsewhere in this Report).





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.



During the year ended June 30, 2012 we reversed previously recognized
deferred tax assets of A$2.8 million and did not recognize any deferred tax assets in relation to the 2012 operating losses. This
decision was made after considering our financial performance during the year and the material uncertainty about our ability to
continue as a going concern. 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, 2014, we had A$17.6 million of derecognized deferred tax assets
and A$16.0 at June 30, 2013 and A$14.0 million at June 30, 2012.



(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 25 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.



79







(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) Impairment of Patents



Prior to their sale in April 2013, we measured the carrying
value of the Larkden controlled storage technology patents at cost less impairment and amortization. The recoverable amount is
the higher of the patents value in use or fair value less cost to sell. The fair value has been determined by a third-party valuation
firm in accordance with the definition of fair value in AASB 13 Fair Value Measurement (IFRS 13 Fair Value Measurement).
This has been measured on the basis of what a willing buyer would pay a willing seller for the patents in a market based transaction.
The valuation has been determined using a discounted cash flow methodology and considering the Patents as a group and as a type
of start-up / early stage commercialization technology. The third-party valuation firm has constructed various alternative scenarios
as to possible likely future outcomes projecting various associated cash flows for each alternative scenario; applying a range
of discount rates to the various projected cash flows to determine a range of indicated net present values.



Under the discounted cash flow valuation methodology, the value
of the Patents, as a group, was deemed to be equivalent to the present value of the prospective stream of net cash flow amounts
(fee income less expected expenses) that would be receivable from the utilized Patents. See Note 16 (b) to our audited financial
statements included elsewhere in this Report.



(e) Impairment of available - for - sale financial assets



We have determined that our investment in the common stock of
Andalay Solar, a U.S.-listed company formerly known as Westinghouse Solar, has been subject to a significant and prolonged decrease
in market price. As a result in accordance with our accounting policy regarding available-for-sale financial assets (see Note 2
(r) to our audited financial statements included elsewhere in this Report) we have recognized an impairment to the carrying value
of our Andalay Solar common stock in our income statement and on our balance sheet.



(f) 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.



80







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.



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, 2014, 2013 and 2012 as reflected in our audited financial
statements presented elsewhere in this document.



|                                                       |  | Year Ended June 30, |        
|------------------------------------------------------ |  | ------------------- | -------
|Amounts in A$(000) except as noted                     |  | 2014                |        
|                                                       |  |                     |        
|Net cash flows used in operating activities            |  |                     | (20,163
|Net cash flows used in investing activities            |  |                     | 1,305  
|Net cash flows from financing activities               |  |                     | 19,770 
|Net (decrease) / increase in cash and cash equivalents |  |                     | 912    
|Cash and cash equivalents at beginning of period       |  |                     | 469    
|Cash and cash equivalents at end of period             |  |                     | 1,381  





At June 30, 2014 our cash and cash equivalents had increased
to A$1.4 million from A$0.5 million at June 30, 2013 primarily as a result 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, 2014, 2013 and 2012 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$21.9 million over this period was insufficient to fund cumulative losses from operations and net investments during
fiscal years 2014, 2013 and 2012. Consequently, our cash availability and liquidity declined from A$9.0 million at the beginning
of fiscal year 2012 to A$1.6 million at June 30, 2014, a level too low to sustain our operations and continuance as a going concern,
as further discussed below. Our liquidity issues were compounded by the fact that while A$7.9 million of the net financing proceeds
generated during the 36 months ending June 30, 2014 were derived from equity issuances, we increased our net debt by A$16.0 million
during these three fiscal years. 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 hadincurred during these three 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$31.2 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 our Company and three of our
subsidiaries into Administration. See - Going Concern in Note 2(a) in our audited June 30, 2014 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 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 our 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, investors have infused
US$1.85 million into the Company pursuant to a private placement. Of this US$1 million was used to pay the Deed Funds as a condition
to effectiveness of the DOCAs. The remainder of the funds raised have been used for working capital purposes and to fund operating
losses following our emergence from VA.



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.



81







As a result of the reorganization plans, the following changes
were made to our working capital position (based on unaudited values at November 14, 2014):



|                                                                                                         |  | Net AssetImpact$’000 |        |   | OrdinaryShares 
Issued | 
|-------------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | ---------------------- | 
|                                                                                                         |  |                      |        |   |                        | 
|Execution of Deed of Company Arrangement:                                                                |  |                      |        |   |                        | 
|Extinguishment of Liabilities                                                                            |  |                      |        |   |                        | 
|·Trade and other payables                                                                                |  |                      | 11,025 |   |                        | 
|·Provisions                                                                                              |  |                      | 440    |   |                        | 
|·Loans and Borrowings                                                                                    |  |                      | 26,017 |   |                        | 
|                                                                                                         |  |                      | 37,482 |   |                        | 
|                                                                                                         |  |                      |        |   |                        | 
|Total assets assigned to creditors/relinquished                                                          |  |                      | (4,678 | ) |                        | 
|                                                                                                         |  |                      |        |   |                        | 
|Issuance of Equity Post Execution of Deed of Company Arrangement: (excluding shares issued to creditors) |  |                      |        |   |                        | 
|Cash subscriptions (net of $1.2 million Deed Funding)                                                    |  |                      | 1,089  |   |                        | 
|Acquisition of BlueNRGY                                                                                  |  |                      | 6,011  |   |                        | 
|Exchange of Indebtedness (non-VA companies)                                                              |  |                      | 854    |   |                        | 
|                                                                                                         |  |                      |        |   |                        | 
|Total Increase
    in Net Assets/Equity from reorganisation                                              |  |                      | 40,758 |   |                        | 



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 this facility can be increased 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$0.5 million as of March 31, 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 been achieved some 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 Plan as a result of the termination of the license agreement with Westinghouse Electric Corporation.



82







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$29.1 million.



|                                                       |  | Year Ended June 30, |        
|------------------------------------------------------ |  | ------------------- | -------
|Amounts in A$(000) except as noted                     |  | 2014                |        
|                                                       |  |                     |        
|Cash flow from operating activities                    |  |                     |        
|Receipts from customers (inclusive of GST)             |  |                     | 20,680 
|Payments to suppliers and employees (inclusive of GST) |  |                     | (39,493
|Payments for development costs                         |  |                     | -      
|Finance costs                                          |  |                     | (1,350 
|Interest received                                      |  |                     | -      
|Net cash flows used in operating activities            |  |                     | (20,163



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 2012.





For the fiscal year ended June 30, 2012, we used net cash for
our operating activities of A$19.0 million. Excluding capitalized expenditures for development projects, the excess of disbursements
to suppliers and employees over receipts for fiscal year 2012 was A$4.2 million. In addition, for fiscal year 2012, we expended
A$12.3 million for capitalized project costs (primarily for the Taralga Project and the large-scale solar projects in Europe),
incurred net finance costs of A$2.5 million and made no cash payments for income taxes.



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                                    |  | 2014                |      
|                                                                      |  |                     |      
|Cash flow from investing activities                                   |  |                     |      
|Proceeds from sale of property, plant and equipment                   |  |                     | 188  
|Proceeds from the sale of financial assets                            |  |                     | -    
|Purchase of property, plant and equipment                             |  |                     | (672 
|Payment for investments                                               |  |                     | -    
|Proceeds from sale of investments                                     |  |                     | 1,789
|Payment for the purchase of controlled entities, net of cash acquired |  |                     | -    
|Net cash flows used in investing activities                           |  |                     | 1,305



Net cash generated from investing activities was A$1.3 million
for the year ended June 30, 2014, an increase from A$0.8 million cash generated in investing activities for the year ended June
30, 2013. 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.



83







Net cash generated from investing activities was A$0.8 million
for the fiscal year ended June 30, 2013 as compared with a net use of funds for the fiscal year ended June 30, 2012 of A$2.2 million.
During fiscal year 2013 our need to generate cash led to the sale of the Larkden Technology, a financial asset that, together with
cash from the disposal of a small amount of property, plant and equipment, net of cash used to the purchase of the remaining interest
eco-Kinetics UK Ltd that was not owned by us, resulted in aggregate proceeds to us of A$1.0 million. This was offset by limited
purchases of property plant and equipment (PP&E) during fiscal year 2013 of A$0.3 million. In contrast, during our fiscal year
2012, cash generated from asset disposals was minimal and we made the following significant investments that together resulted
in substantially all of our net investment outflow for the year: purchases of PP&E amounting to A$0.6 million related to equipping
our Queensland Panel Manufacturing Facility (divested in our Reorganization); A$1.0 million in the common stock of Westinghouse
Solar; an additional A$0.3 million in acquiring the remaining share capital of AREM (also divested in the Reorganization); and
A$0.4 million in deferred performance payments related to the 2010 acquisition of eco-Kinetics.



Financing activities



As shown in the table below, we generated the cash used in operating
and investment activities during fiscal years 2012 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 2014 we generated A$21.9 million cumulatively from financing activities:



|                                         |  | Year Ended June 30, |       
|---------------------------------------- |  | ------------------- | ------
|Amounts in A$(000) except as noted       |  | 2014                |       
|                                         |  |                     |       
|Cash flow from financing activities      |  |                     |       
|Proceeds from share issues               |  |                     | 7,706 
|Proceeds from issue of convertible notes |  |                     | 1,013 
|Convertible note and share issue costs   |  |                     | (1,320
|Proceeds from borrowings                 |  |                     | 16,282
|Repayment of borrowings                  |  |                     | (3,699
|Payment of finance lease liabilities     |  |                     | (212  
|Net cash flows from financing activities |  |                     | 19,770





For the year ended June 30, 2014, net cash inflows from our
financing activities was A$19.8 million as compared with net cash used by financing activities of A$12.6 million for the year ended
June 30, 2013. 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.



For the fiscal year ended June 30, 2013, net cash used by our
financing activities was A$12.6 million as compared with net cash provided by financing activities of A$14.7 million for the fiscal
year ended June 30, 2012. During fiscal year 2013, A$10.8 million of borrowings were repaid to the lenders of the finance facility
used to fund the construction of the Italian Solar Project and A$2.5 million was repaid on our trade finance facility outstanding
with Westpac Banking Corporation Limited. We also disbursed A$0.2 million during fiscal year 2013 to meet financing lease obligations.
These fiscal year 2013 cash outflows were offset during the year by A$0.2 million in net proceeds received from sales of ordinary
shares, A$0.1 million from an additional subscription of Series 1 Notes in August 2012 and draw down on an inventory financing
facility of A$0.5 million. Our net inflow of funds from financing activities during fiscal year 2012 was related primarily to the
issuance of the Series 1 Notes and other unsecured convertible notes, referred to as Series 3 Notes, and draw-downs of A$10.8 million
on the credit facility arranged to fund the Italian Solar Project. . In addition, A$5.5 million of the borrowing proceeds reflected
in the table above related to loans that were secured by our then-owned STCs. These loans were subsequently repaid during the year
and hence this amount is also included in the total repayments of other borrowings shown for the year, together with A$3.0 million
was repaid against another series of secured convertible notes referred to as the Series 2 notes. There were no new equity issuances
during fiscal year 2012.



84







Indebtedness



As a result of the Reorganization Plans, we have no outstanding
debt at the level of our parent company, but we do have trade creditor balances amounting to approximately A$0.2 million as of
May 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 April 30, 2014,
three of our subsidiaries, Parmac, GED and BlueNRGY LLC have obligations that are non-recourse to our Parent Company under separate
secured credit facilities as well as deferred payment plans with trade creditors and, in the case of Parmac, finance leases undertaken
for the purchase of motor vehicles, equipment and machinery as follows.



Parmac





Working Capital Facility unsecured: In April 2015 one
of our subsidiaries, Parmac, secured a line of credit with an affiliate of our Managing Director (refer to Item 7B under the heading
Related Party Transactions), 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 28, 2015, the Company had drawn the maximum amount available under the
Parmac Liquidity Facility. The Liquidity Facility has a maximum term of four months and expires 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
unsecured but we have granted lender the right to place a lien on the trade receivables of Parmac and we expect the lender to do
so.





Deferred Trade Obligations (unsecured): As of May 28, 2015,
Parmac had outstanding A$0.2 million of deferred trade accounts payable. These deferred payables are all subject to structured
payment arrangements that approximately match a structured payment arrangement from one of Parmac’s customer that required
extended time to satisfy amounts owed to Parmac. Our management believes that this deferred receivable will be collectible in full
and has recorded no bad-debt provision for this account debtor. In aggregate, Parmac maintained a positive working capital balance
as of May 28, 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$296,000 as of April 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, 2014 A$100,000 of the financing leases were recorded
as current obligations and the remaining A$286,000 finance lease balance was classified as non-current.



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 the a first lien on the assets of GED.



85







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 have entered into Payment Plan Agreements with these trade creditors whereby GED commits to make 18 monthly payments to these
creditors to satisfy the indebtedness. No interest or other charges are payable on the Payment Plan Agreements.



5.C.           Research
and Development



For our fiscal years 2012-2014 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 “Market Overview and Business Segments”
and Item 5.A under the heading “Overview”.



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.



5.F.           Tabular
Disclosure of Contractual Obligations



As of March 31, 2015 our contractual, obligations, excluding
trade creditors, were as set forth below:



|                        |  | Payments Due By Period |      
|----------------------- |  | ---------------------- | -----
|(Amount in A$ 000)      |  | Total                  |      
|                        |  |                        |      
|Obligations under:      |  |                        |      
|Operating leases        |  |                        | 676  
|Financing leases        |  |                        | 296  
|Borrowings and interest |  |                        | 1,142
|                        |  |                        | 2,114



86







ITEM 6.     DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES



6.A.           Directors
and Senior Management



The following table presents our directors, executive officers
and key employees.



The following table presents our directors, executive officers
and key employees.



|Name               |  | Age |  | Position                                                                                        
|------------------ |  | --- |  | ------------------------------------------------------------------------------------------------
|Executive Officers |  |     |  |                                                                                                 
|William Morro      |  | 61  |  | Managing Director (the equivalent of an American company’s chief executive officer) and Director
|Richard Pillinger  |  | 40  |  | Chief Financial Officer and Secretary                                                           
|Emmanuel Cotrel    |  | 34  |  | Senior Vice President                                                                           
|                   |  |     |  |                                                                                                 
|Directors *        |  |     |  |                                                                                                 
|Carlo Botto        |  | 54  |  | Independent Director                                                                            
|John H. Chapple    |  | 61  |  | Independent Director                                                                            
|Yves-Regis Cotrel  |  | 62  |  | Independent Director                                                                            
|John F. Donohue    |  | 54  |  | Independent Director                                                                            





William Morro.  Mr.
Morro was appointed to our Board in February 2014 and was appointed our Managing Director and Chairman in January 2015. Mr. Morro
is 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. 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.





87







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 CBD Energy, 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. Emmanuel is our Senior Vice President
and heads our Data Management and O&M business as Chief Executive Officer of BlueNRGY LLC. Mr. Cotrel founded BlueNRGY LLC
in 2012 and served as its Chief Executive Officer since inception. Prior to founding BlueNRGY LLC 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.





Directors



Carlo Botto.  Mr.
Botto is a member of our Board and joined CBD Energy in 2011, initially as a consultant. In 2012, he was appointed Senior Vice
President of Strategy & Development and, in 2013, he was appointed as a Board member. 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 our 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.



John H. Chapple. Mr. Chapple
is President and a principal of Hawkeye Investments, a private equity investment business. Mr. Chapple has been the President at
Hawkeye Investments LLC since in 2006. In this capacity he has served on the boards of directors of numerous private companies
and he continues to serve on several such private boards. During the prior five years Mr. Chapple also served on the boards of
directors of the following public companies: Yahoo! Inc. until 2010, and F5 Networks Inc and Cbeyond, Inc until 2011. Mr. Chapple
has over 25 years of experience in the wireless communications and cable television industries during which he served as President,
Chief Executive Officer, and Chairman of the Board of Nextel Partners Inc. and its subsidiaries from August 1998 until June 2006.
From 1995 to 1997, Mr. Chapple was the President and Chief Operating Officer for Orca Bay Sports and Entertainment in Vancouver,
B.C. During Mr. Chapple's tenure, Orca Bay owned and operated Vancouver's National Basketball Association and National Hockey League
sports franchises in addition to the General Motors Place sports. Mr. Chapple is also the past Chairman of Cellular One Group and
the Personal Communications Industry Association and past Vice Chairman of the Cellular Telecommunications Industry Association
and has been on the Board of Governors of the NHL and NBA. Earlier in his career he served as an executive for McCaw Cellular Communications
and subsequently AT&T Wireless Services following the merger of those companies and prior to that he served on the senior management
team of American Cablesystems and Rogers Cablesystems. Mr. Chapple has been a member of the Syracuse University Board of Trustees
since 2005, and currently serves as Chairman Emeritus, He also serves on the Advisory Board for the Maxwell School of Syracuse
University, the Daniel J. Evans School of Public Affairs at the University of Washington and the Apostle Islands Historic Preservation
Conservancy. He is the past Chairman of Cellular One Group and the Personal Communications Industry Association, past Vice-Chairman
of the Cellular Telecommunications & Internet Association and has been on the Board of Governors of the NHL and NBA. Mr. Chapple
received a Bachelor’s degree from Syracuse University and a Graduate Degree from Harvard University’s advanced Management
Program.





88







Yves-Regis Cotrel. Mr. Cotrel
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.









John F. Donohue. Mr. Donohuehas over twenty years of general management and operational experience in both start-up and established businesses with international
activities. He currently serves as a board member of MarqMetrix, a research, development, and consulting company that provides
government and commercial clients with optical measurement products and solutions. Until 2012, Mr. Donohue was a member of the
board of directors of SeaMobile, Inc., a company which he co-founded in 2004 to serve the maritime communications sector. During
his tenure at SeaMobile he held various executive operating, business development and fund-raising roles. During 2011, Mr. Donohue
also served as Chief Operating Officer of L14, an investment firm established to own and operate wind, solar and biogas power plants
Europe. Mr. Donohue is a veteran of the telecommunications industry having served earlier in his career as Vice President of Business
Development for Western Wireless International and Vice President of International Operations for McCaw Cellular Communications/AT&T
Wireless Services. He holds a Bachelor degree in Political Science from Union College in New York.



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, 2014.



|                                                                    |  | Short-term Benefits |           |  | Post- employment Benefits |  |         | Value of Share-
based Payments |  |  |        | 
|------------------------------------------------------------------- |  | ------------------- | --------- |  | ------------------------- |  | ------- | ------------------------------ |  |  | ------ | 
|Amounts in A$                                                       |  | Salary  and Fees    |           |  | Other                     |  |         | Superannuation                 |  |  | Shares | 
|                                                                    |  |                     |           |  |                           |  |         |                                |  |  |        | 
|Gerard McGowan – CEO and Chairman                                   |  |                     | 630,475   |  |                           |  | 67,979  |                                |  |  | 7,237  | 
|Todd Barlow – Independent Director                                  |  |                     | 5,339     |  |                           |  | 64,722  |                                |  |  | 494    | 
|William Morro – Non-Executive Director                              |  |                     | 5,339     |  |                           |  | 17,464  |                                |  |  | 494    | 
|Carlo Botto  - Executive Director                                   |  |                     | 155,339   |  |                           |  | 64,036  |                                |  |  | 14,371 | 
|Richard Pillinger - Chief Financial Officer                         |  |                     | 250,000   |  |                           |  | -       |                                |  |  | 23,125 | 
|Patrick Lennon - Senior Vice President, Wind and Off Grid Solutions |  |                     | 320,366   |  |                           |  | 49,336  |                                |  |  | 29,634 | 
|James Greer - CEO of International Operations                       |  |                     | 146,147   |  |                           |  | 46,992  |                                |  |  | -      | 
|Total                                                               |  |                     | 1,513,005 |  |                           |  | 310,529 |                                |  |  | 75,355 | 



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, 2013.



89







|Amounts in A$                      |  | Short-term Benefits |           |  | Post- employment Benefits |  |        | Value of Share-based Payments |  |  |         | 
|---------------------------------- |  | ------------------- | --------- |  | ------------------------- |  | ------ | ----------------------------- |  |  | ------- | 
|                                   |  | Salary and Fees     |           |  | Other                     |  |        | Superannuation                |  |  | Shares  | 
|Gerard McGowan – CEO and Chairman  |  |                     | 659,055   |  |                           |  | -      |                               |  |  | 5,780   | 
|Mark Vaile – Independent Director* |  |                     | 30,581    |  |                           |  | -      |                               |  |  | 2,752   | 
|Todd Barlow – Independent Director |  |                     | 64,220    |  |                           |  | -      |                               |  |  | 5,780   | 
|Carlo Botto  - Executive Director  |  |                     | 300,000   |  |                           |  | -      |                               |  |  | 25,000  | 
|Richard Pillinger                  |  |                     | 250,001   |  |                           |  | -      |                               |  |  | 22,500  | 
|Edwin Cywinski**                   |  |                     | 226,000   |  |                           |  |        |                               |  |  | 31,215  | 
|Allan McClaren***                  |  |                     | 20,133    |  |                           |  | 2,304  |                               |  |  | 1,810   | 
|Patrick Lennon                     |  |                     | 321,102   |  |                           |  | 39,138 |                               |  |  | 28,899  | 
|James Greer                        |  |                     | 200,000   |  |                           |  | -      |                               |  |  | -       | 
|Total                              |  |                     | 2,071,092 |  |                           |  | 41,442 |                               |  |  | 123,736 | 



* Mark Vaile served as non-executive chairman of the board until
resigning effective January 31, 2013.

** Edwin Cywinski resigned May 13, 2013.

*** Allan McClaren retired August 17, 2012.



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, 2012.



|Amounts in A$                           |  | Short-term Benefits |           |  | Post-
employment Benefits |  |         | Value of Share-based Payments |  |  |         | 
|--------------------------------------- |  | ------------------- | --------- |  | ------------------------- |  | ------- | ----------------------------- |  |  | ------- | 
|                                        |  | Salary and Fees     |           |  | Other                     |  |         | Superannuation                |  |  | Shares  | 
|Gerard McGowan – CEO and Chairman       |  |                     | 633,765   |  |                           |  | 136,364 |                               |  |  | 5,780   | 
|Mark Vaile – Independent Director       |  |                     | 91,743    |  |                           |  | -       |                               |  |  | 8,257   | 
|James Anderson* - Independent Director* |  |                     | 194,296   |  |                           |  | -       |                               |  |  | 3,987   | 
|Todd Barlow – Independent Director      |  |                     | 64,220    |  |                           |  | -       |                               |  |  | 5,780   | 
|Carlo Botto                             |  |                     | 296,203   |  |                           |  | -       |                               |  |  | 26,658  | 
|Richard Pillinger                       |  |                     | 187,500   |  |                           |  | 23,000  |                               |  |  | 16,875  | 
|Edwin Cywinski                          |  |                     | 260,000   |  |                           |  | -       |                               |  |  | 23,400  | 
|Allan McClaren                          |  |                     | 193,069   |  |                           |  | 17,523  |                               |  |  | 35,459  | 
|Patrick Lennon                          |  |                     | 321,101   |  |                           |  | 19,603  |                               |  |  | 28,899  | 
|James Greer                             |  |                     | 200,000   |  |                           |  | -       |                               |  |  | -       | 
|Total                                   |  |                     | 2,441,897 |  |                           |  | 196,490 |                               |  |  | 155,095 | 



* James Anderson resigned March 8, 2012.



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), options and performance incentives. 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.



90







The employment terms and conditions for all of our executives
and directors are formalized in contracts of employment or service contracts. For employees, terms of employment require that an
executive contracted person be provided with a minimum of 3 months’ notice prior to termination of an employment or service
contract. A contracted person deemed employed on a permanent basis may terminate their employment by providing at least 3 months’
notice. Termination payments are not payable on resignation or under the circumstances of unsatisfactory performance.



The remuneration of directors and key executives is determined
by the Remuneration Committee on an annual basis. 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 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 commencing June 14, 2014. Under his agreement, Mr. Cotrel is an at-will
employee. 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 $250,000subject 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%, subject to meeting targets set by the board.





Employee Equity Plan



On May 8, 2014, the board of directors 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 of directors 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 remuneration
committee of our board of directors. The remuneration 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 remuneration 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.





91







The remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration 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 remuneration committee.



The remuneration committee may award dividend equivalent rights
in respect of awards made under the 2014 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 remuneration committee may not, without shareholder approval,
reprice our outstanding share options or share appreciation rights.



92







In the event of a change in control of our company, the outstanding
awards may be treated as described below. For share options and share appreciation rights, the remuneration 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 remuneration 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 of directors may suspend, amend or terminate the 2014
Equity Plan and our remuneration 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 of directors
as described above.



6.C.           Board
Practices



Independence



Four of the five
members of the Board are considered to be independent according to the Australian law definition of independence. Mr. Morro, who
became an executive of the Company on February 9, 2015, is the only non-independent member of the Board.



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.



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.



6.D.           Employees



As of April 30,
2015, we employed approximately 87 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 April 30, 2015 per division is:



|                 |  | Number of Employees |   
|---------------- |  | ------------------- | --
|                 |  | As of June 30,      |   
|Business Segment |  | 2014                |   
|Head office      |  |                     | 11
|Solar PV         |  |                     | 26
|Large-scale wind |  |                     | 5 
|CapTech          |  |                     | - 
|Parmac           |  |                     | 50
|Data Monitoring  |  |                     | - 
|Total            |  |                     | 92



Of our 87 employees
as of April 30, 2015, 15 were located outside Australia, of which 2 were in the United Kingdom and 13 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
34 employees of Parmac, our employees are not represented by labor unions or covered by collective bargaining agreements



93







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 May 29, 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.
| | - | ---------------------------------------------------------------





|Name and Address of Beneficial Owner (1)                                                                                                                                                   |  | Shares |            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | -----------
|                                                                                                                                                                                           |  | Number |            
|Washington H. Soul Pattinson & Company Limited (3)                                                                                                                                         |  |        | 58,488,472 
|Christian Barbey(4)                                                                                                                                                                        |  |        | 17,837,325 
|                                                                                                                                                                                           |  |        |            
|Directors and Executive Officers                                                                                                                                                           |  |        |            
|Mr. Carlo Botto (5)                                                                                                                                                                        |  |        | 1,518,280  
|                                                                                                                                                                                           |  |        |            
|Mr. John Chapple                                                                                                                                                                           |  |        | 14,060,040 
|                                                                                                                                                                                           |  |        |            
|Mr. Emmanuel Cotrel (6)                                                                                                                                                                    |  |        | 32,561,336 
|                                                                                                                                                                                           |  |        |            
|Mr. Yves-Regis Cotrel (6)                                                                                                                                                                  |  |        | 56,454,794 
|                                                                                                                                                                                           |  |        |            
|Mr. John Donohue                                                                                                                                                                           |  |        | 8,572,918  
|                                                                                                                                                                                           |  |        |            
|Mr. William Morro (7)                                                                                                                                                                      |  |        | 23,382,496 
|                                                                                                                                                                                           |  |        |            
|Mr. Richard Pillinger                                                                                                                                                                      |  |        | 5,000,000  
|                                                                                                                                                                                           |  |        |            
|Executive officer (as defined by Rule 3b-7 of the Securities and Exchange Act of 1934) and directors as a group (7 persons, including the executive officer and directors names above) (8) |  |        | 134,119,483





(1) Unless otherwise indicated, the address for each of the
shareholders is c/o BlueNRGY Group Limited, 32 Martin Place, Sydney, NSW 2000.



94







(2) The applicable percentage of ownership for each beneficial
owner is based on 320,277,838 ordinary shares outstanding as of May 29, 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 Ch. des Blanchettes 47 - 1093
La Conversion -Switzerland

(5) Includes all shares owned by Mr. Botto’s spouse, the
beneficial ownership of which is disclaimed.



(6) 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.

(7) Includes shares owned by WHI, Inc Retirement Savings Plan
Trust, of which Mr. Morro is the beneficial owner.

(8) Shares owned by Ryames Investment Company LLC are counted
only once in the total for our executive officers and directors as a group.





ITEM 7     MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS



7.A.           Major
Shareholders



Five shareholders known to us owned beneficially more than 5%
of our ordinary shares as of May 29, 2015. See Item 6.E under the heading “Beneficial Ownership of Senior Managers and
Directors”.





As of May 7, 2015, 29.6% of our ordinary
shares were held in the United States by 84 holders of record, and 70.4% of our ordinary shares were held in various foreign
jurisdictions by 2,563 holders of record. None of the holders of our ordinary shares has different rights from other
shareholders.



7.B.           Related
Party Transactions



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 2014, 2013 and 2012 fiscal
years and subsequently through the date of this registration statement, 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 was at the
exchange value at the time the transactions occurred and at the amounts agreed to by parties. We believe that all of these transactions
were conducted on terms substantially equivalent to those that would have been established for similar transactions with non-affiliated
parties. During the period from July 1, 2014 through May 29, 2015:



| | • | Between July 1, 2014 and his suspension on October 24, 2014, a series of payments were made to a Director,
Mr. McGowan from the Company and its subsidiaries totalling $121,900 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 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 recognised 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 the maximum amount available under the Parmac Liquidity Facility. The Liquidity Facility has a maximum term
of four months and expires 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 secured over the trade receivables of Parmac.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



95







| | · | Some of our Directors, or their related
entities, have subscribed to purchase our ordinary shares under a Securities Purchase Agreement as follows:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



|Director              |  | Subscription Amount US$ |         |  | Subscription Price Per Share US$ |   |         | Number ofOrdinary SharesIssued | 
|--------------------- |  | ----------------------- | ------- |  | -------------------------------- | - | ------- | ------------------------------ | 
|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 follows. This transaction occurred before these individuals were appointed to our Board
of Directors or as Executives of our company:
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Director                |  | Number ofOrdinary SharesIssued |           
|----------------------- |  | ------------------------------ | ----------
|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.





| | · | 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 Mr. Morro made cash advances to us in the amounts of $58,590 and $90,000 respectively. These amounts were advanced
to pay certain of our expenses in connection with the preparation of the DOCA and interim operations thereunder and immediately
following consummation of the transactions contemplated therein. The amounts advanced have not yet been repaid, but we expect to
do so, without interest or fees, as soon as we have funds are available.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the fiscal year ended June 30, 2014:



| | • | TRW Pty Limited, an entity in which a 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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | TRW Holdings Pty Ltd, an entity in which a Director, 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 $560,920. Of the payments made in 2014, $346,965 was made outside of the Company’s
customary approval processes and was 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 or the year ended June 30, 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



96







| | • | A series of payments were made to Mr. McGowan from the Company and its subsidiaries totalling $134,100
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 him. 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 recognised
as an expense in profit or loss for 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.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Company paid Pitt Capital Partners Limited, an entity in which a director, Todd Barlow has
a direct interest, fees for corporate services of $180,290. Pitt Capital Partners Limited is an affiliate of Washington H Soul
Pattinson & Co Limited (WHSP), CBD’s largest shareholder.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Our wholly-owned subsidiary, Capacitor Technologies Pty Ltd., or CapTech, paid Brodpower Pty Ltd,
A$58,025 for contract maintenance and repair services. Yuri Brodsky was the Managing Director of CapTech prior to its sale and
had an ownership interest in Brodpower Pty Ltd.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Transactions with Sligo Investments
Limited





During the years ended June 30, 2014, 2013
and 2012 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.



During the year ended June 30, 2012 the
Company issued Series 1 Convertible Notes with a face value of US$1,000,000 to Sligo. On subscription to the Series 1 Convertible
Notes 15,723 warrants were issued to Sligo with an exercise price of US$15.90 and an expiry date of May 31, 2017. A further 24,245
warrants with an exercise price of US$15.90 and an expiry date of May 31, 2017 were issued to Sligo during the 2013 financial year
following an amendment to the Series 1 Convertible Notes. Interest and fees were incurred on these notes in the year ended June
30, 2014 of US$235,005 (2013: US$348,676; 2012: US$Nil). These charges were incurred on the same terms as for all Series 1 Noteholders.
In June 2014 the Series 1 Notes held by Sligo and all accrued interest and charges totalling US$1,561,093 were exchanged for 390,273
ordinary shares in the Company. At June 30, 2014 the balance on the Series 1 notes issued to Sligo was $Nil.



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.



Transactions with Solon AG



An amount of $676,000 was paid to Solon
AG in December 2013 which was solely initiated by a Director, 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 we have 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 will be credited against Other Assets unless additional information
is obtained by the Company to contradict this accounting treatment.



97







During the fiscal year ended June 30, 2013:



| | • | TRW Holdings Pty Ltd, an entity in which Mr. Gerard McGowan (our Managing Director and Executive
Chairman) has a controlling interest, received payments for executive services provided by Mr. McGowan and for underwriting fees,
reimbursement of travel expenses and other operating disbursements incurred on behalf of our company. The total amount paid or
payable to TRW Holdings Pty Ltd, including GST, for services, other than for the services of Mr. McGowan acting as Executive Chairman
and Managing Director of CBD Energy Ltd, was A$91,915.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Group committed to pay Pitt Capital Partners Limited (an entity in which a Director at that
time, Todd Barlow has a direct interest) an advisory fee equal to 10% of the net proceeds derived from the sale of non-core assets
sold with such firm’s assistance. No fees relating to this assignment were paid to Pitt Capital Partners during our 2013
fiscal year. However, as described immediately above, fees were paid in September 2013 (after our fiscal 2013 year-end) in relation
to the August 2013 sale of the CapTech business. Pitt Capital Partners Limited is an affiliate of WHSP, our largest shareholder.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Through June 30, 2013, our former wholly-owned subsidiary, Capacitor Technologies Pty Ltd., or
CapTech (which we divested in August 2013), paid Brodpower Pty Ltd, A$409,660 for contract maintenance and repair services. Yuri
Brodsky, the Managing Director of CapTech has an ownership interest in Brodpower Pty Ltd.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the fiscal year ended June 30, 2012:



| | • | TRW Holdings Pty Ltd, an entity in which Mr. Gerard McGowan (our Managing Director and Executive
Chairman) has a controlling interest, received payments for executive services provided by Mr. McGowan and for underwriting fees,
reimbursement of travel expenses and other operating disbursements incurred on behalf of our company in the aggregate amount of
A$4,596, which amount includes GST for services other than those of Mr. McGowan acting as our Managing Director.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Corporate and Administrative Services Pty Ltd, a company wholly owned by Pitt Capital Partners
Limited (an entity in which a director at that time, Todd Barlow, has a direct interest), received payments for consulting, corporate
services, reimbursement of travel expenses and other operating disbursements. The total amount payable to Corporate and Administrative
Services Pty Ltd was A$22,085.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Company paid Pitt Capital Partners Limited, an entity in which a director, Todd Barlow has
a direct interest, fees for corporate services of $126,066. Pitt Capital Partners Limited is an affiliate of Washington H Soul
Pattinson & Co Limited (WHSP), CBD’s largest shareholder.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | 
| | - | 

| | • | Our wholly-owned subsidiary, Capacitor Technologies Pty Ltd., or CapTech, paid Brodpower Pty Ltd,
A$375,904 for contract maintenance and repair services. Yuri Brodsky, the Managing Director of CapTech has an ownership interest
in Brodpower Pty Ltd.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | As
                                         part of the purchase of eco-Kinetics the Company agreed to contingent consideration to
                                         be paid to Edwin Cywinski on achievement of certain performance targets. Mr. Cywinski
                                         may be entitled to cash and share payments relating to the earn-out. The Company paid
                                         Mr. Cywinski $1,286,000 in relation to this earn-out agreement. Mr. Cywinski is no longer
                                         an employee of the Group.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | The Company received from Vaile & Associates, an entity in which a Director, Mark Vaile has
a direct interest, total payment of $246 for rental of office space and reimbursement of expenses.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



98







7.C.           Interests
of Experts and Counsel



Not applicable



ITEM 8.    FINANCIAL INFORMATION



8.A.           Consolidated
Statements and Other Financial Information



Financial Statements



Our financial statements are stated in
Australian Dollars (A$) and are prepared in accordance with Australian Accounting Standards.



See our audited financial statements for
the fiscal years ended June 30, 2014, June 30, 2013, and June 30, 2012 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. 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. This
lawsuit is still pending with respect to the former officers and directors and we believe that those parties intend to defend
themselves vigorously. The DOCA had the effect of extinguishing the 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. However, The DOCA had
the effect of extinguishing the claims against the us in this action, but 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.



99







Both of these suits are still pending with
regard to the current and former officers/directors and the current officers and directors plan to defend themselves vigorously.
The Administration” had the effect of extinguishing the claims against the Company in these actions.



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, 2014 on the dates indicated:



(a) Transactions



On July 3, 2014, BlueNRGY acquired 100% of the share capital
of Green Earth Developers, LLC (‘GED’). Consideration paid consisted of a combination of cash, deferred cash payment
obligations and 500,000 Company ordinary shares with an approximate value of US$3,175,000.



On January 27, 2015 we acquired 100% of the share capital of BlueNRGY LLC. Refer to the heading “(f)
Entry into Material Definitive Agreements” below under this Item 8.B.



(b) Financing



On July 25, 2014, BlueNRGY entered into a securities purchase
agreement with certain foreign investors, pursuant to which the Company issued a total of 900 newly authorised Series B Cumulative
Convertible Preferred Shares, together with warrants to purchase up to 112,500 ordinary shares of the Company for an aggregate
purchase price of $900,000. The exercise price per Ordinary Share under the Warrants is 125% of the 10-day volume weighted average
price of the Company’s Ordinary Shares on the Initial Closing Date (which the parties agreed was $3.2916). The Warrants are
exercisable immediately and expire on July 25, 2018.



During July and August 2014, the Company sold 2,500 Series B
Cumulative Convertible Preferred Shares together with Warrants to purchase up to 416,667 Ordinary Shares for an aggregate purchase
price of US$2,500,000.



100







On July 24, 2014 the Company issued 465,000 Ordinary Shares
and on August 9, 2014 it issued 122,500 Ordinary Shares upon the respective conversions of 186 and 49 Class A Preferred Shares.
The Company has committed to redeem all of the remaining 200 Series A Preferred Shares and to accept a contemporaneous subscription
for 2,000 Series B Preferred Shares having a Face Value equal to that of the redeemed Series A Preferred Shares.



On September 3, 2014 the Company issued 275,000 ordinary shares
in lieu of cash payments as due diligence fees and professional services supplied to the Company.



(c) Other



Listed status and Trading



On October 21, 2013 the Company signed an exclusive, worldwide,
long-term license agreement with Westinghouse Electric Corporation to use the WESTINGHOUSE® trademark as the corporate banner
for its solar business. This agreement was terminated on January 30, 2015.



On November 13, 2014, NASDAQ halted trading in the shares of
the Company as a result of the Company’s failure to lodge its 2014 Annual Report and this halt is still in place.



On November 25, 2014, the Company received a letter from NASDAQ’s
Listing Qualifications Department stating that, in light of the commencement of the voluntary administration, trading of the Company’s
common stock was to be suspended at the opening of business on Thursday December 4, 2014 and that they would seek the delisting
of the Company’s shares. BlueNRGY appealed the delisting determination and appeared with counsel at a hearing before an independent
Nasdaq Hearings Panel on January 8, 2015.



On January 26, 2015, the Company received a letter from the
Panel granting the Company’s request for continued listing on the Nasdaq Capital Market subject to meeting a series of deadlines
including filing its Annual Report on Form 20-F for the year ended June 30, 2014.





On October 23, 2014, the Audit Committee, after discussions
with PricewaterhouseCoopers (‘PwC’), the Company’s independent registered public accounting firm at that time,
determined that there was sufficient uncertainty about the accuracy of disclosures about related-party transactions involving its
Executive Chairman and Managing Director, Mr. McGowan, and therefore that its previously issued audited financial statements for
the fiscal years ended June 30, 2013 and 2012 should no longer be relied upon.



Notice of material control weaknesses and investigation
of possible contraventions of the Corporations Act



The Audit Committee received notices from PwC that PwC has identified
material weaknesses in financial controls and had identified the possibility of misconduct and contraventions of the Australian
Corporations Act 2001 (Cth) (the ’Act’) by the Company and involving the Company’s Executive Chairman and Managing
Director, Mr. McGowan.



Resignation of Registered Independent Public Accounting
Firm



Effective November 10, 2014, PricewaterhouseCoopers (‘PwC’),
the registered independent public accounting firm for BlueNRGY Group Limited (the ‘Company’), resigned from its role
as auditor of the Company’s financial statements in connection with the Company’s US legal and regulatory requirements,
having concluded that it is not independent of BlueNRGY under applicable PCAOB rules due to non-payment of its professional fees
by the Company.



Engagement of new independent registered public accounting
firm



On January 29, 2015, the Audit Committee of the Company’s
Board of Directors appointed HLB Mann Judd (‘HLB’) as the Company’s new independent registered public accounting
firm. HLB have audited the Company’s financial statements for the years ended June 30, 2012, June 30, 2013, and June 30,
2014. This appointment was approved by shareholders at the Extraordinary General Meeting held on March 12, 2015 following the removal
of PwC as auditor of the company.



101







(d) Voluntary Appointment of Administrators



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
(i) were 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) appoint Said Jahani and Trevor Pogroske from Grant
Thornton 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,
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. The Company’s other subsidiaries continued to operate
outside the VA process.



Immediately prior to the commencement of the VA, the Company
and Westinghouse Solar Pty Ltd entered into an amendment to the existing finance and security arrangements with the company’s
secured creditor, Wind Farm Financing Pty Ltd (WFF), pursuant to which WFF made additional advances totaling A$400,000 to those
companies.  A$240,000 was advanced to the trust account of Grant Thornton, Sydney, for the sole and exclusive purpose
of enabling the companies to pay Employee Entitlements, of which A$216,603 was agreed to be used immediately to partially pay outstanding
Employee Entitlements owed by the Companies.  In addition, A$160,000 was advanced by WFF to the Trust Account for purposes
of funding the trading expenses of the VA Companies.



(e) Exiting Voluntary Administration



Effectiveness of Two Deeds of Company Arrangement



On December 24, 2014, two deeds of company arrangement under
the Australian Corporations Act 2001 (collectively, the ’Reorganisation Plans’) were signed. The Reorganisation Plans
became effective on January 27, 2015, along with a variation of the Reorganization Plans that removed all references to a draft
license agreement and specified that the Administrators of the Deed Funds will hold 38,123,652 shares in trust – 90% under
the Company’s Trust Deed and 10% under the Trust Deed of the Company’s subsidiary, Westinghouse Solar Pty Ltd.



The Reorganisation Plans provide, among other things, that:
(i) creditor claims and contingent liabilities of the Company were extinguished and creditors received newly issued ordinary shares
of the Company; and (ii) investors infused US$1 million into the Company in order to meet the requirements of the Deed Funds set
forth in the Reorganisation Plans. The Deed Funds will be used to pay creditor claims. Creditors of the Company will receive $610,000
and creditors of the Company’s subsidiary, Westinghouse Solar Pty Ltd, will receive $390,000.



As a consequence of the effectiveness of the Reorganisation
Plans, Said Jahani and Trevor Pogroske from Grant Thornton are no longer joint and several administrators. The Company has now
exited voluntary administration and is being managed by its Board of Directors (the ‘Board’).



(f) Entry into Material Definitive Agreements



On November 19, 2014, the Company’s subsidiary, GED, entered
into a Loan and Security Agreement with WFF pursuant to which it agreed to lend GED up to $360,000 (the ‘GED Loan’).  The
GED Loan bears interest at a rate of 6% per annum and is payable on demand.  All of GED’s obligations under the
GED Loan are secured by a first lien on the assets of GED.



102







BlueNRGY Acquisition



In connection with effectuating the Reorganisation Plans, the
Company, on January 27, 2015, entered into an Amended and Restated Membership Interest Purchase Agreement (the ‘Purchase
Agreement’) in order to acquire BlueNRGY, LLC (‘BlueNRGY’). Pursuant to the Purchase Agreement, the Company acquired
100% of the issued and outstanding membership interests of BlueNRGY (the ‘Acquisition’). The purchase price of BlueNRGY
was the issuance of an aggregate of 150,162,640 ordinary shares of the Company to BlueNRGY’s previous owners.



(g) Issuance of Shares



In connection with effectuating the Reorganisation Plans, the
Company, on January 27, 2015, entered into an Amended and Restated Membership Interest Purchase Agreement (the ‘Purchase
Agreement’) in order to acquire BlueNRGY, LLC (‘BlueNRGY’). Pursuant to the Purchase Agreement, the Company acquired
100% the issued and outstanding membership interests of BlueNRGY (the ‘Acquisition’). The purchase price of BlueNRGY
was the issuance of an aggregate of 150,162,640 ordinary shares of the Company.



Pursuant to the Reorganisation Plans summarized under the heading
‘Exiting Voluntary Administration’, the Company issued 96,028,937 ordinary shares to Company.



Immediately following the effectiveness of the Reorganisation
Plans, certain creditors exchanged $701,513 of indebtedness at the Offering Price and the Company issued 18,534,029 ordinary shares
to them.



Since January 27, 2015 the Company has raised the equivalent
of $2,336,000 through the issuance of 48,877,148 ordinary shares. Of this, $1,247,000 was paid to the Deed Fund.



(h) Change in Terms of Series B Preferred
Shares





As a condition to the Purchase Agreement, the Series B Preferred
Share terms were amended by unanimous resolution of the Company’s Board and the holders of the requisite majority of the
Series B Preferred shares. The conversion price was reset to 1.325 times the Offering Price and the right of Series B Preferred
Shares to receive dividends was eliminated after January 31, 2015.  The rights of Series B shareholders to appoint a
member of the Board and to limit future share issues were also eliminated.  This summary of the modifications to the
terms of our Series B Preferred Shares is qualified in its entirety by the revised terms set forth in the exhibit to the Securities
Purchase Agreement pursuant to which the private placement proceeds were raised to effect the DOCA and which was included as an
exhibit to our Form 6-K/A filed on January 29, 2015.





(i) Board and Executive Changes



On July 18, 2014, Todd Barlow resigned as a director of the
company.



Effective August 5, 2014, Luisa Ingargiola was appointed as
a non-executive member of the Board by the holders of a requisite majority of the Company’s Series B Shares in accordance
with the rights of the Series B Shares to appoint one member of the Company’s Board. Upon joining the Board, Ms. Ingargiola
was appointed to the Company’s Audit Committee and Compensation Committee. Ms. Ingargiola resigned as a director on October
23, 2014.



Effective as of October 21, 2014, the Company’s Directors
appointed William Morro as non-executive Chairman of the Board and Chairman of its Executive Committee.



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; removed as a director of all
Company subsidiaries where the applicable constitutional authority permitted such action; and the Administrator terminated the
Contractor Agreement entered into as of May 1, 2014 between the Company, TRW Holdings Pty Ltd (‘TRW’) and Mr. McGowan
pursuant to which TRW contracted to procure Mr. McGowan’s services as Chief Executive Officer of the Company.



Effective December 30, 2014, Gerard McGowan resigned as a director
of BlueNRGY Group Limited.



Effective January 27, 2015, the Board appointed John H. Chapple,
Yves-Regis Cotrel, and John F. Donohue as members of the Board.  The appointment of Mr. Cotrel and Mr. Donohue became
effective on January 27, 2015 and that of Mr. Chapple on February 2, 2015.



103







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.



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.



On February 9, 2015, the Board unanimously appointed Mr. Morro
as the Company’s Managing Director and Emmanuel Cotrel as Senior Vice President of the Company.



On February 9, 2015, the Board formed an Executive Committee
comprised of Mr. Morro, Mr. Donohue, and Mr. Chapple.



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. 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             |  |                                   | 0.1950                                
|2011             |  |                                   | 0.2000                                
|2012             |  |                                   | 0.1450                                
|2013             |  |                                   | 0.0460                                
|2014             |  |                                   | 0.0160                                
|                 |  |                                   |                                       
|Fiscal Year 2013 |  |                                   |                                       
|First Quarter    |  |                                   | 0.0460                                
|Second Quarter   |  |                                   | 0.0300                                
|Third Quarter    |  |                                   | 0.0330                                
|Fourth Quarter   |  |                                   | 0.0180                                
|Fiscal Year 2014 |  |                                   |                                       
|First Quarter    |  |                                   | No market activity – trading suspended
|Second Quarter   |  |                                   | 0.0160                                
|Third Quarter    |  |                                   | 0.0160                                



OTCBB



Our ordinary shares traded on the OTCBB
from February 10, 2014 until June 13, 2014 under the ticker symbol CBDNF. The following table
sets forth, for the periods indicated, the high and low market quotations for our ordinary shares as quoted on the OTCBB.



|                 |  | CBD Ordinary Share Closing Prices |      
|---------------- |  | --------------------------------- | -----
|                 |  | US$                               |      
|                 |  | High                              |      
|Fiscal Year 2014 |  |                                   |      
|Third Quarter    |  |                                   | 10.00
|Fourth Quarter   |  |                                   | 18.00



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. Due to the delinquency of
this Report and other concerns of The NASDAQ Capital Markets about whether we met and continue to meet the listing requirements,
trading in our ordinary shares has not yet resumed. Although we are endeavoring to complete the steps necessary to allow our share
to resume trading, there can be no assurance that our ordinary shares will continue to trade on The NASDAQ Capital Market when
trading recommences, or if trading will resume. 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        |  |                                   | 4.00                                  
|                      |  |                                   |                                       
|Fiscal Year 2015      |  |                                   |                                       
|First Quarter         |  |                                   | 4.00                                  
|Second Quarter        |  |                                   | 2.56                                  
|Third Quarter         |  |                                   | No market activity – trading suspended
|                      |  |                                   |                                       
|Month (2014 and 2015) |  |                                   |                                       
|December – May        |  |                                   | No market activity – trading suspended





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 OTCBB 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
the delinquency of this Report and other concerns of The NASDAQ Capital Markets about whether we met and continue to meet the listing
requirements, trading in our ordinary shares has not yet resumed. Although we are endeavoring to complete the steps necessary to
allow our share to resume trading, there can be no assurance that our ordinary shares will continue to trade on The NASDAQ Capital
Market when trading recommences, or if trading will resume.





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.



104







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 of Shares” and the exhibits to our Form 6-K/A filed on January 29,
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.



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,
but individually these contracts are not material. 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;



•	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.





105







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 our 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 our 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 our 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 our 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.



In addition, on application by a person, the Australian Takeovers
Panel may declare that unacceptable circumstances exist in relation to the affairs of our 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 our company or the acquisition,
or proposed acquisition, by a person of a substantial interest in our 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 our 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 Consequences



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%.



106







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.



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 OTBB.



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.



107







United States Federal Income Tax Consequences



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.



108







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. We
have applied to list the ordinary shares on The NASDAQ. 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).



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.”



109







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.



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:



110







| | · | 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 our 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 The NASDAQ 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.



111







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



We currently intend to retain all available
funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the foreseeable
future. Any future determination to declare cash dividends will be made at the discretion of our Board and will depend on our financial
condition, results of operations, capital requirements, general business conditions and other factors that our Board may deem relevant.



112







10.G.         Statement
by Experts



Not applicable.



10.H.         Documents
on Display



Publicly filed documents concerning our
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://ir.stockpr.com/cbdenergy/sec-filings



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.





113







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, 2014 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 2012, 2013 and 2014,
our borrowings at variable rate were denominated in Australian Dollars. At April 30, 2015 all of our borrowings are fixed rate
(subject to penalty rates which may be applied under default events).



We constantly 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 April 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 applicable.



B.     Warrants and Rights



Not applicable.



C.     Other Securities



Not applicable.



D.     American Depositary
Shares



Not applicable.



ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES





In our 2013 fiscal year we defaulted on a bank overdraft facility
with Westpac Bank having balances of up to A$1.0 million and on our Series 1, Series 2 and Series 3 notes. As a consequence, these
debt obligations were recorded as current liabilities of A$19.1 million as of June 30, 2013. As described in Item 5.A and 5.B.,
we were subject to default fees and costs related to the defaults during our 2013 fiscal year.



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, we are not in default under any agreements
as of the date of this report on Form 20-F. Refer 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.



114







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. Refer to Item 8.B. under the heading “(g) Issuance of
Shares”.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 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. Refer
to Item 8.B under the heading “(h) Change in Terms of 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. Refer to Item 8.B. under the heading “(g) Issuance of Shares”. 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.



Use of Proceeds



Registered Securities Offering Effective June 12, 2014



Details of the Offering



Pursuant to our prospectus effective 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



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 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.





115







ITEM 15.  CONTROLS AND PROCEDURES



Limitations on Effectiveness of Controls and Procedures



In designing and evaluating our disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact
that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls
and procedures relative to their costs.



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, 2014.





Management’s Annual Report on Internal Control Over
Financial Reporting



This annual report does not include a report of management’s
assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting
firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.



Changes in Internal Control Over Financial Reporting



There was no change in our internal control 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, 2014 that
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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 2015 fiscal year that are approved by our Board.





116







ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT



The composition of our Audit Committee for fiscal years June
30, 2013 and 2014 were:



Currently: - Mr. Carlo Botto & Mr. John Donohue*

June 2014 – Mr. William Morro* and Mr. Todd Barlow

June 2013 – Mr. Todd Barlow*, Mr. Carlo Botto and Mr.
Mark Vaile





(*) 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 is attached as exhibit hereto
and will be available on our company website as soon as website reconstruction in-progress is completed.



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 |        
|-------------------------------------------------------------- |  | ------------ | -------
|                                                               |  | 2014$’000    |        
|Amounts paid or payable to the Company’s auditors              |  |              |        
|- an audit or review of the financial statements of the entity |  |              | 340,000



The following amounts were paid to the
previous auditor of BlueNRGY Group Limited, PricewaterhouseCoopers



|                                                               |  | Consolidated |        
|-------------------------------------------------------------- |  | ------------ | -------
|                                                               |  | 2014$’000    |        
|Amounts paid or payable to the Company’s auditors              |  |              |        
|- an audit or review of the financial statements of the entity |  |              | 758,000
|- other consulting and advisory services                       |  |              | -      
|- tax compliance                                               |  |              | -      
|                                                               |  |              | 758,000



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.



117







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.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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” the Company follows home country practices in lieu of the Nasdaq requirements listed below. These practices are not
prohibited under any Australian laws (including Australian Securities Exchange, or ASX, listing rules).



(1) Audit Committee Composition (Rule
5605)(c)(2)(A):The Company's Audit Committee is comprised of two directors, Mr. Botto and Mr. Donohue. Both Mr. Botto and
Mr. Donohue are independent non-executive directors. The ASX Best Practices Guidelines, or Guidelines, published by the ASX Corporate
Governance Counsel 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 consists of two directors. In early 2015, the Company appointed three new independent non-executive
directors and has amended the composition of its Audit Committee to consist of two independent non-executive directors. The Company
is considering a further Board appointment and to increase the committee to three members, the majority of whom are independent.



(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)):The Company's compensation committee (known as the remuneration committee) is
comprised of two independent non-executive directors, Mr. Chapple and Mr. Donohue. The Guidelines include recommendations that
committees should have at least three members, members should be nonexecutive 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 committee has been reduced
to two. In early 2015, the Company appointed three new independent non-executive directors and has amended the composition of its
compensation committee to consist of two independent non-executive directors. The Company is considering a further Board appointment
and to increase the committee to three members, the majority of whom are independent.



118







(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.





(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.



(8) NASDAQ FPI exemption (Rule 5615(a)(3)):The
Company has elected to follow Australian practices in lieu of the requirements of Listing Rule 5635(a), (b) and (d), shareholder
approval of, respectively, acquisition of stock or assets of another company, change of control, and private placements. 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).



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 firms:



|· | Report of Independent Registered Public Accounting Firm                 
|- | ------------------------------------------------------------------------
|· | Consolidated statements of income/(loss) and comprehensive income/(loss)
|· | Consolidated balance sheets                                             
|· | Consolidated statements of changes in equity                            
|· | Consolidated statements of cash flows                                   
|· | Notes to the Consolidated Financial Statements                          



119







BlueNRGY Group Limited

formerly CBD
Energy Limited



(A.C.N. 010 966 793)







ANNUAL FINANCIAL REPORT



FOR THE YEARS ENDED:



JUNE 30, 2014



JUNE 30, 2013



JUNE 30, 2012



Table of contents



|Report of independent registered accounting firm | 3
|------------------------------------------------ | -
|                                                 |  
|Consolidated statement of comprehensive income   | 4
|                                                 |  
|Consolidated statement of financial position     | 5
|                                                 |  
|Consolidated statement of changes in equity      | 6
|                                                 |  
|Consolidated statement of cash flows             | 7
|                                                 |  
|Notes to the financial statements                | 8



Page 2











Report of Independent Registered Accounting Firm



To the Board of Directors and shareholders
of BlueNRGY Group Limited (formerly BlueNRGY Energy 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, 2014, at 30 June 2013 and at 30 June 2012, and the
related consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended. 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, 2014, at 30 June 2013 and June 30, 2012, and the consolidated results of their
operations and their consolidated cash flows for each of the years ended 30 June 2014, 30 June 2013 and 30 June 2012 in
conformity with Australian Accounting Standards as issued by the Australian Accounting Standards Board.



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 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. 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

June 1, 2015







Page 3







Statement of comprehensive income



|                                                                                                                     |  |      |    |  | Consolidated | 
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  | ------------ | 
|For the year ended June 30                                                                                           |  | Note |    |  | 2014$’000    | 
|                                                                                                                     |  |      |    |  |              | 
|Revenues from continuing operations                                                                                  |  |      | 6  |  |              | 
|Other income                                                                                                         |  |      | 6  |  |              | 
|Cost of raw materials, consumables used, and contractors                                                             |  |      |    |  |              | 
|Employee benefit expenses                                                                                            |  |      | 7  |  |              | 
|Compliance & consultants                                                                                             |  |      |    |  |              | 
|Advertising and marketing                                                                                            |  |      |    |  |              | 
|Travel costs                                                                                                         |  |      |    |  |              | 
|Occupancy expenses                                                                                                   |  |      | 7  |  |              | 
|Provision for impairment of receivables and bad debts written off                                                    |  |      | 11 |  |              | 
|Other expenses                                                                                                       |  |      | 7  |  |              | 
|Share of net loss of associates                                                                                      |  |      |    |  |              | 
|Depreciation and amortisation expenses                                                                               |  |      | 7  |  |              | 
|Finance costs                                                                                                        |  |      | 7  |  |              | 
|Break fee from terminated acquisition                                                                                |  |      |    |  |              | 
|Impairment loss on available-for-sale financial assets                                                               |  |      |    |  |              | 
|Impairment of financial assets and interest in joint ventures                                                        |  |      | 7  |  |              | 
|Impairment of intangible assets                                                                                      |  |      | 7  |  |              | 
|Loss from continuing operations before income tax                                                                    |  |      |    |  |              | 
|Income tax benefit/(expense)                                                                                         |  |      | 8  |  |              | 
|Net loss for the period from continuing operations                                                                   |  |      |    |  |              | 
|                                                                                                                     |  |      |    |  |              | 
|Profit/(loss) from discontinued operations                                                                           |  |      | 14 |  |              | 
|                                                                                                                     |  |      |    |  |              | 
|Net 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 operation                                                             |  |      |    |  |              | 
|Other comprehensive income for the period, net of tax                                                                |  |      |    |  |              | 
|Total comprehensive loss for the period                                                                              |  |      |    |  |              | 
|                                                                                                                     |  |      |    |  |              | 
|                                                                                                                     |  |      |    |  |              | 
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |      |    |  |              | 
|Basic earnings per share                                                                                             |  |      | 9  |  |              | 
|Diluted earnings per share                                                                                           |  |      | 9  |  |              | 
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |      |    |  |              | 
|Basic earnings per share                                                                                             |  |      | 9  |  |              | 
|Diluted earnings per share                                                                                           |  |      | 9  |  |              | 



The above statement of comprehensive income should be read in
conjunction with the accompanying notes.



Page 4







Statement of financial position



|                                                                        |  |      |    |  | Consolidated | 
|----------------------------------------------------------------------- |  | ---- | -- |  | ------------ | 
|As at June 30                                                           |  | Note |    |  | 2014$’000    | 
|ASSETS                                                                  |  |      |    |  |              | 
|Current Assets                                                          |  |      |    |  |              | 
|Cash and cash equivalents                                               |  |      |    |  |              | 
|Trade and other receivables                                             |  |      | 11 |  |              | 
|Inventories                                                             |  |      | 12 |  |              | 
|Other current assets                                                    |  |      | 13 |  |              | 
|Assets classified as held for sale                                      |  |      | 14 |  |              | 
|Total Current Assets                                                    |  |      |    |  |              | 
|                                                                        |  |      |    |  |              | 
|Non-Current Assets                                                      |  |      |    |  |              | 
|Other receivables                                                       |  |      | 11 |  |              | 
|Available-for-sale and other financial assets                           |  |      | 14 |  |              | 
|Plant and equipment                                                     |  |      | 15 |  |              | 
|Goodwill and other 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 held for sale |  |      | 14 |  |              | 
|Total Current Liabilities                                               |  |      |    |  |              | 
|                                                                        |  |      |    |  |              | 
|Non-Current Liabilities                                                 |  |      |    |  |              | 
|Interest-bearing loans and borrowings                                   |  |      | 18 |  |              | 
|Deferred tax liabilities                                                |  |      | 8  |  |              | 
|Provisions                                                              |  |      | 19 |  |              | 
|Total Non-Current Liabilities                                           |  |      |    |  |              | 
|TOTAL LIABILITIES                                                       |  |      |    |  |              | 
|NET ASSETS                                                              |  |      |    |  |              | 
|                                                                        |  |      |    |  |              | 
|EQUITY                                                                  |  |      |    |  |              | 
|Contributed equity                                                      |  |      | 20 |  |              | 
|Accumulated losses                                                      |  |      |    |  |              | 
|Reserves                                                                |  |      | 21 |  |              | 
|TOTAL EQUITY                                                            |  |      |    |  |              | 



The above statement of financial position should be read in
conjunction with the accompanying notes.



Page 5







Statement of changes in equity



|For the year ended June 30                               |  | Ordinaryshares
$’000 |         |   | Preferenceshares
$’000 |  |       | Shareoptionsreserve
$’000 |  |  | Available-for-salereserve
$’000 |  |  | Translation
 reserve $’000 |      |   | Accumulated
 losses$’000 |  |     | Total$’000 | 
|-------------------------------------------------------- |  | -------------------- | ------- | - | ---------------------- |  | ----- | ------------------------- |  |  | ------------------------------- |  |  | -------------------------- | ---- | - | ------------------------ |  | --- | ---------- | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|At July 1, 2013 (restated)                               |  |                      | 109,620 |   |                        |  | -     |                           |  |  | 3,189                           |  |  |                            | 800  |   |                          |  | 33  |            | 
|Profit/(loss) for period                                 |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | -    |   |                          |  | -   |            | 
|Other comprehensive
    income                           |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | (800 | ) |                          |  | (68 | )          | 
|Total comprehensive income for the
    year              |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | (800 | ) |                          |  | (68 | )          | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|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                                 |  |                      | 120,897 |   |                        |  | 4,643 |                           |  |  | 3,336                           |  |  |                            | -    |   |                          |  | (35 | )          | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|At July 1, 2012 (restated)                               |  |                      | 109,083 |   |                        |  | -     |                           |  |  | 2,689                           |  |  |                            | -    |   |                          |  | -   |            | 
|Profit/(loss) for period                                 |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | -    |   |                          |  | -   |            | 
|Other comprehensive income                               |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | 800  |   |                          |  | 33  |            | 
|Total comprehensive income for the year                  |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | 800  |   |                          |  | 33  |            | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|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                                 |  |                      | 109,620 |   |                        |  | -     |                           |  |  | 3,189                           |  |  |                            | 800  |   |                          |  | 33  |            | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|At July 1, 2011 (restated)                               |  |                      | 107,358 |   |                        |  | -     |                           |  |  | 1,205                           |  |  |                            | -    |   |                          |  | -   |            | 
|Loss for period                                          |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | -    |   |                          |  | -   |            | 
|Total comprehensive income for the year                  |  |                      | -       |   |                        |  | -     |                           |  |  | -                               |  |  |                            | -    |   |                          |  | -   |            | 
|                                                         |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|Transactions with owners in their capacity as owners     |  |                      |         |   |                        |  |       |                           |  |  |                                 |  |  |                            |      |   |                          |  |     |            | 
|Shares issued                                            |  |                      | 1,725   |   |                        |  | -     |                           |  |  | -                               |  |  |                            | -    |   |                          |  | -   |            | 
|Share-based payments for convertible notes               |  |                      | -       |   |                        |  | -     |                           |  |  | 1,456                           |  |  |                            | -    |   |                          |  | -   |            | 
|Share-based payments                                     |  |                      | -       |   |                        |  |       |                           |  |  | 28                              |  |  |                            | -    |   |                          |  | -   |            | 
|Balance at June 30, 2012                                 |  |                      | 109,083 |   |                        |  | -     |                           |  |  | 2,689                           |  |  |                            | -    |   |                          |  | -   |            | 



The above statement of changes in equity should be read in
conjunction with the accompanying notes.



Page 6







Statement of cash flows



|                                                                      |  |      |  | Consolidated |        
|--------------------------------------------------------------------- |  | ---- |  | ------------ | -------
|For the year ended June 30                                            |  | Note |  | 2014$’000    |        
|Cash flow from operating activities                                   |  |      |  |              |        
|Receipts from customers (inclusive of GST)                            |  |      |  |              | 20,680 
|Payments to suppliers and employees (inclusive of GST)                |  |      |  |              | (39,493
|Payments for development costs                                        |  |      |  |              | -      
|Finance costs                                                         |  |      |  |              | (1,350 
|Interest received                                                     |  |      |  |              | -      
|Net cash flows (used)/provided in operating activities                |  | 10   |  |              | (20,163
|                                                                      |  |      |  |              |        
|Cash flow from investing activities                                   |  |      |  |              |        
|Proceeds from sale of property, plant and equipment                   |  |      |  |              | 188    
|Proceeds from the sale of intangible assets                           |  |      |  |              | -      
|Purchase of property, plant and equipment                             |  |      |  |              | (672   
|Payment for investments                                               |  |      |  |              | -      
|Proceeds from sale of investments                                     |  |      |  |              | 1,789  
|Payment for the purchase of controlled entities, net of cash acquired |  |      |  |              | -      
|Net cash flows provided/(used) in investing activities                |  |      |  |              | 1,305  
|                                                                      |  |      |  |              |        
|Cash flow from financing activities                                   |  |      |  |              |        
|Proceeds from share issues                                            |  |      |  |              | 7,706  
|Proceeds from issue of convertible notes                              |  |      |  |              | 1,013  
|Convertible note issue costs                                          |  |      |  |              | (1,320 
|Proceeds from borrowings                                              |  |      |  |              | 16,282 
|Repayment of borrowings                                               |  |      |  |              | (3,699 
|Payment of finance lease liabilities                                  |  |      |  |              | (212   
|Net cash flows
    provided/(used) in financing activities            |  |      |  |              | 19,770 
|                                                                      |  |      |  |              |        
|Net (decrease) / increase in cash and cash equivalents                |  |      |  |              | 912    
|Cash and cash equivalents at beginning of period                      |  |      |  |              | 469    
|Cash and cash equivalents at end of period                            |  | 10   |  |              | 1,381  



The above statement of cash flows should be read in conjunction
with the accompanying notes.



Page 7







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    | Disposal of controlling interests                                      | 
|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   | Financial risk management objectives and policies                      | 
|23   | Related party disclosure                                               | 
|24   | Key management personnel                                               | 
|25   | Share-based payments                                                   | 
|26   | Commitments                                                            | 
|27   | Events after the balance sheet date                                    | 
|28   | Parent entity Information                                              | 
|29   | Auditors' remuneration                                                 | 



Page 8







Notes to the financial statements



1 Corporate information



The consolidated financial
statements of BlueNRGY Group Limited (‘BlueNRGY’) (formerly known as CBD Energy Limited) for each of the years
ended June 30, 2014; June 30, 2013 and June 30, 2012 were authorised for issue in accordance with a resolution of the
Directors on June 1, 2015. The Directors have the power to amend and reissue the financial statements.



BlueNRGY Group Limited (‘the Parent’)
is a company limited by shares incorporated in Australia whose shares are publicly listed on the NASDAQ.



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
Group Limited and its subsidiaries. BlueNRGY Group Limited 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.



(i) 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, 2014, 2013, 2012
is disclosed below:



|Consolidated                                                     |  | Year
                                         ended June 30, 2014 $’000 |         |   | Year ended June 30, 2013  $’000 |  |         | Year ended June 30, 2012  $’000 | 
|---------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ------- | - | ------------------------------- |  | ------- | ------------------------------- | 
|                                                                 |  |                                                                         |         |   |                                 |  |         |                                 | 
|Cash at bank and in hand less overdraft                          |  |                                                                         | 1,381   |   |                                 |  | 469     |                                 | 
|Loss for the year                                                |  |                                                                         | (25,430 | ) |                                 |  | (8,407  | )                               | 
|Net cash inflow/(outflow) from operating activities for the year |  |                                                                         | (20,163 | ) |                                 |  | 9,821   |                                 | 
|Net current assets/(liabilities)                                 |  |                                                                         | (31,208 | ) |                                 |  | (33,773 | )                               | 



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 (i) were 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) appoint Said Jahani and Trevor Pogroske from Grant Thornton 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. The Company’s other subsidiaries continued to operate outside the VA process.



On December 24, 2014, two deeds of company
arrangement under Australia’s Corporations Act 2001 (collectively, the ‘Reorganisation Plans’) were signed.
The Reorganisation Plans became effective on January 27, 2015.



Page 9







Notes to the financial statements



2 Summary of significant accounting
policies (continued)



(a) Basis of preparation (continued)



(i) Going concern (continued)

The Reorganisation Plans provide, among
other things, that: (i) creditor claims and contingent liabilities of the Company were extinguished and creditors received newly
issued ordinary shares of the Company; and (ii) investors infused US$1 million into the Company in order to meet the requirements
of the Deed Funds set forth in the Reorganisation Plans. The Deed Funds will be used to pay creditor claims.



As a consequence of the effectiveness of
the Reorganisation Plans, Said Jahani and Trevor Pogroske from Grant Thornton are no longer joint and several administrators. The
Company has now exited voluntary administration and is being managed by its Board of Directors (the ‘Board’).



In connection with effectuating the
Reorganisation Plans, the Company, on January 27, 2015, entered into an Amended and Restated Membership Interest Purchase
Agreement (the ‘Purchase Agreement’) in order to acquire BlueNRGY, LLC. Pursuant to the Purchase Agreement, the
Company acquired 100% the issued and outstanding membership interests of BlueNRGY, LLC (the ‘Acquisition’). The
purchase price of BlueNRGY, LLC was the issuance of an aggregate of 150,162,640 ordinary shares of the Company.



Pursuant to the Reorganisation Plans, the
Company issued 96,028,937 ordinary shares to settle credit claims.



Immediately following the effectiveness
of the Reorganisation Plans, certain creditors exchanged $854,000 of indebtedness at the Offering Price and the Company issued
18,534,029 ordinary shares to them.



Since January 27, 2015 the Company has
raised the equivalent of $2,336,000 through the issuance of 48,877,148 ordinary shares. Of this, $1,247,000 was paid to the Deed
Fund.



As a result of the reorganisation plans
and to the date of this report, the following changes were made to the Group’s Net Asset/Equity position (based on unaudited
values at November 14, 2014) and to the number of ordinary shares on issue:





|                                                                                                                                             |  | Net Asset Impact  $’000 |        |   | Ordinary Shares Issued | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---------------------- | 
|Execution of Deed of Company Arrangement:                                                                                                    |  |                         |        |   |                        | 
|Extinguishment of Liabilities                                                                                                                |  |                         |        |   |                        | 
|·Trade
and other payables                                                                                                                    |  |                         | 11,025 |   |                        | 
|·Provisions                                                                                                                                  |  |                         | 440    |   |                        | 
|·Loans
and Borrowings                                                                                                                        |  |                         | 26,017 |   |                        | 
|                                                                                                                                             |  |                         | 37,482 |   |                        | 
|                                                                                                                                             |  |                         |        |   |                        | 
|Total assets assigned to creditors/relinquished                                                                                              |  |                         | (4,678 | ) |                        | 
|                                                                                                                                             |  |                         |        |   |                        | 
|Issuance
                                    of Equity Post-Execution of Deed of Company Arrangement: (excluding shares issued to creditors) |  |                         |        |   |                        | 
|Cash subscriptions (net of $1.2 million Deed Funding)                                                                                        |  |                         | 1,089  |   |                        | 
|Acquisition of BlueNRGY                                                                                                                      |  |                         | 6,011  |   |                        | 
|Exchange of Indebtedness (non-VA companies)                                                                                                  |  |                         | 854    |   |                        | 
|                                                                                                                                             |  |                         |        |   |                        | 
|Total Increase
    in Net Assets/Equity from reorganisation                                                                                  |  |                         | 40,758 |   |                        | 



Note: the above does not reflect changes
to equity position arising from operating activities post June 30, 2014.



Following the issuance of these ordinary
shares, the Company has 319,683,386 ordinary shares on issue.



Page 10







Notes to the financial statements



2 Summary of significant accounting policies (continued)





(a) Basis of preparation (continued)



(i) Going concern (continued)

Consequently 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:



| | · | Sustain
net operating profits: BlueNRGY is continually reviewing costs structures of the businesses and making the appropriate changes
to maximize 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) Compliance with IFRS



The financial report also complies with
International Financial Reporting Standards (‘IFRS’), as issued by the International Accounting Standards Board (‘IASB’).



(d) New accounting standards and interpretations



(i) Changes in accounting policy and
disclosures.

The accounting policies adopted are consistent
with those of the previous financial year.



None of the new Standards and amendments
to Standards that are mandatory for the first time for the financial years beginning 1 July 2011 affected any of the amounts recognised
in the current period (i.e years ended June 30, 2014, 2013 and 2012) or any prior period and are not likely to affect future periods.



The Group has not elected to apply any
pronouncements before their operative date in the reporting period from 1 July 2011 to June 30, 2014.



(ii) Australian Accounting Standards
and Interpretations issued but not yet effective

A number of new Standards, amendments to
Standards and Interpretations are effective for annual periods beginning after 1 July 2014, 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 has not been determined.





Page 11







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(e) Basis of consolidation



The consolidated financial statements
comprise the financial statements of BlueNRGY Group Limited and its subsidiaries as outlined in Note 23 as at and for the year
ended June 30 each year.



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 parent 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.



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(f)).



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.



(f) 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.



(g) 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.



Page 12







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(h) 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.



(i) 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:



(i) Domestic Solar Installation fees

Installation fees are recognised once
installation is completed. Domestic 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. Under the Australian government program known as the
Small-Scale Renewable Energy Scheme (‘SRES’), eligible residential solar systems are credited by the responsible government
agency with a one-time allocation of STCs. STCs are registered with the government regulator and do not expire. The regulator
also establishes, on an annual basis, a purchase obligation for power generators at a level that is expected to approximately
equal the supply of STC’s the regulator forecasts will be created from new installations during the year. The annual STC
purchase obligation in each year is also adjusted by the regulator to take into account over- or under-creation of STCs in prior
years as compared with forecast. As a consequence of the SRES and the mandated purchase obligation of the power producers, STCs
have an intrinsic value and an unregulated market for STCs has developed in Australia. As the government agency responsible for
balancing STC purchase obligations with supply has gained experience over time, market volatility, liquidity and predictability
of pricing have increased, 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. 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.



(ii) Sale of products, materials and
parts

Revenue from the sale of products, material
and parts is recognised upon the delivery of goods to customers.



(iii) Services

Revenue from the rendering of service is
recognised upon delivery of the service to the customers.



Page 13







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(i) Revenue recognition (continued)



(iv) 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.



(v) 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.



(vi) Interest income

Interest income is recognised using the
effective interest method.



(vii) Other revenues

Other operating revenues are recognised
as they are earned and goods or services provided.



(j) Government grants



Grants from the government are recognised
at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached
conditions.



Government grants relating to costs are
deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate.



(k) 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.



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.



Page 14







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(k) Income tax and other taxes (continued)



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.



(i) 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.



(ii) 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.
| | - | ---------------------------------------------------------------------------



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.



Page 15







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(k) Income tax and other taxes (continued)



Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or payable to, the taxation authority.



(l) 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.



(m) 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.



(n) 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 the 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.



(o) Inventories



(i) 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.



(ii) Small-scale Technology Certificates
(‘STCs’)

As indicated in Note 2(i), 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.



Page 16







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(o) Inventories (continued)



(iii) 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.



Project work in progress also comprises
wind farm development projects. Costs incurred for developing wind farm projects for which the Group is earning a developer fee
are recognised as inventory when it is probable that the project will be completed and generate future economic benefits and its
costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of materials,
services, direct labour and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset
in a subsequent period.



(iv) 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.



(p) 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.



(i) 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.



(ii) 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.



(iii) 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.



Page 17







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(p) 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.



(q) 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.



Page 18







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(r) 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.



(s) 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.



Page 19







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(s) 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.



Licences

Licences are recognised at cost of acquisition.
Licences have a finite life and are amortised on a systematic basis, matched to the future economic benefits over the life of the
asset, less any impairment losses. Licences are reviewed for impairment at the end of the financial year and more frequently when
an indication of impairment exists. Any impairment charge is recorded separately.



Patents

Patents are initially recognised at cost.
Patents have a finite life and are amortised on a systematic basis matched to the future economic benefits over the life of the
asset, less any impairment losses. Amortisation of the patents commences on commercialisation of this technology and is matched
to the timing of economic benefits flowing to the company from the application of this technology. Patents are reviewed for impairment
at the end of the financial year and more frequently when an indication of impairment exists.



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.



(t) Pensions and other post-employment
benefits



The company contributes to superannuation
funds on behalf of employees at the required statutory rates.



(u) 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.



(v) 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.



(w) Convertible notes



On issuance of the convertible notes, an
assessment is made to determine 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 convertibles 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.



Page 20







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(w) 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.



(x) 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.



Warranty provisions

Provision is made for the estimated liability
on all products and services still under warranty at balance date. This provision is estimated having regard to prior service warranty
experience. In calculating the liability at balance date, amounts were not discounted to their present value as the effect of discounting
was not material. In determining the level of provision required for warranties, the Group has made judgments in respect of the
expected performance and the costs of fulfilling the warranty. Historical experience and current knowledge have been used in determining
this provision. The initial estimate of warranty-related costs is revised annually.



Deferred consideration

Deferred consideration acquired in a business
combination is initially measured at fair value at the date of acquisition. Subsequently, it is measured in accordance with AASB
137 Provisions, Contingent Liabilities and Contingent Assets.



Expected losses on contracts

Where the outcome for a services contract
is expected to result in an overall loss over the life of the contract, this loss is provided for when it first becomes known that
a loss will be incurred.



Employee Entitlements

(i) 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.



(ii) 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.



Page 21







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(y) 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 25.



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.



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).



(z) 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.



(aa) 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 22







Notes to the financial statements



2 Summary of significant accounting policies (continued)



(ab) Parent entity financial information



The financial information for the parent
entity, BlueNRGY Group Limited, disclosed in Note 28 has been prepared on the same basis as the consolidated financial statements,
except as set out below.



(i) Investments in subsidiaries

Investments in subsidiaries are accounted
for at cost less any impairment charge.



(ii) 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.



(ac) 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.



(ad) Correction of prior period errors



As set out in Note 27, Events after the
balance sheet date, the withdrawal of the previously issued audited financial statements for the years ended June 30, 2013 and
2012 by the Company’s former independent registered public accounting firm, PricewaterhouseCoopers (‘PwC’),
and their subsequent removal as auditors has resulted in the appointment of independent registered public accounting firm HLB
Mann Judd (‘HLB’) as the Company’s new auditors. HLB reaudited the Company’s financial statements for
the years ended June 30, 2012 and June 30, 2013, and performed the audit for the year ended June 30, 2014.



As a result of this reaudit, and with the
benefit of time having passed, certain balances which are impacted by critical accounting estimates, assumptions and management
judgement have been adjusted to represent a restated view of the Group based on actual events which have occurred since the release
of the previously issued audited financial statements for the years ended June 30, 2013 and 2012. These changes are highlighted
hereunder:



Financial year ended June 30, 2013



1 As with 2012, the existence
of inventories as at financial year ended June 30, 2013 could not be supported and accordingly finished goods and work-in-progress
of some of the subsidiaries were written off to $Nil. The impact of this entry was $1,416,000.



2 As a result of the impairment
raised against the Solar goodwill in 2012 of $10,891,000, the 2013 impairment of $3,000,000 was reversed. The net impact is $7,891,000.



3 A previously recognised tax
liability of $447,000 was reversed upon determination that it related to a pre-acquisition liability of eco-Kinetics.



4 An amendment of $1,454,000
was made to the fair value adjustment of convertible notes triggered by the impact of the defaults on the fair value calculation.



Page 23









Notes to the financial statements



2 Summary of significant accounting policies (continued)



5 As per Note 5(i), disposals of controlling interests, the company disposed of its wholly owned subsidiary Capacitor
Technologies Pty Ltd (‘Captech’) in August 2013. Accordingly the associated assets and liabilities of the subsidiary
have been reclassified as held for sale in the Statement of financial position and as a discontinued operation in the Statement
of comprehensive income.



6Adjustments reflected in this column are the roll
forward effect of the previous financial year’s adjustments and their impact on the Statement of financial position balances.



7Write off of provision for contingent consideration associated with the sale of Larkden.



8 Reclassification of Statement of comprehensive
income line items.



Page 24







As a result of the errors noted above,
the following adjustments were made to the financial statements:



Statement of Financial Position (extract):



|                                                                        |  |            |          |   | Consolidated Entity         | 
|----------------------------------------------------------------------- |  | ---------- | -------- | - | --------------------------- | 
|June 30, 2013                                                           |  | 2013 $’000 |          |   | Correction of errors1 $’000 | 
|                                                                        |  |            |          |   |                             | 
|Current Assets                                                          |  |            |          |   |                             | 
|Cash and cash equivalents                                               |  |            | 932      |   |                             | 
|Trade and other receivables                                             |  |            | 5,952    |   |                             | 
|Inventories                                                             |  |            | 1,611    |   |                             | 
|Other current assets                                                    |  |            | 463      |   |                             | 
|Assets Classified as held for sale                                      |  |            |          |   |                             | 
|Total Current assets                                                    |  |            | 8,958    |   |                             | 
|                                                                        |  |            |          |   |                             | 
|Non-Current Assets                                                      |  |            |          |   |                             | 
|Plant and equipment                                                     |  |            | 4,896    |   |                             | 
|Goodwill and other intangible assets                                    |  |            | 15,898   |   |                             | 
|Other non-current assets                                                |  |            | 13,455   |   |                             | 
|Total Non-Current Assets                                                |  |            | 34,249   |   |                             | 
|TOTAL ASSETS                                                            |  |            | 43,207   |   |                             | 
|                                                                        |  |            |          |   |                             | 
|Current Liabilities                                                     |  |            |          |   |                             | 
|Trade and other payables                                                |  |            | 22,113   |   |                             | 
|Interest-bearing loans and borrowings                                   |  |            | 17,633   |   |                             | 
|Current tax liabilities                                                 |  |            | 447      |   |                             | 
|Provisions                                                              |  |            | 1,307    |   |                             | 
|Liabilities directly associated with assets classified as held for sale |  |            | -        |   |                             | 
|Total Current Liabilities                                               |  |            | 41,500   |   |                             | 
|                                                                        |  |            |          |   |                             | 
|Non-Current Liabilities                                                 |  |            |          |   |                             | 
|Interest-bearing loans and borrowings                                   |  |            | 328      |   |                             | 
|Provisions                                                              |  |            | 108      |   |                             | 
|Total Non-Current Liabilities                                           |  |            | 436      |   |                             | 
|TOTAL LIABILITIES                                                       |  |            | 41,936   |   |                             | 
|NET ASSETS                                                              |  |            | 1,270    |   |                             | 
|                                                                        |  |            |          |   |                             | 
|Contributed equity                                                      |  |            | 109,620  |   |                             | 
|Accumulated losses                                                      |  |            | (112,311 | ) |                             | 
|Reserves                                                                |  |            | 3,962    |   |                             | 
|TOTAL EQUITY                                                            |  |            | 1,271    |   |                             | 



Page 25







Notes to the financial statements



2 Summary of significant accounting policies (continued)



Statement of Comprehensive Income (extract):



|June 30, 2013                                                        |  | 2013 $’000 |         |   | Correction
                                         of errors1 $’000 |  |        | Correction
                                         of errors2 $’000 |  |  | Correction
                                         of errors3 $’000 |  |  | Correction
                                         of errors4 $’000 |     |  | Correction
                                         of errors5 $’000 |  |        | Correction
                                         of errors6 $’000 |  |  | Correction
                                         of errors7 $’000 |   |  | Correction
                                         of errors8 $’000 |       |   | Restated 2013
    $’000 | 
|-------------------------------------------------------------------- |  | ---------- | ------- | - | -------------------------------------------------------------------- |  | ------ | -------------------------------------------------------------------- |  |  | -------------------------------------------------------------------- |  |  | -------------------------------------------------------------------- | --- |  | -------------------------------------------------------------------- |  | ------ | -------------------------------------------------------------------- |  |  | -------------------------------------------------------------------- | - |  | -------------------------------------------------------------------- | ----- | - | ----------------------- | 
|                                                                     |  |            |         |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  |                                                                      |   |  |                                                                      |       |   |                         | 
|Revenue and other income                                             |  |            | 69,928  |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  | (5,230                                                               | ) |  |                                                                      |       |   |                         | 
|Other income                                                         |  |            | 4,664   |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  | (2                                                                   | ) |  |                                                                      |       |   |                         | 
|Cost of raw materials, consumables used, and contractors             |  |            | (44,687 | ) |                                                                      |  | (1,416 | )                                                                    |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  | 2,563                                                                |   |  |                                                                      | 4,335 |   |                         | 
|Impairment loss on assets                                            |  |            | (3,578  | ) |                                                                      |  |        |                                                                      |  |  | 3,000                                                                |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  |                                                                      |   |  |                                                                      |       |   |                         | 
|Other expenses and revenue                                           |  |            | (38,204 | ) |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  | (1,454 | )                                                                    |  |  | 1,758                                                                |   |  |                                                                      | (60   | ) |                         | 
|Profit before income tax expense                                     |  |            | (11,877 | ) |                                                                      |  | (1,416 | )                                                                    |  |  | 3,000                                                                |  |  |                                                                      | -   |  |                                                                      |  | (1,454 | )                                                                    |  |  | (911                                                                 | ) |  |                                                                      | 4,275 |   |                         | 
|                                                                     |  |            |         |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  |                                                                      |   |  |                                                                      |       |   |                         | 
|Income tax (expense)/benefit                                         |  |            | (382    | ) |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      | 447 |  |                                                                      |  |        |                                                                      |  |  |                                                                      |   |  |                                                                      |       |   |                         | 
|Net profit/(loss) attributable members of
    BlueNRGY Group Limited |  |            | (12,259 | ) |                                                                      |  | (1,416 | )                                                                    |  |  | 3,000                                                                |  |  |                                                                      | 447 |  |                                                                      |  | (1,454 | )                                                                    |  |  | (911                                                                 | ) |  |                                                                      | 4,275 |   |                         | 
|                                                                     |  |            |         |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  |                                                                      |   |  |                                                                      |       |   |                         | 
|Profit from discontinued operations                                  |  |            |         |   |                                                                      |  |        |                                                                      |  |  |                                                                      |  |  |                                                                      |     |  |                                                                      |  |        |                                                                      |  |  | 911                                                                  |   |  |                                                                      |       |   |                         | 



Financial year ended June 30, 2012



1 A previously considered provision
for doubtful debts raised against a trade debtor for $895,000 was reversed as funds were received in the subsequent financial year
for the amount outstanding.



2 Deferred project setup costs
of $1,027,000, relating to a pipeline of overseas solar PV projects which did not eventuate were expensed in the year incurred
(2012) instead of 2013 when the decision not to pursue the projects was taken.



3 The existence of inventories
as at financial year ended June 30, 2012 could not be supported and accordingly finished goods and work-in-progress of some of
the subsidiaries were written off to $Nil. The impact of this entry was $3,817,000.



4 As part of the purchase agreement
of eco-Kinetics in January 2010, a contingent consideration was raised in trade and other payables based on the acquisition values.
This liability was reassessed upon the subsequent restatement of the financial accounts and deemed no longer applicable resulting
in a write-off of $603,000.



5 An amount of $261,000 was
written off against inventory relating to the overstatement of the value of STC’s.



6 An amount of $125,000 was
recognised against understated trade payables relating to the receipt of invoices subsequent to the balance sheet date.



7 An impairment to the goodwill
of the Solar cash-generating unit was made totalling $10,891,000. Refer Note 16, Non-current assets – intangible assets and
goodwill, for full details thereon.



8 As per Note 5(i), Disposals of controlling interests, the company disposed of its wholly owned subsidiary Capacitor
Technologies Pty Ltd (‘Captech’) in August 2013. Accordingly the associated assets and liabilities of the subsidiary
have been reclassified as held for sale in the Statement of financial position and as a discontinued operation in the Statement
of comprehensive income.



As a result of the errors noted above,
the following adjustments were made to the financial statements:



Page 26







Statement of Financial Position (extract):



|                                                                        |  | Consolidated Entity |         
|----------------------------------------------------------------------- |  | ------------------- | --------
|June 30, 2012                                                           |  | 2012 $’000          |         
|                                                                        |  |                     |         
|Current Assets                                                          |  |                     |         
|Cash and cash equivalents                                               |  |                     | 2,522   
|Trade and other receivables                                             |  |                     | 5,898   
|Inventories                                                             |  |                     | 18,687  
|Other current assets                                                    |  |                     | 1,259   
|Assets classified as held for sale                                      |  |                     |         
|Total Current assets                                                    |  |                     | 28,366  
|                                                                        |  |                     |         
|Non-Current Assets                                                      |  |                     |         
|Available-for-sale and other financial assets                           |  |                     | 636     
|Plant and equipment                                                     |  |                     | 5,377   
|Goodwill and other intangible assets                                    |  |                     | 22,800  
|Other non-current assets                                                |  |                     | 192     
|Total Non-Current Assets                                                |  |                     | 29,005  
|TOTAL ASSETS                                                            |  |                     | 57,371  
|                                                                        |  |                     |         
|Current Liabilities                                                     |  |                     |         
|Trade and other payables                                                |  |                     | 16,728  
|Interest-bearing loans and borrowings                                   |  |                     | 27,230  
|Provisions                                                              |  |                     | 985     
|Liabilities directly associated with assets classified as held for sale |  |                     | -       
|Total Current Liabilities                                               |  |                     | 44,943  
|                                                                        |  |                     |         
|Non-Current Liabilities                                                 |  |                     |         
|Interest-bearing loans and borrowings                                   |  |                     | 344     
|Provisions                                                              |  |                     | 299     
|Deferred tax liability                                                  |  |                     | 65      
|Total Non-Current Liabilities                                           |  |                     | 708     
|TOTAL LIABILITIES                                                       |  |                     | 45,651  
|NET ASSETS                                                              |  |                     | 11,720  
|                                                                        |  |                     |         
|Contributed equity                                                      |  |                     | 109,083 
|Accumulated losses                                                      |  |                     | (100,052
|Reserves                                                                |  |                     | 2,689   
|TOTAL EQUITY                                                            |  |                     | 11,720  



Page 27







Notes to the financial statements



2 Summary of significant accounting policies (continued)



Statement of Comprehensive Income (extract):



|                                                                           |  | Consolidated Entity |        
|-------------------------------------------------------------------------- |  | ------------------- | -------
|June 30, 2012                                                              |  | 2012  $’000         |        
|                                                                           |  |                     |        
|Revenue and other income                                                   |  |                     | 53,678 
|Cost of raw materials, consumables used, and contractors                   |  |                     | (43,073
|Provision for impairment of receivables                                    |  |                     | (2,496 
|Impairment loss on assets                                                  |  |                     | (4,614 
|Impairment of intangible assets                                            |  |                     | (643   
|Other expenses and revenue                                                 |  |                     | (40,136
|(Loss)/profit before income tax expense                                    |  |                     | (37,284
|                                                                           |  |                     |        
|Income tax (expense)/benefit                                               |  |                     | (2,835 
|Net profit/(loss) attributable members of
    BlueNRGY Group Limited       |  |                     | (40,119
|                                                                           |  |                     |        
|Loss from discontinued
                                         operations |  |                     |        



The effect on earnings per share
related to the restatement in 2012 was an increase in basic loss per share by $1.18 to $35.24 per share. The
impact on 2013 was a decrease in basic loss per share of $0.57 to $5.27 per share.



Page 28







Notes to the financial statements



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



(i) Recovery of deferred tax assets

During the year ended June 30, 2013, 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.



(ii) Impairment of goodwill and other
intangibles other than Patents

The Group determines whether goodwill
and other intangiblesother than patents are 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.



(iii) Project work in progress

Project work in progress is capitalised
in accordance with the accounting policy in Note 2(o)(iii). 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, 2014, the carrying amount of capitalised project work in progress was $392,000
(2013: nil; 2012: $12,762,000).



(iv) 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 25.



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.



(v) Patents

At 30 June 2012, prior to its sale, the
Group measured the carrying value of the Larkden controlled storage technology patents at cost less impairment and amortisation.
The recoverable amount is the higher of the patents value in use or fair value less cost to sell. The fair value was determined
by an external valuer in accordance with the definition of fair value in AASB 13 Fair Value Measurement. The valuation was
determined using a discounted cash flow methodology and considering the Patents as a group and as a type of start-up / early stage
commercialisation technology. The external valuer constructed various alternative scenarios as to possible likely future outcomes
projecting various associated cash flows for each alternative scenario; applying a range of discount rates to the various projected
cash flows to determine a range of indicated net present values.



Page 29







Notes to the financial statements



3 Significant accounting judgements, estimates and assumptions



(a) Critical accounting estimates and
assumptions (continued)



(vi) Wind development projects

Part of BlueNRGY’s business is the
development of large-scale wind projects in Australia whereby BlueNRGY earns a developer fee. In respect of the Taralga Wind project,
costs incurred for developing the project were initially recognised as inventory as it was probable that the project would be
completed and generate future economic benefits (refer Note 2(o)(iii). On 9 October 2012, BlueNRGY sold the Taralga Wind project
it had developed in return for cash of $6,993,000 plus a 10% interest in the project’s vehicle established for the transaction.
The accounting treatment was to:



| | · | recognise revenue which includes the
    fair value of the 10% ownership interest in two entities (Taralga Holding Nominees 1 Pty Ltd and Taralga Holding Nominees
    2 Pty Ltd) valued at $10,000,000
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | recognised revenue of $6,993,000 which
    was received in cash during the period, and
| | - | --------------------------------------------------------------------------------------



| | · | expense development costs of $3,099,000
    carried in inventory as Cost of Goods sold.
| | - | ---------------------------------------------------------------------------------------



resulting in a profit on the sale of $13,894,000
in the 2013 year.



The investment of 10% of the
Taralga Wind Farm project is by way of investment in two trustee companies, Taralga Holding Nominees 1 Pty Ltd and Taralga
Holding Nominees 2 Pty Ltd and two trusts, the Taralga HoldCo Land Trust and the Taralga HoldCo Operating Trust. This investment
was funded by BlueNRGY from the re-investment of part of its development fee generated on equity close of the project. This
investment is classified as an ‘Available-for-sale financial asset’. The investment in Taralga was initially
recognised at fair value at the date of the equity transaction on 9 October 2012. The fair value was determined based on
discounting the cash flows which will be received on exit based on several scenarios of the financial model for the project
and the contractually defined distributions from any sales profits due to BlueNRGY on exit. Due to the requirement for
judgement 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 were 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
$9,500,000 to $10,900,000 and the adopted value was $10,000,000. Variances between actual results and the estimated results
from the valuation methodology may result in higher or lower profits being achieved. After initial recognition the investment
in the Taralga Wind Farm project was accounted for as an available-for-sale investment which was measured at fair value
with gains recognised in other comprehensive income and in an available-for-sale reserve until the investment is derecognised
or until the investment is determined to be impaired. At 30 June 2013 this available-for-sale asset was revalued to
$10,800,000. This revaluation was based on an indicative offer to acquire the asset which was received by the Group during
the year.



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 profit or loss of $10,000,000.



(vii) Contingent consideration

On 16 April 2013, the Group’s interests
in Larkden Pty Ltd were sold, including the energy storage patents held by Larkden. The sale price was $4,500,000, of which $250,000
was received in cash at the time of sale. If certain targets of installed capacity of the storage technology are not met within
3 years of the date of sale, the purchase price shall be reduced by $1,000,000. This contingent consideration of $1,000,000 will
be recognised as revenue on receipt. The balance of the payments is to be received in three tranches on the anniversaries of the
sale from 2015 to 2017 and is recorded in other non-current receivables. Interest on the deferred purchase price accrues at market
rate. A loss on sale of $265,000 has been included in Other Expenses, refer Note 7(f). Subsequent to June 30, 2014, $1,000,000
due to be received in May 2015 was received.



Page 30







Notes to the financial statements



3 Significant accounting judgements, estimates and assumptions



(b) Critical judgements in applying
the entity’s accounting policies





(i) Net realisable value for STCs inventories

STCs
are measured at lower of cost or net realisable value. Net realisable value is the estimated selling price in the
ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Judgement
is applied when determining the net realisable value. This includes consideration of the number of STCs that the Group has at balance
date, the estimated period it will take to sell the STCs, the ability of the Group to sell the STCs in the ordinary course of business,
potential forward sale contracts that the Group has at balance date and observed STC market prices.



(ii) Impairment of available-for-sale
financial assets

The Group has determined that its investment
in Andalay Solar Inc, a US listed company, has been subject to a significant and prolonged decrease in market price. As a result,
in accordance with the Group’s accounting policy regarding available-for-sale financial assets (refer to Note 2(p)) the
Company has recognised an impairment to the carrying value of the asset through profit or loss for the year ended June 30, 2014
of $4,000 (2013: $560,000; 2012: $375,000).



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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | RAPS / Technology Solutionsincludes operating remote area power systems (‘RAPS’) as well as the inclusion of other operations that utilise the Groups patents relating to carbon block energy storage technology and other intellectual property. The Chatham Island wind project is included in the RAPS segment.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Winddevelopment of large scale wind projects, including expenditure on early stage projects. At 30 June 2014 this segment is predominately the Taralga wind farm project.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Corporateprovides administrative
and other services required to support the BlueNRGY group. This includes the Corporate Executive Team, Finance, Human Resources
and Legal departments.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | CapTech (discontinued operation)manufacture energy saving products (power factor correction equipment) and energy quality products (reactors and filters), and also supply components (capacitors) and energy consulting services. In general, their power correction equipment can reduce energy consumption by 25% and their other products provide for improvement in quality and thereby efficiency of power use. Captech was disposed  on August 30, 2013 and is no longer an operating segment.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 31







Notes to the financial statements



4 Operating segments (continued)



Primary reporting – business segments



|2014                                                          |  | Solar PV $’000 |        |   | Parmac $’000 |  |        | RAPS/ Technology Solutions $’000 |  |  | Wind $’000 |   |  | Corporate $’000 |       |  | Total $’000 |  |         | Adjustments & Eliminations $’000 |  |  | Consolidated $’000 |  
|------------------------------------------------------------- |  | -------------- | ------ | - | ------------ |  | ------ | -------------------------------- |  |  | ---------- | - |  | --------------- | ----- |  | ----------- |  | ------- | -------------------------------- |  |  | ------------------ | -
|Revenue outside the economic entity                           |  |                | 2,240  |   |              |  | 10,188 |                                  |  |  | 329        |   |  |                 | 1,308 |  |             |  | -       |                                  |  |  | 14,065             |  
|Other income                                                  |  |                | 3,194  |   |              |  | 14     |                                  |  |  | -          |   |  |                 | -     |  |             |  | 589     |                                  |  |  | 3,797              |  
|Total income from continuing operations                       |  |                | 5,434  |   |              |  | 10,202 |                                  |  |  | 329        |   |  |                 | 1,308 |  |             |  | 589     |                                  |  |  | 17,862             |  
|Total income from discontinued operations                     |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Total  income                                                 |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Segment profit/(loss) before tax from continuing operations   |  |                | (1,352 | ) |              |  | (823   | )                                |  |  | 10         |   |  |                 | 707   |  |             |  | (25,058 | )                                |  |  | (26,516            | )
|Income tax (expense)/benefit                                  |  |                | -      |   |              |  | -      |                                  |  |  | -          |   |  |                 | -     |  |             |  |         |                                  |  |  | -                  |  
|Net profit/(loss) after tax from continuing operations        |  |                | (1,352 | ) |              |  | (823   | )                                |  |  | 10         |   |  |                 | 707   |  |             |  | (25,058 | )                                |  |  | (26,516            | )
|Net profit from discontinued operations                       |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Net profit after tax                                          |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|                                                              |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Depreciation, Amortisation                                    |  |                | (183   | ) |              |  | (143   | )                                |  |  | (36        | ) |  |                 | -     |  |             |  | (270    | )                                |  |  | (632               | )
|Impairment of financial assets and interest in joint ventures |  |                | -      |   |              |  | -      |                                  |  |  | -          |   |  |                 | -     |  |             |  | (4      | )                                |  |  | (4                 | )
|Impairment of intangible assets                               |  |                | -      |   |              |  | -      |                                  |  |  | -          |   |  |                 | -     |  |             |  | (10,015 | )                                |  |  | (10,015            | )
|                                                              |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Segment assets of continuing operations                       |  |                | 3,273  |   |              |  | 2,608  |                                  |  |  | 2,294      |   |  |                 | 3     |  |             |  | 22,695  |                                  |  |  | 30,873             |  
|Segment assets of discontinued operations                     |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Total
    Assets                                              |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Segment liabilities of  continuing operations                 |  |                | 18,977 |   |              |  | 2,332  |                                  |  |  | 164        |   |  |                 | -     |  |             |  | 17,244  |                                  |  |  | 38,717             |  
|Segment liabilities of discontinued operations                |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  
|Total
    Liabilities                                         |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |       |  |             |  |         |                                  |  |  |                    |  



Page 32







Notes to the financial statements



4 Operating segments (continued)



Primary reporting – business segments (continued)



|2013 (restated)                                               |  | Solar PV $’000 |        |   | Parmac $’000 |  |        | RAPS/ Technology Solutions $’000 |  |  | Wind $’000 |   |  | Corporate $’000 |        |  | Total $’000 |  |         | Adjustments & Eliminations $’000 |  |  | Consolidated $’000 |  
|------------------------------------------------------------- |  | -------------- | ------ | - | ------------ |  | ------ | -------------------------------- |  |  | ---------- | - |  | --------------- | ------ |  | ----------- |  | ------- | -------------------------------- |  |  | ------------------ | -
|Revenue outside the economic entity                           |  |                | 28,107 |   |              |  | 17,363 |                                  |  |  | 323        |   |  |                 | 18,557 |  |             |  | -       |                                  |  |  | 64,350             |  
|Other income                                                  |  |                | 1,599  |   |              |  | 49     |                                  |  |  | -          |   |  |                 | -      |  |             |  | 2,583   |                                  |  |  | 4,231              |  
|Total  income from continuing operations                      |  |                | 29,706 |   |              |  | 17,412 |                                  |  |  | 323        |   |  |                 | 18,557 |  |             |  | 2,583   |                                  |  |  | 68,581             |  
|Total revenue from discontinued operations                    |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Total  income                                                 |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Segment profit/(loss) before tax from continuing operations   |  |                | (8,530 | ) |              |  | (1,287 | )                                |  |  | 586        |   |  |                 | 13,748 |  |             |  | (13,900 | )                                |  |  | (9,383             | )
|Income tax (expense)/benefit                                  |  |                | 12     |   |              |  | -      |                                  |  |  | -          |   |  |                 | -      |  |             |  | 53      |                                  |  |  | 65                 |  
|Net profit/(loss) after tax from continuing operations        |  |                | (8,518 | ) |              |  | (1,287 | )                                |  |  | 586        |   |  |                 | 13,748 |  |             |  | (13,847 | )                                |  |  | (9,318             | )
|Net profit from discontinued operations                       |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Net profit after tax                                          |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|                                                              |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Depreciation, Amortisation                                    |  |                | (229   | ) |              |  | (149   | )                                |  |  | (178       | ) |  |                 | -      |  |             |  | (252    | )                                |  |  | (808               | )
|Impairment of financial assets and interest in joint ventures |  |                | -      |   |              |  | -      |                                  |  |  | (18        | ) |  |                 | -      |  |             |  | (560)   |                                  |  |  | (578               | )
|Impairment of intangible assets                               |  |                | -      |   |              |  | -      |                                  |  |  | -          |   |  |                 | -      |  |             |  | -       |                                  |  |  | -                  |  
|                                                              |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Segment assets of continuing operations                       |  |                | 3,426  |   |              |  | 3,834  |                                  |  |  | 2,610      |   |  |                 | 10,808 |  |             |  | 10,573  |                                  |  |  | 31,191             |  
|Segment assets of discontinued operations                     |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Total Assets                                                  |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Segment liabilities of continuing operations                  |  |                | 12,588 |   |              |  | 4,254  |                                  |  |  | 17         |   |  |                 | 7      |  |             |  | 24,765  |                                  |  |  | 41,631             |  
|Segment liabilities of discontinued operations                |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  
|Total Liabilities                                             |  |                |        |   |              |  |        |                                  |  |  |            |   |  |                 |        |  |             |  |         |                                  |  |  |                    |  



Page 33







Notes to the financial statements



4 Operating segments (continued)



Primary reporting – business segments (continued)



|2012 (restated)                                               |  | Solar PV $’000 |         |   | Parmac $’000 |  |        | RAPS/ Technology Solutions $’000 |  |  | Wind $’000 |   |  | Corporate $’000 |       |   | Total $’000 |  |         | Adjustments & Eliminations $’000 |  |  | Consolidated $’000 |  
|------------------------------------------------------------- |  | -------------- | ------- | - | ------------ |  | ------ | -------------------------------- |  |  | ---------- | - |  | --------------- | ----- | - | ----------- |  | ------- | -------------------------------- |  |  | ------------------ | -
|Revenue outside the economic entity                           |  |                | 32,438  |   |              |  | 10,372 |                                  |  |  | 767        |   |  |                 | -     |   |             |  | -       |                                  |  |  | 43,577             |  
|Other income                                                  |  |                | 107     |   |              |  | 4      |                                  |  |  | -          |   |  |                 | -     |   |             |  | 4,452   |                                  |  |  | 4,563              |  
|Total  income from continuing operations                      |  |                | 32,545  |   |              |  | 10,376 |                                  |  |  | 767        |   |  |                 | -     |   |             |  | 4,452   |                                  |  |  | 48,140             |  
|Total revenue from discontinued operations                    |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Total  income                                                 |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Segment profit/(loss) before tax from continuing operations   |  |                | (20,832 | ) |              |  | (576   | )                                |  |  | (178       | ) |  |                 | (7    | ) |             |  | (28,846 | )                                |  |  | (50,441            | )
|Income tax (expense)/benefit                                  |  |                | 1,496   |   |              |  | 67     |                                  |  |  | (119       | ) |  |                 | 2     |   |             |  | (3,977  | )                                |  |  | (2,531             | )
|Net profit/(loss) after tax from continuing operations        |  |                | (19,336 | ) |              |  | (509   | )                                |  |  | (297       | ) |  |                 | (5    | ) |             |  | (32,825 | )                                |  |  | (52,972            | )
|Net profit from discontinued operations                       |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Net profit after tax                                          |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|                                                              |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Depreciation, Amortisation                                    |  |                | (335    | ) |              |  | (127   | )                                |  |  | (130       | ) |  |                 | -     |   |             |  | (263    | )                                |  |  | (855               | )
|Impairment of financial assets and interest in joint ventures |  |                | (308    | ) |              |  | -      |                                  |  |  | -          |   |  |                 | -     |   |             |  | (3,931  | )                                |  |  | (4,239             | )
|Impairment of intangible assets                               |  |                | (471    | ) |              |  | -      |                                  |  |  | -          |   |  |                 | -     |   |             |  | (11,063 | )                                |  |  | (11,534            | )
|                                                              |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Segment assets of continuing operations                       |  |                | 19,890  |   |              |  | 2,320  |                                  |  |  | 4,516      |   |  |                 | 2,523 |   |             |  | 11,644  |                                  |  |  | 40,893             |  
|Segment assets of discontinued operations                     |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Total Assets                                                  |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Segment liabilities of continuing operations                  |  |                | 26,307  |   |              |  | 1,440  |                                  |  |  | -          |   |  |                 | 10    |   |             |  | 18,011  |                                  |  |  | 45,768             |  
|Segment liabilities of discontinued operations                |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  
|Total Liabilities                                             |  |                |         |   |              |  |        |                                  |  |  |            |   |  |                 |       |   |             |  |         |                                  |  |  |                    |  



Page 34









Notes to the financial statements



5 Disposals of controlling interests



(i) Disposal of subsidiary

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. (Refer Note 14).



6 Revenues from continuing operations and other income



|                                                     |  | Consolidated |       
|---------------------------------------------------- |  | ------------ | ------
|                                                     |  | 2014$’000    |       
|                                                     |  |              |       
|Revenue from sales and services                      |  |              | 14,065
|Total revenue from operating activities              |  |              | 14,065
|                                                     |  |              |       
|Other income                                         |  |              |       
|Gain on financial liabilities measured at fair value |  |              | 73    
|Gain on re-measurement of contingent consideration   |  |              | -     
|Discount received (i)                                |  |              | 3,086 
|Interest income                                      |  |              | -     
|Other income (ii)                                    |  |              | 634   
|                                                     |  |              | 3,793 



(i) Discount received in 2014 includes
a discount received from trade suppliers on amounts previously recorded as trade payables.



(ii) Other income in 2013 includes $489,000
gain on sale of STCs and $396,000 recovery from a previously written off bad debt.



7 Expenses



|                                                         |  | Consolidated |       
|-------------------------------------------------------- |  | ------------ | ------
|                                                         |  | 2014$’000    |       
|                                                         |  |              |       
|(a) Employee benefits expense                            |  |              |       
|Wages and salaries                                       |  |              | 9,232 
|Defined contribution superannuation expense              |  |              | 457   
|Other employee benefits expense                          |  |              | 868   
|                                                         |  |              | 10,557
|                                                         |  |              |       
|(b) Lease payments and other occupancy expenses          |  |              |       
|Minimum lease payments - operating lease                 |  |              | 780   
|Other                                                    |  |              | 135   
|                                                         |  |              | 915   
|                                                         |  |              |       
|(c) Depreciation, and amortisation of non-current assets |  |              |       
|Depreciation – property, plant & equipment               |  |              | 586   
|Amortisation – leasehold improvements                    |  |              | 46    
|Amortisation – patents                                   |  |              | -     
|                                                         |  |              | 632   



Page 35









Notes to the financial statements



7 Expenses (continued)



|                                                                 |  | Consolidated |       
|---------------------------------------------------------------- |  | ------------ | ------
|                                                                 |  | 2014$’000    |       
|(d) Impairment loss on intangibles                               |  |              |       
|Impairment loss on goodwill                                      |  |              | -     
|Impairment loss on license cost                                  |  |              | -     
|Impairment loss on development costs                             |  |              | -     
|                                                                 |  |              | -     
|                                                                 |  |              |       
|(e) Impairment loss on financial assets and joint venture assets |  |              |       
|Investments in Solar projects                                    |  |              | -     
|Investment in Wind projects                                      |  |              | 10,000
|Investment in Barefoot Power                                     |  |              | 15    
|Investment in eco-Kinetics UK JV                                 |  |              | -     
|Investment in eco-Kinetics Germany JV                            |  |              | -     
|Investment in Bowen                                              |  |              | -     
|Investment in Emerald                                            |  |              | -     
|                                                                 |  |              | 10,015
|                                                                 |  |              |       
|(f) Other expenses                                               |  |              |       
|Communications costs                                             |  |              | 229   
|Bank charges                                                     |  |              | 51    
|Printing, postage & delivery                                     |  |              | 32    
|Development costs                                                |  |              | 350   
|Insurance                                                        |  |              | 436   
|Office supplies                                                  |  |              | 317   
|Training                                                         |  |              | 9     
|Unrealised and realised losses on foreign exchange               |  |              | 474   
|Loss on sale/disposal of assets                                  |  |              | 642   
|Other expenses                                                   |  |              | 715   
|                                                                 |  |              | 3,255 
|                                                                 |  |              |       
|(g) Finance costs                                                |  |              |       
|Interest expense                                                 |  |              | 3,947 
|Finance cost for extinguishment of convertible notes             |  |              | 870   
|Share option expenses                                            |  |              | 148   
|Foreign exchange difference                                      |  |              | 96    
|                                                                 |  |              | 5,061 
|                                                                 |  |              |       
|(h) Cost of sales                                                |  |              | 14,064



Page 36







Notes to the financial statements



8 Income tax



|                                                                                                     |  | Consolidated |        
|---------------------------------------------------------------------------------------------------- |  | ------------ | -------
|                                                                                                     |  | 2014$’000    |        
|                                                                                                     |  |              |        
|(a) Income tax benefit/(expense)                                                                     |  |              |        
|Current tax expense                                                                                  |  |              | -      
|Deferred tax                                                                                         |  |              |        
|-  Relating to origination and reversal of temporary differences                                     |  |              | -      
|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                                                    |  |              | (26,516
|Profit/(loss) before income tax from discontinuing operations                                        |  |              | 1,086  
|                                                                                                     |  |              | (25,430
|Tax at the Australian tax rate of 30%                                                                |  |              | (7,629 
|                                                                                                     |  |              |        
|Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:              |  |              |        
|Expenditure not allowable for income tax purposes                                                    |  |              | 4,095  
|Non-assessable items for income tax purposes                                                         |  |              | -      
|Tax benefit (not recognised) now recognised                                                          |  |              | 3,534  
|Recognition of prior year temporary differences/tax losses brought to account as deferred tax assets |  |              | -      
|                                                                                                     |  |              | -      
|                                                                                                     |  |              |        
|(c) Reconciliation of deferred tax asset/(liability) (net position)                                  |  |              |        
|Opening balance as at 1 July                                                                         |  |              | -      
|Income tax benefit recognised                                                                        |  |              | -      
|Closing balance as at 30 June                                                                        |  |              | -      
|                                                                                                     |  |              |        
|(d) Deferred income tax                                                                              |  |              |        
|Deferred tax liabilities:                                                                            |  |              |        
|Depreciation                                                                                         |  |              | -      
|Other                                                                                                |  |              | -      
|                                                                                                     |  |              | -      



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.



(d) Tax losses



The Group generated revenue tax losses
totalling $11,780,000 (deferred tax asset of $3,534,000). Deferred tax assets relating to tax losses totalling $19,921,000 (2013:
$16,387,000; 2012: $14,521,000) 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 (2013: $4,855,000; 2012: $4,672,000)





(e) Unrecognised temporary differences

The temporary differences
not recognised at June 30, 2014 2013 and 2012 relate primarily to tax losses referred to in (d). There are no other material
temporary differences.



(f) Franking credits

At June 30, 2014 the Group has $834,000
of available franking credits (2013: $834,000; 2012: $834,000).



Page 37







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 |        
|--------------------------------------------------------------------------------------------- |  | ------------ | -------
|                                                                                              |  | 2014$’000    |        
|                                                                                              |  |              |        
|(a) Earnings used in calculating earnings per share                                           |  |              |        
|Net loss from continuing operations attributable to ordinary equity holders of the parent     |  |              | (26,516
|Net profit from discontinued operations attributable to ordinary equity holders of the parent |  |              | 1,086  
|Net loss attributable to ordinary equity holders of the parent                                |  |              | (25,430



|                                                                                                             |  | 2014Number ofshares |           |  | 2013 Number of shares |  |           | 2012 Number of shares | 
|------------------------------------------------------------------------------------------------------------ |  | ------------------- | --------- |  | --------------------- |  | --------- | --------------------- | 
|(b) Weighted average number of shares                                                                        |  |                     |           |  |                       |  |           |                       | 
|Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share   |  |                     | 1,953,691 |  |                       |  | 1,596,246 |                       | 
|Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share |  |                     | 1,953,691 |  |                       |  | 1,596,246 |                       | 



|                                                        |  | 2014$ |        |   | 2013
$ |  |       | 2012
$ | 
|------------------------------------------------------- |  | ----- | ------ | - | ------ |  | ----- | ------ | 
|(c) Earnings per share                                  |  |       |        |   |        |  |       |        | 
|Basic earnings per share from continuing operations     |  |       | (13.57 | ) |        |  | (5.84 | )      | 
|Basic earnings per share from discontinued operations   |  |       | 0.55   |   |        |  | 0.57  |        | 
|Basic earnings per share                                |  |       | (13.02 | ) |        |  | (5.27 | )      | 
|                                                        |  |       |        |   |        |  |       |        | 
|Diluted earnings per share from continuing operations   |  |       | (13.57 | ) |        |  | (5.84 | )      | 
|Diluted earnings per share from discontinued operations |  |       | 0.55   |   |        |  | 0.57  |        | 
|Diluted earnings per share                              |  |       | (13.02 | ) |        |  | (5.27 | )      | 



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.





Page 38







Notes to the financial statements



9 Earnings per share (continued)



The following anti-dilutive share options
have been excluded from the calculation of diluted earnings per share that could potentially dilute earnings per share in the future
if they become dilutive:





|Date granted |  | Expiry date |             |  | Exercise price$ |   |       | Vested and exercisable atend of the year | 
|------------ |  | ----------- | ----------- |  | --------------- | - | ----- | ---------------------------------------- | 
|2014         |  |             |             |  |                 |   |       |                                          | 
|1-Nov-11     |  |             | 31-Dec-14   |  |                 | $ | 75.00 |                                          | 
|28-May-12    |  |             | 28-May-15   |  |                 | $ | 8.25  | 1                                        | 
|31-May-12    |  |             | 30-May-17   |  |                 | $ | 3.90  |                                          | 
|12-Dec-12    |  |             | 12-Dec-17   |  |                 | $ | 15.90 |                                          | 
|12-Dec-12    |  |             | 12-Dec-17   |  |                 | $ | 3.90  | 2                                        | 
|30-Dec-12    |  |             | 30-Dec-17   |  |                 | $ | 15.90 |                                          | 
|13-Feb-13    |  |             | 30-May-17   |  |                 | $ | 3.90  | 2                                        | 
|18-Jun-14    |  |             | 15-Dec-19   |  |                 | $ | 5.34  |                                          | 
|2013         |  |             |             |  |                 |   |       |                                          | 
|28-Nov-08    |  |             | 27-Nov-13   |  |                 | $ | 60.00 |                                          | 
|21-Dec-10    |  |             | 19-Dec 13   |  |                 | $ | 60.00 |                                          | 
|01-Nov-11    |  |             | 31-Dec-14   |  |                 | $ | 75.00 |                                          | 
|28-May-12    |  |             | 28-May-15   |  |                 | $ | 8.25  | 1                                        | 
|31-May-12    |  |             | 30-May-17   |  |                 | $ | 3.90  | 2                                        | 
|12- Dec -12  |  |             | 12-Dec-17   |  |                 | $ | 15.90 |                                          | 
|12- Dec -12  |  |             | 12-Dec-17   |  |                 | $ | 3.90  |                                          | 
|30- Dec -13  |  |             | 30-Dec-17   |  |                 | $ | 15.90 |                                          | 
|13-Feb-13    |  |             | 30-May-17   |  |                 | $ | 3.90  | 2                                        | 
|             |  |             |             |  |                 |   |       |                                          | 
|2012         |  |             |             |  |                 |   |       |                                          | 
|28-Nov-08    |  |             | 27- Nov -13 |  |                 | $ | 60.00 |                                          | 
|21-Dec-10    |  |             | 19- Dec -13 |  |                 | $ | 60.00 |                                          | 
|27-Jul-11    |  |             | 31- Dec-12  |  |                 | $ | 60.00 |                                          | 
|01-Nov-11    |  |             | 31-Dec-14   |  |                 | $ | 75.00 |                                          | 
|28-May-12    |  |             | 28-May-15   |  |                 | $ | 15.00 |                                          | 
|31-May-12    |  |             | 30-May-17   |  |                 | $ | 15.00 |                                          | 





1 These options were repriced
down from $15.90 to $8.25 following the restructuring of the series 1 convertible notes.



2 These 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.



All the convertible notes issued were
anti-dilutive for all three financial years. Refer to Note 18(b) for details of convertible notes issued.



Page 39







Notes to the financial statements



10 Cash and cash equivalents



|                                                                    |  | Consolidated |        
|------------------------------------------------------------------- |  | ------------ | -------
|                                                                    |  | 2014$’000    |        
|Cash at bank and in hand                                            |  |              | 1,381  
|Bank overdraft                                                      |  |              | -      
|                                                                    |  |              | 1,381  
|(a) Reconciliation of net loss to net cash flow from operations     |  |              |        
|Loss after tax                                                      |  |              | (25,430
|Adjustment for non-cash items:                                      |  |              |        
|Depreciation and amortisation                                       |  |              | 632    
|Impairment of intangibles                                           |  |              | -      
|Impairment of financial assets and joint venture assets             |  |              | 10,015 
|Share-based payments expense                                        |  |              | 147    
|Write-off of capitalised finance facility costs                     |  |              | -      
|Non-cash items relating to convertible notes                        |  |              | 3,256  
|Non-cash items relating to Taralga project                          |  |              | -      
|Gain on financial liabilities measured at fair value                |  |              | -      
|Loss on sale of property, plant and equipment and intangible assets |  |              | 909    
|Unrealised losses/(gains) on foreign exchange                       |  |              | 474    
|Share of (profit)/loss of associates                                |  |              | -      
|Bad debts written off and provision for impairment of receivable    |  |              | 75     
|Discount on acquisition of controlled entity                        |  |              | -      
|Break fee from terminated acquisition                               |  |              | -      
|Gain on remeasurement of contingent consideration                   |  |              | -      
|Changes in assets and liabilities:                                  |  |              |        
|Trade and other receivables                                         |  |              | 2,862  
|Inventories                                                         |  |              | (1,038 
|Other assets                                                        |  |              | (801   
|Deferred tax assets                                                 |  |              | -      
|Trade and other payables                                            |  |              | (10,735
|Current tax liabilities                                             |  |              | -      
|Deferred tax liabilities                                            |  |              | -      
|Provisions                                                          |  |              | (529   
|Net cash from/(used in) operating activities                        |  |              | (20,163
|                                                                    |  |              |        
|(b) Non-cash financing and investing activities                     |  |              |        
|Share-based payments (options) – borrowings                         |  |              | 147    
|Equity settled – payables and borrowings                            |  |              | 4,891  
|Acquisition of plant and equipment by means of finance leases       |  |              | 167    
|Acquisition of investment by means of re-investment of fees earned  |  |              | -      



The Group’s exposure to interest rate risk is discussed
in Note 22. The maximum exposure to credit risk at the end of the reporting period is the carrying amount.



Page 40







Notes to the financial statements



11 Trade and other receivables



|                                                                |  | Consolidated |      
|--------------------------------------------------------------- |  | ------------ | -----
|                                                                |  | 2014$’000    |      
|Current                                                         |  |              |      
|Trade receivables (a)                                           |  |              | 1,498
|Other receivables (b)                                           |  |              | 1,600
|Allowance for impairment
loss                                   |  |              | (3   
|                                                                |  |              | 3,095
|                                                                |  |              |      
|Non-current                                                     |  |              |      
|Other receivables (b)                                           |  |              | 500  
|                                                                |  |              | 500  
|                                                                |  |              |      
|Movements in the allowance for impairment loss were as follows: |  |              |      
|At July 1                                                       |  |              | 78   
|Charge for the year                                             |  |              | 75   
|Amounts recovered                                               |  |              | -    
|Amounts written off                                             |  |              | (150 
|At June 30                                                      |  |              | 3    



(a) Past due but not impaired

As at June 30, 2014, trade receivables
past due but not considered impaired are: $234,000 (2013: $2,490,000; 2012: $1,930,000).



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 $207,000 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: |  |              |       |  |                  |  |   |                   |  |  |                  | 
|2014 Consolidated                                                            |  |              | 234   |  |                  |  | - |                   |  |  | 177              | 
|2013 Consolidated                                                            |  |              | 2,490 |  |                  |  | - |                   |  |  | 2,166            | 
|2012 Consolidated                                                            |  |              | 1,930 |  |                  |  | - |                   |  |  | 399              | 



(b) Other receivables

These amounts generally arise from transactions
outside of the usual operating activities of the Group. The balance relates primarily to the receivable from the sale of Larkden
Pty Ltd, of which $1,000,000 has been received by the date of this report.



Page 41







Notes to the financial statements



12 Inventories



|                         |  | Consolidated |      
|------------------------ |  | ------------ | -----
|                         |  | 2014$’000    |      
|Raw materials and stores |  |              | 826  
|Work in progress         |  |              | 392  
|STCs                     |  |              | 15   
|                         |  |              | 1,233



Work in progress at June 30, 2012 was made
up of costs incurred in constructing a 5MW solar project in Italy and development expenditure on the Taralga wind farm project.
Since 30 June 2012 the Italian Solar project has been sold and development costs for Taralga have been reimbursed with the respective
work-in-progress amounts transferred to profit or loss in the year ended 30 June 2013.



13 Other assets



|             |  | Consolidated |      
|------------ |  | ------------ | -----
|             |  | 2014$’000    |      
|Current      |  |              |      
|Prepayments  |  |              | 347  
|Deposits (i) |  |              | 756  
|             |  |              | 1,103
|             |  |              |      
|Non-current  |  |              |      
|Deposits     |  |              | 178  



(i) For 2014, this amount includes $676,000
relating to a payment initiated by a Director, Mr Gerry McGowan, (no longer a director) outside of the customary approval processes
of the Company. The Company has been unable to determine the nature of this payment. Refer to Note 24(g).



Page 42







Notes to the financial statements



14 Available-for-sale, other financial
assets and discontinued operations



Available-for-sale and other financial assets



|                             |  | Consolidated |   
|---------------------------- |  | ------------ | --
|                             |  | 2014$’000    |   
|Non-current                  |  |              |   
|Taralga Wind Farm1           |  |              | - 
|Andalay Solar2               |  |              | 39
|Shares in other corporations |  |              | - 
|Investment in solar projects |  |              | - 
|                             |  |              | 39





1 During the year ended June
30, 2013 the Group made an investment in two trustee companies Taralga Holding Nominees 1 Pty Ltd, and Taralga Holding Nominees 2 Pty Ltd, and two trusts,
the Taralga HoldCo Land Trust, and the Taralga HoldCo Operating Trust. See Note 3(vi) for details of the investment.
At 30 June 2014, this investment was fully impaired to $Nil.





2 On January 4, 2012,
BlueNRGY invested US$1,000,000 into Andalay Solar (previously Westinghouse Solar Inc.) to acquire 1,666,667 common stock in
this US listed company. This represented an ownership interest of approximately 9% of the common stock of Andalay Solar.
BlueNRGY does not have a controlling interest in Andalay Solar and as such this investment is valued on a mark to market
basis. Impairment losses of $4,000 (2013: $560,000; 2012: $375,000) have been recognised as it was deemed that the decline in
value was significant compared to the original cost of the investment.



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.
Financial information relating to the discontinued operation for the period to the date of disposal is set out below:



|                                                                        |  | Consolidated |      
|----------------------------------------------------------------------- |  | ------------ | -----
|                                                                        |  | 2014$’000    |      
|Current                                                                 |  |              |      
|Revenue                                                                 |  |              | 1,076
|Expenses                                                                |  |              | 10   
|Profit before income tax                                                |  |              | 1,086
|Income tax expense                                                      |  |              | -    
|Profit after income tax of discontinued operation                       |  |              | 1,086
|                                                                        |  |              |      
|Assets classified as held for sale                                      |  |              | -    
|Liabilities directly associated with assets classified as held for sale |  |              | -    
|                                                                        |  |              |      
|Net cash outflow from operating activities                              |  |              | (263 
|Net cash outflow from investing activities                              |  |              | -    
|Net cash outflow from financing activities                              |  |              | (26  
|Net decrease in cash generated by discontinued operation                |  |              | (289 



Page 43









Notes to the financial statements



14 Available-for-sale, other financial
assets and discontinued operations (continued)



Details of the sale of Captech are as follows:



|                                                               |  | 2014$’000 |      
|-------------------------------------------------------------- |  | --------- | -----
|Details of sale:                                               |  |           |      
|Consideration received                                         |  |           |      
|Cash received                                                  |  |           | 1,788
|Total disposal consideration                                   |  |           | 1,788
|                                                               |  |           |      
|Carry amount of net assets sold                                |  |           | 1,796
|Loss on sale before income tax                                 |  |           | (8   
|Income tax expense                                             |  |           | -    
|Loss on sale of discontinued operation after income tax        |  |           | (8   
|                                                               |  |           |      
|Carrying amounts of assets and liabilities at the date of sale |  |           |      
|Receivables                                                    |  |           | 937  
|Inventories and work in progress                               |  |           | 935  
|Fixed assets                                                   |  |           | 162  
|Goodwill                                                       |  |           | 341  
|Total assets                                                   |  |           | 2,375
|                                                               |  |           |      
|Trade payables & other payables                                |  |           | 297  
|Provisions                                                     |  |           | 257  
|Finance leases                                                 |  |           | 25   
|Total liabilities                                              |  |           | 579  
|                                                               |  |           |      
|Net assets                                                     |  |           | 1,796



Page 44







Notes to the financial statements



15 Non-current assets - plant and equipment



|                                             |  | Consolidated |       
|-------------------------------------------- |  | ------------ | ------
|                                             |  | 2014$’000    |       
|Computer hardware & software                 |  |              |       
|At cost                                      |  |              | 1,043 
|Accumulated depreciation                     |  |              | (700  
|Total computer hardware & software           |  |              | 343   
|                                             |  |              |       
|Motor vehicles                               |  |              |       
|At cost                                      |  |              | 374   
|Accumulated depreciation                     |  |              | (369  
|Total motor vehicles                         |  |              | 5     
|                                             |  |              |       
|Plant and equipment                          |  |              |       
|At cost                                      |  |              | 3,967 
|Accumulated depreciation                     |  |              | (1,443
|Total plant and equipment                    |  |              | 2,524 
|                                             |  |              |       
|Furniture, fittings & office equipment       |  |              |       
|At cost                                      |  |              | 429   
|Accumulated depreciation                     |  |              | (240  
|Total furniture, fittings & office equipment |  |              | 189   
|                                             |  |              |       
|Leased motor vehicles                        |  |              |       
|At cost                                      |  |              | 644   
|Accumulated amortisation                     |  |              | (287  
|Total leased motor vehicles                  |  |              | 357   
|                                             |  |              |       
|Leasehold improvements                       |  |              |       
|At cost                                      |  |              | 407   
|Accumulated amortisation                     |  |              | (293  
|Total leasehold improvements                 |  |              | 114   
|                                             |  |              |       
|Total property, plant and equipment          |  |              |       
|At cost                                      |  |              | 6,864 
|Accumulated amortisation/depreciation        |  |              | (3,332
|Total property, plant and equipment          |  |              | 3,532 



Page 45







Notes to the financial statements



15 Non-current assets - plant and equipment (continued)



Reconciliation of carrying amounts at the beginning and end
of the year



|                                                                    |  | Computerhardware&software$’000 |      |   | Motorvehicles$’000 |  |     | Plant &equipment$’000 |  |  | Furniture,fittings &officeequipment$’000 |   |  | Leasedmotorvehicles$’000 |      |   | Leaseholdimprove-ments$’000 |  |      | Total$’000 | 
|------------------------------------------------------------------- |  | ------------------------------ | ---- | - | ------------------ |  | --- | --------------------- |  |  | ---------------------------------------- | - |  | ------------------------ | ---- | - | --------------------------- |  | ---- | ---------- | 
|Year ended June 30, 2014                                            |  |                                |      |   |                    |  |     |                       |  |  |                                          |   |  |                          |      |   |                             |  |      |            | 
|At July 1, 2013 net of
    accumulated depreciation and impairment  |  |                                | 344  |   |                    |  | 10  |                       |  |  | 3,496                                    |   |  |                          | 214  |   |                             |  | 379  |            | 
|Additions                                                           |  |                                | 21   |   |                    |  | 97  |                       |  |  | 284                                      |   |  |                          | 80   |   |                             |  | 167  |            | 
|Disposals                                                           |  |                                | (10  | ) |                    |  | (97 | )                     |  |  | (867                                     | ) |  |                          | (45  | ) |                             |  | (64  | )          | 
|Transfers                                                           |  |                                | 119  |   |                    |  | 7   |                       |  |  | (119                                     | ) |  |                          | (5   | ) |                             |  | (7   | )          | 
|Depreciation charge
    for the year                                |  |                                | (131 | ) |                    |  | (12 | )                     |  |  | (270                                     | ) |  |                          | (55  | ) |                             |  | (118 | )          | 
|At June 30,
    2014 net of accumulated depreciation and impairment |  |                                | 343  |   |                    |  | 5   |                       |  |  | 2,524                                    |   |  |                          | 189  |   |                             |  | 357  |            | 
|                                                                    |  |                                |      |   |                    |  |     |                       |  |  |                                          |   |  |                          |      |   |                             |  |      |            | 
|Year Ended 30 June 2013                                             |  |                                |      |   |                    |  |     |                       |  |  |                                          |   |  |                          |      |   |                             |  |      |            | 
|At 1 July 2012 net of accumulated depreciation and impairment       |  |                                | 164  |   |                    |  | 154 |                       |  |  | 3,890                                    |   |  |                          | 259  |   |                             |  | 359  |            | 
|Additions                                                           |  |                                | 304  |   |                    |  | 13  |                       |  |  | -                                        |   |  |                          | 134  |   |                             |  | 115  |            | 
|Disposals                                                           |  |                                | (11  | ) |                    |  | (86 | )                     |  |  | (145                                     | ) |  |                          | (118 | ) |                             |  | -    |            | 
|Depreciation charge for the year                                    |  |                                | (113 | ) |                    |  | (71 | )                     |  |  | (249                                     | ) |  |                          | (61  | ) |                             |  | (95  | )          | 
|At 30 June 2013 net of accumulated depreciation and impairment      |  |                                | 344  |   |                    |  | 10  |                       |  |  | 3,496                                    |   |  |                          | 214  |   |                             |  | 379  |            | 



Page 46







Notes to the financial statements



15 Non-current assets - 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 30 June 2012                                        |  |                                    |      |   |                      |  |     |                         |  |  |                                              |   |  |                             |     |   |                                |  |     |            | 
|At 1 July 2011 net of accumulated depreciation and impairment  |  |                                    | 287  |   |                      |  | 273 |                         |  |  | 3,391                                        |   |  |                             | 385 |   |                                |  | 215 |            | 
|Additions                                                      |  |                                    | 136  |   |                      |  | 27  |                         |  |  | 725                                          |   |  |                             | -   |   |                                |  | 197 |            | 
|Disposals                                                      |  |                                    | (2   | ) |                      |  | (18 | )                       |  |  | -                                            |   |  |                             | (74 | ) |                                |  | (48 | )          | 
|Transfers                                                      |  |                                    | -    |   |                      |  | (59 | )                       |  |  | -                                            |   |  |                             | -   |   |                                |  | 59  |            | 
|Depreciation charge for the year                               |  |                                    | (257 | ) |                      |  | (69 | )                       |  |  | (226                                         | ) |  |                             | (52 | ) |                                |  | (64 | )          | 
|At 30 June 2012 net of accumulated depreciation and impairment |  |                                    | 164  |   |                      |  | 154 |                         |  |  | 3,890                                        |   |  |                             | 259 |   |                                |  | 359 |            | 



Page 47







Notes to the financial statements



16 Non-current assets – goodwill and intangible assets



Reconciliation of carrying amounts at the beginning and end
of the year



|                                                                    |  | Patent Costs $’000 |        |   | Develop-
ment Costs $’000 |  |      | License Costs $’000 |  |  | Goodwill $’000 |   |  | Total $’000 |        
|------------------------------------------------------------------- |  | ------------------ | ------ | - | ------------------------- |  | ---- | ------------------- |  |  | -------------- | - |  | ----------- | -------
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Year ended June 30, 2014                                            |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At July 1, 2013 net of impairment                                   |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 7,666  
|Additions                                                           |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | -      
|Disposals                                                           |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | -      
|Impairment                                                          |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | -      
|Amortisation                                                        |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | -      
|At June 30,
    2014 net of accumulated amortisation and impairment |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 7,666  
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At June 30, 2014                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Cost (gross carrying amount)                                        |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 19,123 
|Accumulated impairment                                              |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | (11,457
|Net carrying
    amount                                             |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 7,666  
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Year ended June 30, 2013                                            |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At July 1, 2012 net of impairment                                   |  |                    | 3,500  |   |                           |  | 402  |                     |  |  | -              |   |  |             | 7,666  
|Disposals                                                           |  |                    | (3,363 | ) |                           |  | (402 | )                   |  |  | -              |   |  |             | -      
|Impairment                                                          |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | -      
|Amortisation                                                        |  |                    | (137   | ) |                           |  | -    |                     |  |  | -              |   |  |             | -      
|At June 30, 2013 net of accumulated amortisation and impairment     |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 7,666  
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At June 30, 2013                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Cost (gross carrying amount)                                        |  |                    | -      |   |                           |  | 255  |                     |  |  | 163            |   |  |             | 18,782 
|Accumulated impairment                                              |  |                    | -      |   |                           |  | (255 | )                   |  |  | (163           | ) |  |             | (11,116
|Net carrying amount                                                 |  |                    | -      |   |                           |  | -    |                     |  |  | -              |   |  |             | 7,666  
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Year ended June 30, 2012                                            |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At July 1, 2011 net of impairment                                   |  |                    | 3,582  |   |                           |  | 654  |                     |  |  | 163            |   |  |             | 18,557 
|Additions                                                           |  |                    | -      |   |                           |  | 3    |                     |  |  | -              |   |  |             | 225    
|Impairment                                                          |  |                    | -      |   |                           |  | (255 | )                   |  |  | (163           | ) |  |             | (11,116
|Amortisation                                                        |  |                    | (82    | ) |                           |  | -    |                     |  |  | -              |   |  |             | -      
|At June 30, 2012 net of accumulated amortisation and impairment     |  |                    | 3,500  |   |                           |  | 402  |                     |  |  | -              |   |  |             | 7,666  
|                                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|At June 30, 2012                                                    |  |                    |        |   |                           |  |      |                     |  |  |                |   |  |             |        
|Cost (gross carrying amount)                                        |  |                    | 3,582  |   |                           |  | 657  |                     |  |  | 163            |   |  |             | 18,782 
|Accumulated impairment                                              |  |                    | -      |   |                           |  | (255 | )                   |  |  | (163           | ) |  |             | (11,116
|Accumulated amortisation                                            |  |                    | (82    | ) |                           |  | -    |                     |  |  | -              |   |  |             | -      
|Net carrying amount                                                 |  |                    | 3,500  |   |                           |  | 402  |                     |  |  | -              |   |  |             | 7,666  



Page 48







Notes to the financial statements



16 Non-current assets – goodwill and intangible assets
(continued)



Patents

(i) Description of the asset

Patents have been acquired through business
combinations (Larkden Pty Ltd) and are carried at cost less accumulated amortisation and accumulated impairment losses. Whilst
the technology and know-how associated with the patents have an infinite economic life expectancy, the patents expire in 2025.
If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that
the recoverable amount is lower than the carrying amount.



(ii) Impairment consideration

The Group obtained an independent valuation
of the Larkden patents as at June 30, 2012 in order to determine the recoverable amount of the asset. The valuation indicated that
the carrying value of the patents was $3,500,000.



(iii) Key assumptions used by the independent
valuer

The recoverable amount of the patents was
determined based on an independent assessment of their fair value. The independent valuation considered a range of possible scenarios
and resulting cash flows. The pre-tax discount rate applied to these range of cash flows is between 70% and 80%. In determining
the recoverable amount of the asset the Company considered the range of valuations provided by the different scenarios and adopted
the value recommended by the independent valuer.



The Group’s interests in Larken
Pty Ltd were sold during the year ended 2013. The sale included the energy storage patents held by Larken.



License costs and development costs

During the year ended June 30, 2010 the
Group acquired a licence to act as exclusive retailer of Climate Well products with a fair value of $163,000. During the year ended
June 30, 2012 the Group assessed the recoverability of the $163,000 Climate Well license agreement and determined that the license
was impaired as the Company has decided not to pursue product sales within its licensed geography any further. The full amount
of $163,000 was impaired during the year ended June 30, 2012.



During the year ended June 30, 2012, the
Group assessed the recoverability of capitalised development costs and determined that the carrying value required impairment and
accordingly an impairment loss of $255,000 was recognised in profit or loss in the 2012 financial year.
The remaining carrying amount of development costs of $402,000 at 30 June 2012 represented development costs associated with linking
solar and wind generating assets with energy storage technology for a remote area renewable energy project. As part of the sale
of the patent asset, the licence for use of the storage technology in this project was terminated and the development costs were
fully impaired.



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 |      
|-------- |  | ------------ | -----
|         |  | 2014$’000    |      
|         |  |              |      
|Solar PV |  |              | 6,500
|Parmac   |  |              | 1,166
|         |  |              | 7,666





Page 49







Notes to the financial statements



16 Non-current assets – goodwill and intangible assets
(continued)



The Group performs its impairment testing
as at 30 June each year or more frequently where there are indicators of impairment. The Directors retrospectively tested goodwill
for impairment as part of the preparation of this financial report as at June 30 for each of the three years covered by this report.
The assumptions used to assess goodwill at each prior balance date were reviewed in conjunction with the actual performance of
the CGU under review. As a result of this review as explained below the Solar PV goodwill was considered impaired to the value
of $6,500,000 at June 30, 2012. No retrospective goodwill adjustments were required to the Parmac or Captech goodwill.



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.



The Captech CGU was disposed of in August
2013 for a sale price not materially different from its net assets plus goodwill value.



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:



|                       |  | Solar |      |   | Parmac | 
|---------------------- |  | ----- | ---- | - | ------ | 
|Pre-tax discount rate  |  |       | 25.5 | % |        | 
|Perpetuity growth rate |  |       | 2    | % |        | 



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.



Page 50







Notes to the financial statements



16 Non-current assets – goodwill and intangible assets
(continued)



|(i) | 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 $000                 |      
|EBITDA        |  | 25% shortfall in EBITDA achievement  |  |                            | 4,250
|Growth rate   |  | Long term growth rate of 0%          |  |                            | 6,170
|Discount rate |  | 3% increase to discount rate applied |  |                            | 5,696



17 Trade and other payables



|                            |  | Consolidated |       
|--------------------------- |  | ------------ | ------
|                            |  | 2014$’000    |       
|Current                     |  |              |       
|Trade payables              |  |              | 7,877 
|Accruals and other payables |  |              | 2,730 
|                            |  |              | 10,607



Fair value



Due to the short-term nature of these payables,
their carrying value is assumed to approximate their fair value.



Page 51







Notes to the financial statements



18 Interest-bearing loans and borrowings



|                           |  | Consolidated |       
|-------------------------- |  | ------------ | ------
|                           |  | 2014$’000    |       
|Current - secured          |  |              |       
|Trade finance (a)          |  |              | -     
|Bank overdraft (a)         |  |              | -     
|Other loans (b) (i)        |  |              | 7,878 
|Energy bonds (c)(ii)       |  |              | 12,743
|Convertible notes (d) (i)  |  |              | 4,489 
|Finance leases             |  |              | 100   
|Current – unsecured        |  |              |       
|Other loans (b) (ii)       |  |              | 116   
|Energy bonds (c)(i)        |  |              | 1,539 
|Convertible notes (d) (ii) |  |              | -     
|                           |  |              | 26,865
|Non-current – secured      |  |              |       
|Finance leases             |  |              | 286   
|                           |  |              | 286   



(a) Trade Finance and Bank overdraft



The 2012 trade finance facility was secured
by purchased stock and by the assets of eco-Kinetics Pty Ltd. The facility was withdrawn by the lender and the balance to
be repaid was classified as an overdraft at June 30, 2013. The overdraft was secured by a first-ranking fixed and floating charge
on the assets of the eco-Kinetics entities and guaranteed by BlueNRGY Group Limited. The overdraft was fully repaid in the 2014
financial year.



(b) Other loans



(i) Current – Secured





The other loans balance as at 30 June 2012
included a balance of $10,763,000 drawn on the entity’s construction finance facility in relation to the 5MW Italy solar
project completed in June 2012. This loan was repaid in full on the sale of the Italy project in December 2012. This construction
finance facility is no longer in place.



The other loans balance as at 30 June 2012
also included a loan of $6,500,000 secured by a 2nd ranking fixed and floating charge over all otherwise unencumbered assets of
the Group. This loan remained in place at June 30, 2013. During the 2014 financial year, accrued interest of $865,000
was capitalised into the loan balance and further net loan funding of $503,000 was provided by the lender. Interest is 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.



(ii) Current - unsecured





In December 2012, the Group issued $750,000
of instalment loan notes to a professional advisor of the Group in lieu of cash payments for services received. The instalment
notes do not bear interest and are payable in 18 equal monthly instalments, commencing in January 2013, in cash or, at BlueNRGY’s
discretion, common shares in the Company. The balance on these notes at June 30, 2014 is $Nil (2013: $500,000).



In January 2013, BlueNRGY entered into
an agreement with a consortium of lenders to establish an unsecured financing facility for the purpose of financing purchases of
inventory for the Solar PV division. As of June 30, 2014, the facility has been fully repaid to $Nil (2013: $539,000).



(c) Energy Bonds



(i) Energy Bonds 1 – unsecured





In July 2013, £994,500
($1,800,400) was raised by a subsidiary company (‘the issuer’) Energy Bonds PLC through the issue of an unsecured
Clean Energy Bond offering in the United Kingdom (‘Energy Bonds 1’). Energy Bonds 1 bear interest at a rate of
7.5% per annum. Interest is payable quarterly in cash. Energy Bonds 1 are redeemable by the holder on or after the fourth
anniversary of their issuance. The issuer has the right to prepay Energy Bonds 1 in whole or in part at any time. Energy
Bonds 1 are unsecured and are not subject to any operating covenants or restrictions as a result of their issuance. On
execution of the Deed of Company Arrangement on December 24, 2014 the parent company guarantee provided to the issuer was
extinguished.



Page 52







Notes to the financial statements



18 Interest-bearing loans and borrowings (continued)



(c) Energy Bonds (continued)



(ii) Energy Bonds 2 –
secured







In December 2013, £7.5 million ($13.6
million) was raised by a subsidiary company (‘the issuer’) Secured Energy Bonds PLC through a secured Clean Energy
Bond offering in the United Kingdom (‘Energy Bonds 2’). Energy Bonds 2 bear interest at a rate of 6.5% per annum. Interest
is payable quarterly in cash. Energy Bonds 2 are redeemable by the holder on the later of the third anniversary of their issue.
The issuer has the right to prepay the Energy Bonds 2 in whole or in part at any time. Energy Bonds 2 are secured over the assets
of the issuer and are not subject to any operating covenants or restrictions. On execution of the Deed of Company Arrangement
on December 24, 2014 the parent company guarantee provided to the issuer was extinguished. Secured Energy Bonds PLC entered voluntary
administration on January 22, 2015.



(d) Convertible notes





(i) Convertible notes secured –
Series 1







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 maturity date of these notes
was 36 months after the date of issue. The notes are transferable by the note holders and are convertible into ordinary shares
of the Company at the option of the holder. The conversion price when issued was A$15.90. The notes are 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.



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 has resulted in an additional
expense of $1,168,000 that has been recognised in profit or loss at June 30, 2013.



As a result of a default event at June
30, 2013, at maturity the notes are subject to a redemption premium equal to 20% of the principal which is 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 Series 1 convertible notes were fully extinguished.





(ii) Convertible notes – Series
2 unsecured









In December 2011, BlueNRGY issued 12-month
term convertible notes to an investor consortium for US$2,000,000 ($2,128,000) and in March 2012 issued an additional US$400,000
($425,600) of these notes. In December 2012, prior to maturity of these notes, BlueNRGY issued replacement notes to the note holders,
referred to as the ‘Series 2 Notes’ with a face value equal to US$2,750,000 ($2,926,000), which includes accrued interest
from the issue date of the original notes through to the issue date of the Series 2 Notes. At June 30, 2014 these notes including
all accrued and unpaid interest have a $nil balance after being settled during the year in full by the issue of $606,000 BlueNRGY
ordinary shares and $2,508,000 Series A Preference Shares.



Convertible notes – Series 3
unsecured



In December 2012, BlueNRGY issued convertible
notes for US$250,000 ($266,000), referred to as the ‘Series 3 Notes’. The Series 3 Notes mature on December 12, 2015
and were convertible at any time in whole or in part at a conversion price of A$15.90 per share. The Series 3 Notes bear interest
at an annual rate of 9.75% per annum. At June 30, 2014 these notes including all accrued and unpaid interest have a $Nil balance
after being settled during the year in full by the issue of $313,000 BlueNRGY ordinary shares.



(iv) Summary of convertible notes





The convertible notes are presented on the balance sheet as
follows:



|                                                                                            |  | Consolidated |      
|------------------------------------------------------------------------------------------- |  | ------------ | -----
|                                                                                            |  | 2014$’000    |      
|                                                                                            |  |              |      
|Face value of convertible note (equivalent to cash redemption amount)                       |  |              | 4,460
|Derivative on convertible note (Conversion options and associated warrants) – at fair value |  |              | 52   
|Borrowing costs - amortised balance                                                         |  |              | (23  
|Carrying Value                                                                              |  |              | 4,489



Page 53







Notes to the financial statements



18 Interest-bearing loans and borrowings (continued)



(e) Derivatives on convertible note



(i) Conversion option





The convertible notes on issue at June
30, 2013 and 2012 are denominated in USD and are convertible at the option of the holder at any time before maturity at a strike
price multiplied by a USD exchange rate. These convertible notes are classified as a financial liability (refer to Note 2(w)).



(ii) Performance warrants





The performance warrants which have been
issued to Series 1 noteholders as a result of the restructure of these notes are also considered to be derivative instruments
due to the re-pricing mechanism for these warrants and are classified as financial liabilities.



The group engaged an independent valuer
to assess the fair value of the derivative on the convertible notes as at June 30, 2013 and 2012.



The embedded conversion option was valued
using a modified binominal lattice model giving consideration to the dilution impact of shares issued upon conversion. In order
to account for the specific terms of the potential warrants two components of the commonly used (unmodified) binomial model in
relation to the share prices have been modified. In this regard, the share price at each node where new shares are issued has been
modified to account for the effect of dilution. The following key inputs were applied to determine a fair value.





|                 |  | June 30, 2014 |          |   | June 30,  2013 |   |          | June 30,  2012 | 
|---------------- |  | ------------- | -------- | - | -------------- | - | -------- | -------------- | 
|                 |  |               |          |   |                |   |          |                | 
|Share price      |  | $             | 3.60     |   |                | $ | 2.40     |                | 
|Conversion price |  | $             | 15.90    |   |                | $ | 15.90    |                | 
|Dividend yield   |  |               | 0.0      | % |                |   | 0.0      | %              | 
|Risk free rate   |  |               | 3.0      | % |                |   | 3.0      | %              | 
|Volatility       |  |               | 70% - 90 | % |                |   | 70% - 90 | %              | 





The additional warrants were valued 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. The following key inputs were applied to determine a fair value.





|                 |  | June 30,  2014 |          |   | June 30,  2013 |   |          | June 30,  2012 | 
|---------------- |  | -------------- | -------- | - | -------------- | - | -------- | -------------- | 
|                 |  |                |          |   |                |   |          |                | 
|Share price      |  | $              | 3.60     |   |                | $ | 2.40     |                | 
|Conversion price |  | $              | 15.90    |   |                | $ | 15.90    |                | 
|Dividend yield   |  |                | 0.0      | % |                |   | 0.0      | %              | 
|Risk free rate   |  |                | 3.0      | % |                |   | 3.0      | %              | 
|Volatility       |  |                | 70% - 90 | % |                |   | 70% - 90 | %              | 





Page 54







Notes to the financial statements



18 Interest-bearing loans and borrowings (continued)



(e) Derivatives on convertible note (continued)



(ii) Performance warrants (continued)



The performance warrants were valued using
a multi-step binomial model. The following key inputs were applied to determine a fair value.





|                                  |  | June 30 2014 |              |   | June 30, 2013 |  
|--------------------------------- |  | ------------ | ------------ | - | ------------- | -
|                                  |  |              |              |   |               |  
|Number of options granted         |  |              | 153,939      |   |               |  
|Consideration for options granted |  |              | Nil          |   |               |  
|Grant date:                       |  |              | Feb 13, 2013 |   |               |  
|Expiry date:                      |  |              | May 30, 2017 |   |               |  
|Share price at grant date         |  | $            | 6.00         |   |               | $
|Exercise price                    |  |              | $ 3.90       | 1 |               |  
|Expected dividend yield           |  |              | 0            | % |               |  
|Risk-free interest rate           |  |              | 3.0          | % |               |  
|Volatility                        |  |              | 70           | % |               |  





1 These 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. These options were repriced down from $8.25 to $3.90.



(d) Fair values





With the exception of the convertible notes,
the carrying amount of the Group’s current and non-current borrowings approximates their fair values.



(e) 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 22.



(f) Assets pledged as security





All assets of the Group have been pledged
as security for current and non-current interest bearing liabilities.



19 Provisions



|                                  |  | Consolidated |    
|--------------------------------- |  | ------------ | ---
|                                  |  | 2014$’000    |    
|                                  |  |              |    
|Current                           |  |              |    
|Employee entitlements             |  |              | 395
|Provision for warranty claims (a) |  |              | 153
|                                  |  |              | 548
|Non-current                       |  |              |    
|Employee entitlements             |  |              | 92 



(a) This amount includes predominantly
provision for estimated claims by customers for product faults in domestic Solar PV systems as well as provision for claimable
warranty for other goods and services sold by the Group.



Page 55







Notes to the financial statements



20 Contributed equity



|                                                |  | Consolidated |        
|----------------------------------------------- |  | ------------ | -------
|                                                |  | 2014$’000    |        
|                                                |  |              |        
|Ordinary share capital, issued and fully paid   |  |              | 120,323
|Class A Preferred shares, issued and fully paid |  |              | 4,643  
|Value of conversion rights – convertible notes  |  |              | 574    
|                                                |  |              | 125,540



On February 6, 2014 the Company effected
a 300:1 consolidation of its ordinary shares (the ‘Reverse Stock Split’) in accordance with the authorization of shareholders
granted at its Extraordinary General Meeting held on November 26, 2013. Following the Reverse Stock Split, the Company’s
issued and outstanding ordinary shares as of February 6, 2014 totaled 2,032,013. All common share, per common share, stock unit
per stock unit data, stock option and warrant exercise prices per ordinary share and all convertible note conversion prices per
share, for all periods presented, have been adjusted to reflect the Reverse Stock Split.



|                                             |  | 2014              |           |   | 2013  |  |         | 2012             | 
|-------------------------------------------- |  | ----------------- | --------- | - | ----- |  | ------- | ---------------- | 
|                                             |  | Number of  shares |           |   | $’000 |  |         | Number of shares | 
|Movement in shares on issue                  |  |                   |           |   |       |  |         |                  | 
|Balance at the beginning of the year         |  |                   | 1,742,825 |   |       |  | 109,046 |                  | 
|Issue of shares during the year              |  |                   | 2,976,489 |   |       |  | 12,597  |                  | 
|Issue from exercise of share options         |  |                   | -         |   |       |  | -       |                  | 
|Forfeiture on consolidation                  |  |                   | (1,181    | ) |       |  | -       |                  | 
|Transaction costs                            |  |                   | -         |   |       |  | (1,320  | )                | 
|Balance at the end of the year               |  |                   | 4,718,133 |   |       |  | 120,323 |                  | 
|                                             |  |                   |           |   |       |  |         |                  | 
|Movement in preference shares on issue       |  |                   |           |   |       |  |         |                  | 
|Balance at the beginning of the year         |  |                   | -         |   |       |  | -       |                  | 
|Issue of preference A shares during the year |  |                   | 435       |   |       |  | 4,643   |                  | 
|Balance at the beginning of the year         |  |                   | 435       |   |       |  | 4,643   |                  | 



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.





The 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 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.



Page 56







Notes to the financial statements



20 Contributed equity (continued)



Other equity



The amount shown for other equity is the
value of the conversion rights relating to the 12.5% convertible notes issued on July 29, 2009.



Share options



Options
over ordinary shares: The following options (including conversion rights on convertible notes) to purchase fully
paid ordinary shares in the Company were outstanding at June 30, 2014:



|Grant Date                        |  | Expiry Date |  | Exercise Price ($) |       |  | Balance at beginning of the year No. |  |         | Granted during the year No. |      |  | Exercised during the year No. |  |  | Forfeited during the year No. |   |  | Vested and exercisable at end of the year No. | 
|--------------------------------- |  | ----------- |  | ------------------ | ----- |  | ------------------------------------ |  | ------- | --------------------------- | ---- |  | ----------------------------- |  |  | ----------------------------- | - |  | --------------------------------------------- | 
|                                  |  |             |  |                    |       |  |                                      |  |         |                             |      |  |                               |  |  |                               |   |  |                                               | 
|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    |  | $                  | 8.25  |  |                                      |  | 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    |  | $                  | 3.90  |  |                                      |  | 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                             |  |             |  |                    |       |  |                                      |  | 469,031 |                             |      |  | 72,400                        |  |  |                               | - |  |                                               | 
|Weighted average exercise price $ |  |             |  |                    |       |  | 14.35                                |  |         |                             | 5.34 |  |                               |  |  |                               |   |  | 60.00                                         | 



Page 57







Notes to the financial statements



20 Contributed equity (continued)



The following options (including conversion rights on convertible notes) to
purchase fully paid ordinary shares in the Company were outstanding at June 30, 2013:



|Grant Date                        |  | Expiry Date |  | Exercise Price ($) |       |   | Balance at beginning of the year No. |  |         | Granted during the year  No. |      |  | Exercised during the year No. |  |  | Forfeited during the year No. |   |  | Vested and exercisable at end of the year No. | 
|--------------------------------- |  | ----------- |  | ------------------ | ----- | - | ------------------------------------ |  | ------- | ---------------------------- | ---- |  | ----------------------------- |  |  | ----------------------------- | - |  | --------------------------------------------- | 
|                                  |  |             |  |                    |       |   |                                      |  |         |                              |      |  |                               |  |  |                               |   |  |                                               | 
|28/11/08                          |  | 27/11/13    |  | $                  | 60.00 |   |                                      |  | 30,667  |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|21/12/10                          |  | 19/12/13    |  | $                  | 60.00 |   |                                      |  | 40,000  |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|27/07/11                          |  | 31/12/12    |  | $                  | 60.00 |   |                                      |  | 1,917   |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|01/11/11                          |  | 31/12/14    |  | $                  | 75.00 |   |                                      |  | 1,167   |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|28/05/12                          |  | 28/05/15    |  | $                  | 8.25  | 1 |                                      |  | 66,667  |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|31/05/12                          |  | 30/05/17    |  | $                  | 3.90  | 2 |                                      |  | 117,705 |                              |      |  | -                             |  |  |                               | - |  |                                               | 
|12/12/12                          |  | 12/12/17    |  | $                  | 15.90 |   |                                      |  | -       |                              |      |  | 3,930                         |  |  |                               | - |  |                                               | 
|12/12/12                          |  | 12/12/17    |  | $                  | 3.90  |   |                                      |  | -       |                              |      |  | 11,792                        |  |  |                               | - |  |                                               | 
|30/12/12                          |  | 30/12/17    |  | $                  | 15.90 |   |                                      |  | -       |                              |      |  | 43,164                        |  |  |                               | - |  |                                               | 
|13/02/13                          |  | 30/05/17    |  | $                  | 3.90  | 2 |                                      |  | -       |                              |      |  | 153,939                       |  |  |                               | - |  |                                               | 
|Total                             |  |             |  |                    |       |   |                                      |  | 258,123 |                              |      |  | 212,825                       |  |  |                               | - |  |                                               | 
|Weighted average exercise price $ |  |             |  |                    |       |   | 21.12                                |  |         |                              | 6.56 |  |                               |  |  |                               |   |  | 60.00                                         | 



1 These options
were repriced down from $15.90 to $8.25 following the restructuring of the Series 1 convertible notes.



2 These 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
and 153,939 options were repriced down from $8.25 to $3.90.



The following options (including conversion rights on convertible notes) to
purchase fully paid ordinary shares in the Company were outstanding at June 30, 2012:



|Grant Date                        |  | Expiry Date |  | Exercise Price ($) |       |  | Balance at beginning of the year No. |  |        | Granted  during the  year No. |       |  | Exercised during the year No. |  |  | Forfeited  during the  year No. |   |  | Vested and exercisable at end of the year No. | 
|--------------------------------- |  | ----------- |  | ------------------ | ----- |  | ------------------------------------ |  | ------ | ----------------------------- | ----- |  | ----------------------------- |  |  | ------------------------------- | - |  | --------------------------------------------- | 
|                                  |  |             |  |                    |       |  |                                      |  |        |                               |       |  |                               |  |  |                                 |   |  |                                               | 
|28/11/08                          |  | 27/11/13    |  | $                  | 60.00 |  |                                      |  | 30,667 |                               |       |  | 333                           |  |  |                                 | - |  |                                               | 
|21/12/10                          |  | 19/12/13    |  | $                  | 60.00 |  |                                      |  | 40,000 |                               |       |  | -                             |  |  |                                 | - |  |                                               | 
|09/02/11                          |  | 09/02/13    |  | $                  | 60.00 |  |                                      |  | 16,667 |                               |       |  | -                             |  |  |                                 | - |  |                                               | 
|27/07/11                          |  | 31/12/12    |  | $                  | 60.00 |  |                                      |  | -      |                               |       |  | 1,917                         |  |  |                                 | - |  |                                               | 
|01/11/11                          |  | 31/12/14    |  | $                  | 75.00 |  |                                      |  | -      |                               |       |  | 1,167                         |  |  |                                 | - |  |                                               | 
|28/05/12                          |  | 28/05/15    |  | $                  | 15.00 |  |                                      |  | -      |                               |       |  | 66,667                        |  |  |                                 | - |  |                                               | 
|31/05/12                          |  | 30/05/17    |  | $                  | 15.00 |  |                                      |  | -      |                               |       |  | 117,705                       |  |  |                                 | - |  |                                               | 
|Total                             |  |             |  |                    |       |  |                                      |  | 87,334 |                               |       |  | 187,789                       |  |  |                                 | - |  |                                               | 
|Weighted average exercise price $ |  |             |  |                    |       |  | 60.00                                |  |        |                               | 15.91 |  |                               |  |  |                                 |   |  | 60.00                                         | 



3.Includes
16,667 options cancelled and re-issued on 28 May 2012 to a loan provider under the terms of the loan agreement.



(e) Capital management



When managing capital,
management's objective is to ensure 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.



Page 58











Notes to the financial statements



20 Contributed equity (continued)



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, 2014, 2013
and 2012, the company had negative net equity.



21 Reserves



|                                                               |  | Consolidated                |      
|-------------------------------------------------------------- |  | --------------------------- | -----
|                                                               |  | Share options reserve $’000 |      
|At July 1, 2013                                                |  |                             | 3,189
|Share based payments
    - borrowing & underwriting agreements |  |                             | 147  
|Impairment of available
    for sale asset                     |  |                             |      
|Translation
    reserve                                        |  |                             | -    
|At June 30,
    2014                                           |  |                             | 3,336
|                                                               |  |                             |      
|At July 1, 2012 (restated)                                     |  |                             | 2,689
|Share based payments - borrowing agreements                    |  |                             | 500  
|Revaluation reserve                                            |  |                             | -    
|Translation reserve                                            |  |                             | -    
|At June 30, 2013                                               |  |                             | 3,189
|                                                               |  |                             |      
|At July 1, 2011 (restated)                                     |  |                             | 1,205
|Share based payments – remuneration                            |  |                             | 28   
|Share based payments - borrowing agreements                    |  |                             | 1,456
|At June 30, 2012                                               |  |                             | 2,689



Nature and purpose of reserves



(i) 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. 72,400 options in total were granted during 2014 as part of remuneration to underwriters. For the year
ended June 30, 2013, 58,887 options were granted as part of borrowing agreements and 150,055 in the year ended June 30, 2012.
The reserve also records the re-pricing of options previously issued.



(ii) 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.



(iii) Translation reserve

Exchange differences arising on translation
of a foreign controlled entity are recognised in other comprehensive income as described in Note 2(h) and accumulated in
a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed
of.



Page 59







Notes to the financial statements



22 Financial risk management objectives and policies



The Group's principal financial instruments
comprise receivables, payables, bank overdraft, trade finance, 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.



During 2013 and 2012, the Group’s
borrowings at variable rate were denominated in Australian Dollars. There were no variable rate borrowings in 2014.



The Group's exposure to market interest
rates relates primarily to the Group's previous bank overdraft. The level of debt is disclosed in Note 18.



At reporting date, the Group had the following
mix of financial assets and liabilities exposed to Australian variable interest rate risk.



|                          |  | Consolidated |      
|------------------------- |  | ------------ | -----
|                          |  | 2014$’000    |      
|Financial Assets          |  |              |      
|Cash and cash equivalents |  |              | 1,381
|                          |  |              |      
|Financial Liabilities     |  |              |      
|Bank overdraft            |  |              | -    
|Trade finance             |  |              | -    
|                          |  |              |      
|Net exposure              |  |              | 1,381



Page 60













Notes to the financial statements



22 Financial risk management objectives and policies (continued)



(a) Interest rate risk (continued)





The Group's policy is to manage its finance
costs using a mix of fixed and variable rate debt. At June 30, 2014, the Group had borrowings of $27,151,000 (2013: $19,388,000;
2012: $27,532,000) with 100% being fixed interest rate debt (2013: 97.6%; 2012: 90.9%).



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.



The following sensitivity analysis is based
on the interest rate risk exposures in existence at the reporting date.



At June 30, 2014, 2013 and 2012, if interest
rates had moved as illustrated in the table below, with all other variables held constant, post tax profit / (losses) and equity
would have been affected as follows:



|                                            |  | Post Tax Profit  Higher/(lower) |    |   | Equity  Higher/(lower) | 
|------------------------------------------- |  | ------------------------------- | -- | - | ---------------------- | 
|Judgments of reasonably possible movements: |  | 2014  $’000                     |    |   | 2013  $’000            | 
|Consolidated                                |  |                                 |    |   |                        | 
|+1% (100 basis points)                      |  |                                 | 4  |   |                        | 
|-1% (100 basis points)                      |  |                                 | (4 | ) |                        | 



(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.



The Group’s exposure to foreign currency
risk at the end of the reporting period, expressed in Australian dollars was as follows:



|                            |  | USD  $’000 |         |   | EUR  $’000 |  |        | GBP  $’000 |  |  | FJD  $’000 |   |  | AUD  $’000 |   |  | Total  $’000 | 
|--------------------------- |  | ---------- | ------- | - | ---------- |  | ------ | ---------- |  |  | ---------- | - |  | ---------- | - |  | ------------ | 
|                            |  |            |         |   |            |  |        |            |  |  |            |   |  |            |   |  |              | 
|2014                        |  |            |         |   |            |  |        |            |  |  |            |   |  |            |   |  |              | 
|Cash and cash equivalents   |  |            | 1,134   |   |            |  | 2      |            |  |  | 82         |   |  |            | - |  |              | 
|Trade and other receivables |  |            | -       |   |            |  | -      |            |  |  | 16         |   |  |            | - |  |              | 
|Financial assets            |  |            | -       |   |            |  | 39     |            |  |  | -          |   |  |            | - |  |              | 
|Trade and other payables    |  |            | (266    | ) |            |  | (1,504 | )          |  |  | (1,368     | ) |  |            | - |  |              | 
|Borrowings                  |  |            | -       |   |            |  | -      |            |  |  | (14,399    | ) |  |            | - |  |              | 
|                            |  |            |         |   |            |  |        |            |  |  |            |   |  |            |   |  |              | 
|2013                        |  |            |         |   |            |  |        |            |  |  |            |   |  |            |   |  |              | 
|Cash and cash equivalents   |  |            | 1       |   |            |  | 6      |            |  |  | 246        |   |  |            | - |  |              | 
|Trade and other receivables |  |            | -       |   |            |  | -      |            |  |  | 102        |   |  |            | - |  |              | 
|Financial assets            |  |            | 43      |   |            |  | -      |            |  |  | -          |   |  |            | - |  |              | 
|Trade and other payables    |  |            | (1,028  | ) |            |  | (1,678 | )          |  |  | (152       | ) |  |            | - |  |              | 
|Borrowings                  |  |            | (10,473 | ) |            |  | -      |            |  |  | -          |   |  |            | - |  |              | 



Page 61







Notes to the financial statements



22 Financial risk management objectives and policies (continued)



(b) Foreign currency risk (continued)



|                            |  | USD  $’000 |         |   | EUR  $’000 |  |        | GBP  $’000 |  |  | FJD  $’000 |  |  | AUD  $’000 |    |  | Total  $’000 | 
|--------------------------- |  | ---------- | ------- | - | ---------- |  | ------ | ---------- |  |  | ---------- |  |  | ---------- | -- |  | ------------ | 
|2012                        |  |            |         |   |            |  |        |            |  |  |            |  |  |            |    |  |              | 
|Cash and cash equivalents   |  |            | 5       |   |            |  | 1,512  |            |  |  | -          |  |  |            | 31 |  |              | 
|Trade and other receivables |  |            | 1,018   |   |            |  | 426    |            |  |  | -          |  |  |            | -  |  |              | 
|Financial assets            |  |            | 603     |   |            |  | -      |            |  |  | -          |  |  |            | -  |  |              | 
|Trade and other payables    |  |            | (3,740  | ) |            |  | (2,799 | )          |  |  | -          |  |  |            | -  |  |              | 
|Borrowings                  |  |            | (18,073 | ) |            |  | -      |            |  |  | -          |  |  |            | -  |  |              | 



Foreign currency sensitivity



The following tables demonstrate the sensitivity
to a reasonably possible change in the US dollar and AUD exchange rate, and the Euro and 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 |        |                  | EUR |  |                             | GBP | 
|---- |  | -------------- | --- | - | --------------------------- | --- | ------ | ---------------- | --- |  | --------------------------- | --- | 
|     |  | Change in rate |     |   | Effect on profit before tax |     |        | Effect on equity |     |  | Effect on profit before tax |     | 
|     |  |                |     |   | $’000                       |     |        | $’000            |     |  | $’000                       |     | 
|2014 |  |                | +10 | % |                             |     | (37    | )                |     |  | (26                         | )   | 
|     |  |                | -10 | % |                             |     | 30     |                  |     |  | 21                          |     | 
|     |  |                |     |   |                             |     |        |                  |     |  |                             |     | 
|2013 |  |                | +10 | % |                             |     | (1,215 | )                |     |  | (850                        | )   | 
|     |  |                | -10 | % |                             |     | 993    |                  |     |  | 695                         |     | 
|     |  |                |     |   |                             |     |        |                  |     |  |                             |     | 
|2012 |  |                | +10 | % |                             |     | (2,243 | )                |     |  | (1,570                      | )   | 
|     |  |                | -10 | % |                             |     | 1,835  |                  |     |  | 1,285                       |     | 





The Group is party to derivative financial
instruments in the normal course of business in order to hedge exposure to fluctuations in foreign exchange rates. The eco-Kinetics
operations use US dollar denominated borrowings to fund Euro based projects. In order to protect against exchange rate movements,
the Group has entered into forward exchange contracts to purchase US dollars and sell Euros. These contracts are hedging highly
probable repayment of borrowings and interest for the ensuing financial year. The contracts are timed to mature when repayments
of borrowings are scheduled to be made.



The Group does not apply hedge accounting.
At June 30, 2014 and 2013 no forward contracts were in place. The fair value of forward contracts at June 30, 2012 was $17,000.



(c) Price risk



The Group has no significant exposure to
price risk.



Page 62







Notes to the financial statements



22 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-derivatives 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:



|                             |  | Consolidated |       
|---------------------------- |  | ------------ | ------
|                             |  | 2014$’000    |       
|                             |  |              |       
|3 months or less             |  |              | 38,606
|3-6 months                   |  |              | 487   
|6 months – 1 year            |  |              | 926   
|1-5 years                    |  |              | 400   
|Over 5 years                 |  |              | -     
|Total contractual cash flows |  |              | 40,419



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.



Page 63







Notes to the financial statements



22 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.



|                                 |  | 2014    |    |  | 2013    |  |   | 2012    | 
|-------------------------------- |  | ------- | -- |  | ------- |  | - | ------- | 
|Consolidated                     |  | Level 1 |    |  | Level 2 |  |   | Level 3 | 
|                                 |  | $’000   |    |  | $’000   |  |   | $’000   | 
|Financial assets                 |  |         |    |  |         |  |   |         | 
|Available-for-sale investments   |  |         | 39 |  |         |  | - |         | 
|Total assets                     |  |         | 39 |  |         |  | - |         | 
|                                 |  |         |    |  |         |  |   |         | 
|Financial liabilities            |  |         |    |  |         |  |   |         | 
|Derivatives on convertible notes |  |         | -  |  |         |  | - |         | 
|Total liabilities                |  |         | -  |  |         |  | - |         | 





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(d) 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, 2014 and June 30, 2013:



|                                                                          |  | Unlistedequitysecurities(asset) |         |   | Embeddedderivativesonconvertiblenotes(liabilities) | 
|------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | -------------------------------------------------- | 
|                                                                          |  |                                 |         |   |                                                    | 
|Opening balance July 1, 2011                                              |  |                                 | 117     |   |                                                    | 
|Additions                                                                 |  |                                 | -       |   |                                                    | 
|Losses recognised in profit or loss                                       |  |                                 | (84     | ) |                                                    | 
|Closing balance June 30, 2012                                             |  |                                 | 33      |   |                                                    | 
|Other decrease (extinguishment)                                           |  |                                 | -       |   |                                                    | 
|Other increases                                                           |  |                                 | 10,000  |   |                                                    | 
|Gains recognised in other comprehensive income                            |  |                                 | 800     |   |                                                    | 
|(Losses)/gains recognised in profit or loss                               |  |                                 | (18     | ) |                                                    | 
|Closing balance June 30, 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      |   |                                                    | 



Page 64







Notes to the financial statements



23 Related party disclosure



(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 ofIncorporation |  | Principal Activity      |  | 2014              |    
|                                                      |  |                         |  |                         |  |                   |    
|BlueNRGY Group Limited Ltd                            |  | Australia               |  | Holding company         |  |                   | 100
|Capacitor Technologies Pty Limited                    |  | Australia               |  | Energy efficiency       |  |                   | -  
|Parmac Air Conditioning & Mechanical Services Pty Ltd |  | Australia               |  | Energy efficiency       |  |                   | 100
|Remote Area Power Systems Pty Ltd                     |  | Australia               |  | Energy storage          |  |                   | 100
|Larkden Pty Ltd                                       |  | Australia               |  | Energy storage          |  |                   | -  
|KI Solar Pty Ltd                                      |  | Australia               |  | Solar                   |  |                   | 100
|eco-Kinetics Group Pty Ltd                            |  | Australia               |  | Solar                   |  |                   | 100
|Eco-Kinetics Europe Limited                           |  | United Kingdom          |  | Solar                   |  |                   | 100
|eco-Kinetics Pty Ltd                                  |  | Australia               |  | Solar                   |  |                   | 100
|Westinghouse Solar Limited                            |  | United Kingdom          |  | Solar                   |  |                   | 100
|CBD Energy USA Limited                                |  | USA                     |  | Solar                   |  |                   | 100
|CBD Acquisition Holdings Inc                          |  | USA                     |  | Solar                   |  |                   | 100
|Westinghouse Solar Inc                                |  | USA                     |  | Solar                   |  |                   | 100
|CBD Solar Labs Pty Ltd                                |  | Australia               |  | PV Plant                |  |                   | 100
|CBD Solar Pty Ltd                                     |  | Australia               |  | Solar                   |  |                   | 100
|Westinghouse Solar Pty Ltd                            |  | Australia               |  | Solar                   |  |                   | 100
|Chatham Island Wind Ltd                               |  | New Zealand             |  | Special purpose vehicle |  |                   | 100
|Energy Bonds Plc                                      |  | United Kingdom          |  | Special purpose vehicle |  |                   | 100
|Secured Energy Bonds Plc                              |  | United Kingdom          |  | Special purpose vehicle |  |                   | 100



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 24.



Page 65







Notes to the financial statements



23 Related party disclosure (continued)



(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.



24 Key management personnel



(a) Compensation for key management
personnel



|                             |  | Consolidated |          
|---------------------------- |  | ------------ | ---------
|                             |  | 2014$        |          
|                             |  |              |          
|Short-term employee benefits |  |              | 1,823,534
|Post-employment benefits     |  |              | 75,355   
|Share-based payment          |  |              | -        
|Total compensation           |  |              | 1,898,889



(b) Option holdings of key management personnel



|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   | Vested at June 30 | 
|-------------- |  | ----------------- | ------ |  | ------------------------- |  | ----- | ----------------- |  |  | ---------------- |  |  | ------------------ | ------- | - | ----------------- | 
|               |  | Balance at July 1 |        |  | Granted as remune- ration |  |       | Options exercised |  |  | Net other change |  |  | Balance at June 30 |         |   | Total             | 
|2014           |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Directors      |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|G.
    McGowan |  |                   | 20,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,000 | ) |                   | 
|Sub-total      |  |                   | 20,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,000 | ) |                   | 
|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Executives     |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Y. Brodsky1    |  |                   | 667    |  |                           |  | -     |                   |  |  | -                |  |  |                    | (667    | ) |                   | 
|J.
    Greer   |  |                   | -      |  |                           |  | 1,000 |                   |  |  | -                |  |  |                    | -       |   |                   | 
|Sub-total      |  |                   | 667    |  |                           |  | 1,000 |                   |  |  | -                |  |  |                    | (667    | ) |                   | 
|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Total          |  |                   | 20,667 |  |                           |  | 1,000 |                   |  |  | -                |  |  |                    | (20,667 | ) |                   | 
|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|2013           |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Directors      |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|M. Vaile2      |  |                   | 20,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,000 | ) |                   | 
|G. McGowan     |  |                   | 20,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | -       |   |                   | 
|Sub-total      |  |                   | 40,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,000 | ) |                   | 
|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Executives     |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Y. Brodsky     |  |                   | 667    |  |                           |  | -     |                   |  |  | -                |  |  |                    | -       |   |                   | 
|A. McClaren2   |  |                   | 333    |  |                           |  | -     |                   |  |  | -                |  |  |                    | (333    | ) |                   | 
|E. Cywinski2   |  |                   | 20,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,000 | ) |                   | 
|Sub-total      |  |                   | 21,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (20,333 | ) |                   | 
|               |  |                   |        |  |                           |  |       |                   |  |  |                  |  |  |                    |         |   |                   | 
|Total          |  |                   | 61,000 |  |                           |  | -     |                   |  |  | -                |  |  |                    | (40,333 | ) |                   | 



Page 66







Notes to the financial statements



24 Key management personnel (continued)



(b) Option holdings of key management personnel (continued)



|             |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   | Vested at June 30 | 
|------------ |  | ----------------- | ------ |  | ------------------------- |  | --- | ----------------- |  |  | ---------------- |  |  | ------------------ | ------- | - | ----------------- | 
|             |  | Balance at July 1 |        |  | Granted as remune- ration |  |     | Options exercised |  |  | Net other change |  |  | Balance at June 30 |         |   | Total             | 
|2012         |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   |                   | 
|Directors    |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   |                   | 
|M. Vaile     |  |                   | 20,000 |  |                           |  | -   |                   |  |  | -                |  |  |                    | -       |   |                   | 
|G. McGowan   |  |                   | 20,000 |  |                           |  | -   |                   |  |  | -                |  |  |                    | -       |   |                   | 
|J. Anderson3 |  |                   | 10,000 |  |                           |  | -   |                   |  |  | -                |  |  |                    | (10,000 | ) |                   | 
|Sub-total    |  |                   | 50,000 |  |                           |  | -   |                   |  |  | -                |  |  |                    | (10,000 | ) |                   | 
|             |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   |                   | 
|Executives   |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   |                   | 
|Y. Brodsky   |  |                   | 333    |  |                           |  | 334 |                   |  |  | -                |  |  |                    | -       |   |                   | 
|A. McClaren  |  |                   | 333    |  |                           |  | -   |                   |  |  | -                |  |  |                    | -       |   |                   | 
|E. Cywinski  |  |                   | 20,000 |  |                           |  | -   |                   |  |  | -                |  |  |                    | -       |   |                   | 
|Sub-total    |  |                   | 20,666 |  |                           |  | 334 |                   |  |  | -                |  |  |                    | -       |   |                   | 
|             |  |                   |        |  |                           |  |     |                   |  |  |                  |  |  |                    |         |   |                   | 
|Total        |  |                   | 70,666 |  |                           |  | 334 |                   |  |  | -                |  |  |                    | (10,000 | ) |                   | 



1Changes for Y. 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.



3Changes for J. Anderson in 2012 relate to resignation.



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 |        
|----------- |  | ----------------- | ------ |  | ----------------------- |  | - | ---------------------- |  |  | ---------------- |  |  | ------------------ | -------
|2014        |  |                   |        |  |                         |  |   |                        |  |  |                  |  |  |                    |        
|Directors   |  |                   |        |  |                         |  |   |                        |  |  |                  |  |  |                    |        
|G. McGowan  |  |                   | 59,665 |  |                         |  | - |                        |  |  | -                |  |  |                    | 215,712
|C. Botto    |  |                   | 1,667  |  |                         |  | - |                        |  |  | -                |  |  |                    | 13,280 
|W. Morro    |  |                   | -      |  |                         |  | - |                        |  |  | -                |  |  |                    | 30,448 
|T. Barlow2  |  |                   | -      |  |                         |  | - |                        |  |  | -                |  |  |                    | 15,107 
|            |  |                   |        |  |                         |  |   |                        |  |  |                  |  |  |                    |        
|Executives  |  |                   |        |  |                         |  |   |                        |  |  |                  |  |  |                    |        
|Y. Brodsky1 |  |                   | 707    |  |                         |  | - |                        |  |  | -                |  |  |                    | (707   
|J. Greer2   |  |                   | -      |  |                         |  | - |                        |  |  | -                |  |  |                    | 18,508 
|Total       |  |                   | 62,039 |  |                         |  | - |                        |  |  |                  |  |  |                    | 292,348



Page 67







Notes to the financial statements



24 Key management personnel (continued)



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 |        
|------------ |  | ----------------- | ------- |  | ----------------------- |  | --- | ---------------------- |  |  | ---------------- |  |  | ------------------ | -------
|2013         |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Directors    |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|M. Vaile3    |  |                   | 671     |  |                         |  | -   |                        |  |  | -                |  |  |                    | (671   
|G. McGowan   |  |                   | 59,665  |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|C. Botto     |  |                   | 1,667   |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|             |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Executives   |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Y. Brodsky   |  |                   | 707     |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|A. McClaren3 |  |                   | 1,664   |  |                         |  | -   |                        |  |  | -                |  |  |                    | (1,664 
|E. Cywinski3 |  |                   | 61,572  |  |                         |  | -   |                        |  |  | -                |  |  |                    | (61,572
|             |  |                   | 125,946 |  |                         |  | -   |                        |  |  | -                |  |  |                    | (63,907
|             |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|2012         |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Directors    |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|M. Vaile     |  |                   | 671     |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|G. McGowan   |  |                   | 59,665  |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|J. Anderson4 |  |                   | 3,333   |  |                         |  | -   |                        |  |  | -                |  |  |                    | (3,333 
|             |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Executives   |  |                   |         |  |                         |  |     |                        |  |  |                  |  |  |                    |        
|Y. Brodsky   |  |                   | 707     |  |                         |  | -   |                        |  |  | -                |  |  |                    | -      
|A. McClaren  |  |                   | 997     |  |                         |  | 667 |                        |  |  | -                |  |  |                    | -      
|C. Botto4    |  |                   | -       |  |                         |  | -   |                        |  |  | -                |  |  |                    | 1,667  
|E. Cywinski5 |  |                   | 25,044  |  |                         |  | -   |                        |  |  | -                |  |  |                    | 36,528 
|             |  |                   | 90,417  |  |                         |  | 667 |                        |  |  | -                |  |  |                    | 34,862 





1 Changes for Mr. Brodsky is
in relation to disposal of Captech



2 Changes for Mr. Barlow and
Mr. Greer 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.



3 Changes for Mr. Vaile, Mr.
McClaren and Mr. Cywinski relate to resignations.



4 Changes for Mr. Anderson and
Mr. Botto relate to resignation and appointment respectively.



5 Net change for Mr. Cywinksi
of 36,528 shares were ordinary shares issued to the executive as part of an earn-out agreement in relation to the Company’s
acquisition of eco-Kinetics.



(d) Loans to key management personnel

There were no loans to directors or key
management personnel during the year ending June 30, 2014 (2013: none; 2012: none).



(e) Loans from key management personnel





On May 12, 2014, TRW Pty Limited, an entity
in which a 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.



There were no loans from directors or key
management personnel during the years ending June 30, 2013 or 2012.





Page 68







Notes to the financial statements



24 Key management personnel (continued)



(f) Transactions with Sligo Investments Limited



During the years ended June 30, 2014,
2013 and 2012 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.



During the year ended June 30, 2012 the
Company issued Series 1 Convertible Notes with a face value of US$1,000,000 to Sligo. On subscription to the Series 1 Convertible
Notes 15,723 warrants were issued to Sligo with an exercise price of US$15.90($16.92) and an expiry date of May 31, 2017. A further 24,245
warrants with an exercise price of US$15.90($16.92) and an expiry date of May 31, 2017 were issued to Sligo during the 2013 financial year
following an amendment to the Series 1 Convertible Notes. Interest and fees were incurred on these notes in the year ended June
30, 2014 of US$235,005($250,000) (2013: US$348,676($371,000); 2012: $Nil). These charges were incurred on the same terms as for all Series 1 Noteholders.
In June 2014 the Series 1 Notes held by Sligo and all accrued interest and charges totalling US$1,561,093($1,661,000) were exchanged for 390,273
ordinary shares in the Company. At June 30, 2014 the balance on the Series 1 notes issued to Sligo was $Nil.



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 a Director, Mr Gerry McGowan (no longer a director) 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 will be credited against Other Assets unless
additional information is obtained by the Company to contradict this accounting treatment.



(h) Convertible note holdings of key
management personnel



Aside from the above, there were no convertible
notes held by key management personnel at June 30, 2014 (2013: none; 2012: none).



(i) Other transactions and balances
with key management personnel and their related parties



Directors

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) | During the financial year ending June 30, 2014, TRW Holdings Pty Ltd, an entity in which a Director, 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 $560,920 (2013: $91,915; 2012: $4,596). Of the payments made in 2014, $346,965 (2013: $Nil; 2012: $Nil) was made outside of the Company’s customary approval processes and was 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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 69







Notes to the financial statements



24 Key management personnel (continued)



(i) Other transactions and balances
with key management personnel and their related parties (continued)



| | (ii) | During the year ended June 30, 2014, a series of payments were made to Mr McGowan from the Company and its subsidiaries totalling $134,100 (2013: $Nil; 2012: $Nil) 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 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 recognised as an expense in profit or loss for the year ended June 30, 2014.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | 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.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iv) | 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 (2013: $Nil; 2012 $126,066). Pitt Capital Partners Limited is an affiliate of Washington H
Soul Pattinson & Co Limited (‘WHSP’), CBD’s largest shareholder.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (v) | During the year ended June 30, 2012, Corporate and Administrative Services Pty Ltd, a company wholly owned by Pitt Capital Partners Limited, received payments for consulting, corporate services, reimbursement of travel expenses and other operating disbursements. The total amount payable to Corporate and Administrative Services Pty Ltd was $22,085 (2014: $Nil; 2013: $Nil).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (vi) | During the year ended June 30, 2012,
the Company received from Vaile & Associates, an entity in which a former Director, Mark Vaile has a direct interest, total
payment of $246 (2013: $Nil) for rental of office space and reimbursement of expenses.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Key management personnel (‘KMP’)



| | (i) | During the year ended June 30, 2014, CapTech paid Brodpower Pty Ltd, A$58,025 (2013: $409,660; 2012: $375,904) for contract maintenance and repair services. Yuri Brodsky was the Managing Director of CapTech prior to its sale and had an ownership interest in Brodpower Pty Ltd.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | As part of the purchase of eco-Kinetics the Company agreed to contingent consideration to be paid to Edwin Cywinski on achievement of certain performance targets. Mr. Cywinksi may be entitled to cash and share payments relating to the earn-out. During the year ended June 30, 2012 the Company paid Mr. Cywinski $1,286,000 in relation to this earn-out agreement (2014 & 2013: $Nil).Mr. Cywinski is no longer an employee of the Group.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 70







Notes to the financial statements



25 Share-based payments



(a) Recognised share-based payment expenses

The expense recognised for employee services
received during the year and the expense relating to options granted as part of borrowing agreements is shown in the table below:



|                                                                                   |  | Consolidated |    
|---------------------------------------------------------------------------------- |  | ------------ | ---
|                                                                                   |  | 2014$’000    |    
|                                                                                   |  |              |    
|Expense arising from equity-settled share-based payment transactions for employees |  |              | -  
|Expense arising from equity-settled share-based payment financing transactions     |  |              | 147
|                                                                                   |  |              | 147



(b) Types of share-based payments

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.



The options issued during the year ended
June 30, 2013 relate to options / warrants that were issued as part of borrowing agreements. 58,887 unlisted options with an exercise
price of $15.90, with exercise dates in December 2017 were granted in accordance with loan agreement and convertible note facilities
issued during the year ended 30 June 2013. The weighted average remaining contractual life of issued options outstanding at year-end
was 2.8 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:



|                                         |  | 2014 |         |   | 2014 |   |       | 2013 |  |  | 2013    |   |  | 2012 |       |  | 2012 | 
|---------------------------------------- |  | ---- | ------- | - | ---- | - | ----- | ---- |  |  | ------- | - |  | ---- | ----- |  | ---- | 
|                                         |  | No.  |         |   | WAEP |   |       | No.  |  |  | WAEP    |   |  | No.  |       |  | WAEP | 
|                                         |  |      |         |   |      |   |       |      |  |  |         |   |  |      |       |  |      | 
|Outstanding at the beginning of the year |  |      | 315,091 |   |      | $ | 19.46 |      |  |  | 258,122 |   |  | $    | 21.12 |  |      | 
|Granted during the year                  |  |      | 72,400  |   |      | $ | 5.34  |      |  |  | 58,887  | 1 |  | $    | 13.50 |  |      | 
|Expired during the year                  |  |      | (70,667 | ) |      | $ | 60.00 |      |  |  | (1,917  | ) |  | $    | 60.00 |  |      | 
|Outstanding at the end of the year       |  |      | 316,824 |   |      | $ | 7.19  |      |  |  | 315,091 |   |  | $    | 19.46 |  |      | 



1 Options granted during the year ended June 30,
2013 exclude 153,939 options relating to the performance options which are considered derivative instruments.



(d) Option pricing model

The fair value of the
equity-settled share options granted for the years ended June 30, 2014, 2013 and 2012 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 is
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.



Page 71







Notes to the financial statements



25 Share-based payments (continued)



The model inputs for options granted during
the years ended June 30, 2014 included:



|                                                  |  | As part ofremunerationtounderwriters |            
|------------------------------------------------- |  | ------------------------------------ | -----------
|                                                  |  |                                      |            
|Number of options granted                         |  |                                      | 72,400     
|Consideration for options granted                 |  |                                      | Nil        
|Exercise price                                    |  | $                                    | 5.34       
|Grant date                                        |  |                                      | Dec 18 2014
|Expiry date                                       |  |                                      | Dec 15 2019
|Share price at grant date                         |  | $                                    | 3.83       
|Expected price volatility of the Company’s shares |  |                                      | 70         
|Expected dividend yield                           |  |                                      | 0          
|Risk-free interest rate                           |  |                                      | 3.0        



The expected price volatility is based on the historical five-year
volatility of the Company’s share price.



The model inputs for options granted during that year were:



|                                                  |  | Unsecuredloan, referNote 18(b)(ii) |             |   | Convertiblenotes, referNote18(d)(ii) |   |           | Convertiblenotes, referNote 18(b)(ii) | 
|------------------------------------------------- |  | ---------------------------------- | ----------- | - | ------------------------------------ | - | --------- | ------------------------------------- | 
|                                                  |  |                                    |             |   |                                      |   |           |                                       | 
|Number of options granted                         |  |                                    | 11,793      |   |                                      |   | 43,164    |                                       | 
|Consideration for options granted                 |  |                                    | Nil         |   |                                      |   | Nil       |                                       | 
|Exercise price                                    |  | $                                  | 15.90       |   |                                      | $ | 15.90     |                                       | 
|Grant date                                        |  |                                    | 24 Dec 2012 |   |                                      |   | 30 Dec 12 |                                       | 
|Expiry date                                       |  |                                    | 12 Dec 2017 |   |                                      |   | 30 Dec 17 |                                       | 
|Share price at grant date                         |  | $                                  | 6.00        |   |                                      | $ | 6.00      |                                       | 
|Expected price volatility of the Company’s shares |  |                                    | 131         | % |                                      |   | 131       | %                                     | 
|Expected dividend yield                           |  |                                    | 0           | % |                                      |   | 0         | %                                     | 
|Risk-free interest rate                           |  |                                    | 3.0         | % |                                      |   | 3.0       | %                                     | 



The expected price volatility is based on the historical five-year
volatility of the Company’s share price.



Page 72







Notes to the financial statements



26 Commitments



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 |      
|------------------------------------------- |  | ------------ | -----
|                                            |  | 2014$’000    |      
|                                            |  |              |      
|Within one year                             |  |              | 535  
|After one year but not more than five years |  |              | 606  
|Total minimum lease payments                |  |              | 1,141



Finance lease commitments - Group as
lessee

The finance leases relate to the leasing
of motor vehicles and office equipment.



Future minimum lease payments under finance
leases together with the present value of the net minimum lease payments are as follows:





|                                            |  | Consolidated |    
|------------------------------------------- |  | ------------ | ---
|                                            |  | 2014$’000    |    
|                                            |  |              |    
|Within one year                             |  |              | 130
|After one year but not more than five years |  |              | 327
|Total minimum lease payments                |  |              | 457
|Less amounts representing finance charges   |  |              | (71
|Present value of minimum lease payments     |  |              | 386
|                                            |  |              |    
|Current liability                           |  |              | 100
|Non-current liability                       |  |              | 286
|Total                                       |  |              | 386



27 Events after the balance sheet date



(a) Transactions

On July 3, 2014, BlueNRGY acquired 100%
of the share capital of Green Earth Developers, LLC (‘GED’). Consideration paid consisted of a combination of cash,
deferred cash payment obligations and 500,000 Company ordinary shares with an approximate value of US$3,175,000($3,378,000).



(b) Financing

On July 25, 2014, BlueNRGY entered into
a securities purchase agreement with certain foreign investors, pursuant to which the Company issued a total of 900 newly authorised
Series B Cumulative Convertible Preferred Shares, together with warrants to purchase up to 112,500 ordinary shares of the Company
for an aggregate purchase price of $900,000. The exercise price per Ordinary Share under the Warrants is 125% of the 10-day volume
weighted average price of the Company’s Ordinary Shares on the Initial Closing Date (which the parties agreed was $3.2916).
The Warrants are exercisable immediately and expire on July 25, 2018.



Page 73







Notes to the financial statements



27 Events after the balance sheet date (continued)



(b) Financing (continued)





During July and August 2014, the Company
sold 2,500 Series B Cumulative Convertible Preferred Shares together with Warrants to purchase up to 416,667 Ordinary Shares for
an aggregate purchase price of US$2,500,000 ($2,660,000).



On July 24, 2014 the Company issued 465,000
Ordinary Shares and on August 9, 2014 it issued 122,500 Ordinary Shares upon the respective conversions of 186 and 49 Class A Preferred
Shares. The Company has committed to redeem all of the remaining 200 Series A Preferred Shares and to accept a contemporaneous
subscription for 2,000 Series B Preferred Shares having a Face Value equal to that of the redeemed Series A Preferred Shares.



On September 3, 2014 the Company issued
275,000 ordinary shares in lieu of cash payments as due diligence fees and professional services supplied to the Company.



(c) Other

Listed status and Trading

On October 21, 2013 the Company signed
an exclusive, worldwide, long-term license agreement with Westinghouse Electric Corporation to use the WESTINGHOUSE® trademark
as the corporate banner for its solar business. This agreement was terminated on January 30, 2015.



On November 13, 2014, NASDAQ halted trading
in the shares of the Company as a result of the Company’s failure to lodge its 2014 Annual Report and this halt is still
in place.



On November 25, 2014, the Company received
a letter from NASDAQ’s Listing Qualifications Department stating that, in light of the commencement of the voluntary administration,
trading of the Company’s common stock was to be suspended at the opening of business on Thursday December 4, 2014 and that
they would seek the delisting of the Company’s shares. BlueNRGY appealed the delisting determination and appeared with counsel
at a hearing before an independent Nasdaq Hearings Panel on January 8, 2015.



On January 26, 2015, the Company received
a letter from the Panel granting the Company’s request for continued listing on the Nasdaq Capital Market subject to meeting
a series of deadlines including filing its Annual Report on Form 20-F for the year ended June 30, 2014.



Non-Reliance on previously issued financial
statements or a related audit report or completed interim review

On October 23, 2014, the Audit Committee,
after discussions with PricewaterhouseCoopers (‘PwC’), the Company’s independent registered public accounting
firm at that time, determined that there was sufficient uncertainty about the accuracy of disclosures about related-party transactions
involving its Executive Chairman and Managing Director, Mr. McGowan, and therefore that its previously issued audited financial
statements for the fiscal years ended June 30, 2013 and 2012 should no longer be relied upon.



Notice of material control weaknesses
and investigation of possible contraventions of the Corporations Act

The Audit Committee received notices from
PwC that PwC has identified material weaknesses in financial controls and had identified the possibility of misconduct and contraventions
of the Australian Corporations Act 2001 (Cth) (the ’Act’) by the Company and involving the Company’s Executive
Chairman and Managing Director, Mr. McGowan.



Resignation of Registered Independent
Public Accounting Firm

Effective November 10, 2014, PricewaterhouseCoopers
(‘PwC’), the registered independent public accounting firm for BlueNRGY Group Limited (the ‘Company’),
resigned from its role as auditor of the Company’s financial statements in connection with the Company’s US legal and
regulatory requirements, having concluded that it is not independent of BlueNRGY under applicable PCAOB rules due to non-payment
of its professional fees by the Company.



Engagement of new independent registered
public accounting firm

On January 29, 2015, the Company’s Board of Directors appointed HLB Mann Judd (‘HLB’) as the Company’s new independent registered
public accounting firm. HLB have audited the Company’s financial statements for the years ended June 30, 2012, June 30, 2013,
and June 30, 2014. This appointment was approved by shareholders at the Extraordinary General Meeting held on March 12, 2015 following
the removal of PwC as auditor of the company.



Page 74







Notes to the financial statements



27 Events after the balance sheet date (continued)



(d) Voluntary Appointment of Administrators

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 (i) were 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) appoint Said Jahani and Trevor
Pogroske from Grant Thornton 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, 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. The Company’s other subsidiaries continued to operate
outside the VA process.



Immediately prior to the commencement
of the VA, the Company and Westinghouse Solar Pty Ltd entered into an amendment to the existing finance and security arrangements
with the company’s secured creditor, Wind Farm Financing Pty Ltd (‘WFF’), pursuant to which WFF made additional
advances totalling $400,000 to those companies.  $240,000 was advanced to the trust account of Grant Thornton, Sydney,
for the sole and exclusive purpose of enabling the companies to pay Employee Entitlements, of which $216,603 was agreed to be
used immediately to partially pay outstanding Employee Entitlements owed by the Companies.  In addition, $160,000 was
advanced by WFF to the Trust Account for purposes of funding the trading expenses of the VA Companies.



(e) Exiting Voluntary Administration

Effectiveness of Two Deeds of Company
Arrangement



On December 24, 2014, two deeds of company
arrangement under the Australian Corporations Act 2001 (collectively, the ’Reorganisation Plans’) were signed. The
Reorganisation Plans became effective on January 27, 2015, along with a variation of the Reorganisation Plans that removed all
references to a draft license agreement and specified that the Administrators of the Deed Funds will hold 38,123,652 shares in
trust – 90% under the Company’s Trust Deed and 10% under the Trust Deed of the Company’s subsidiary, Westinghouse
Solar Pty Ltd.



The Reorganisation Plans provide,
among other things, that: (i) creditor claims and contingent liabilities of the Company 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 will be used to pay
creditor claims. Creditors of the Company will receive US$610,000 ($649,000) and creditors of the Company’s subsidiary,
Westinghouse Solar Pty Ltd, will receive US$390,000 ($415,000).



As a consequence of the effectiveness
of the Reorganisation Plans, Said Jahani and Trevor Pogroske from Grant Thornton are no longer joint and several administrators.
The Company has now exited voluntary administration and is being managed by its Board of Directors (the ‘Board’).



(f) Entry into Material Definitive Agreements

On November 19, 2014, the Company’s
subsidiary, GED, entered into a Loan and Security Agreement with WFF pursuant to which it agreed to lend GED up to $360,000 (the
‘GED Loan’).  The GED Loan bears interest at a rate of 6% per annum and is payable on demand.  All
of GED’s obligations under the GED Loan are secured by a first lien on the assets of GED.



Page 75







Notes to the financial statements



27 Events after the balance sheet date (continued)



(g) BlueNRGY
Acquisition





In connection with effectuating the
Reorganisation Plans, the Company, on January 27, 2015, entered into an Amended and Restated Membership Interest Purchase
Agreement (the ‘Purchase Agreement’) in order to acquire BlueNRGY, LLC. Pursuant to the
Purchase Agreement, the Company acquired 100% of the issued and outstanding membership interests of BlueNRGY, LLC (the
‘Acquisition’). The purchase price of BlueNRGY, LLC was the issuance of an aggregate of 150,162,640 ordinary
shares of the Company.



Pursuant to the Reorganisation Plans, the
Company issued 96,028,937 ordinary shares to settle credit claims.



Immediately following the effectiveness
of the Reorganisation Plans, certain creditors exchanged $701,513 of indebtedness at the Offering Price and the Company issued
18,534,029 ordinary shares to them.



Since January 27, 2015 the Company has
raised the equivalent of $2,336,000 through the issuance of 48,877,148 ordinary shares. Of this, $1,247,000 was paid to the Deed
Fund.



(h) Change in Terms of Series B Preferred
Shares

As a condition to the Purchase Agreement,
the Series B Preferred Share terms were amended by unanimous resolution of the Company’s Board and the holders of the requisite
majority of the Series B Preferred share. The conversion price was reset to 1.325 times the Offering Price and the right of Series
B Preferred Shares to receive dividends was eliminated after January 31, 2015.  The rights of Series B shareholders to
appoint a member of the Board and to limit future share issues were also eliminated.



(i) Board and Executive Changes

On July 18, 2014, Todd Barlow resigned
as a director of the company.



Effective August 5, 2014, Luisa Ingargiola
was appointed as a non-executive member of the Board by the holders of a requisite majority of the Company’s Series B Shares
in accordance with the rights of the Series B Shares to appoint one member of the Company’s Board. Upon joining the Board,
Ms. Ingargiola was appointed to the Company’s Audit Committee and Compensation Committee. Ms. Ingargiola resigned as a director
on October 23, 2014.



Effective as of October 21, 2014, the Company’s
Directors appointed William Morro as non-executive Chairman of the Board and Chairman of its Executive Committee.



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; removed as
a director of all Company subsidiaries where the applicable constitutional authority permitted such action; and the Administrator
terminated the Contractor Agreement entered into as of May 1, 2014 between the Company, TRW Holdings Pty Ltd (‘TRW’)
and Mr. McGowan pursuant to which TRW contracted to procure Mr. McGowan’s services as Chief Executive Officer of the Company.



Effective December 30, 2014, Gerard McGowan
resigned as a director of BlueNRGY Group Limited.



Effective January 27, 2015, the Board appointed
John H. Chapple, Yves-Regis Cotrel, and John F. Donohue as members of the Board.  The appointment of Mr. Cotrel and Mr.
Donohue became effective on January 27, 2015 and that of Mr. Chapple on February 2, 2015.



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.



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.



On February 9, 2015, the Board unanimously
appointed Mr. Morro as the Company’s Managing Director and Emmanuel Cotrel as Senior Vice President of the Company.



On February 9, 2015, the Board formed an
Executive Committee comprised of Mr. Morro, Mr. Donohue, and Mr. Chapple.



Page 76







Notes to the financial statements



28 Parent entity information



(a) Summary financial information

The individual financial statements for the parent entity show
the following aggregate amounts:





|                           |  | 2014$’000 |          |   | Restated 2013 $’000 |  |          | Restated 2012 $’000 | 
|-------------------------- |  | --------- | -------- | - | ------------------- |  | -------- | ------------------- | 
|Current assets             |  |           | 1,317    |   |                     |  | 452      |                     | 
|Total assets               |  |           | 4,623    |   |                     |  | 15,394   |                     | 
|Current liabilities        |  |           | (17,775  | ) |                     |  | (24,656  | )                   | 
|Total liabilities          |  |           | (27,030  | ) |                     |  | (26,809  | )                   | 
|Net assets/(liabilities)   |  |           | (22,407  | ) |                     |  | (11,415  | )                   | 
|                           |  |           |          |   |                     |  |          |                     | 
|Issued capital             |  |           | 125,540  |   |                     |  | 109,619  |                     | 
|Accumulated losses         |  |           | (151,283 | ) |                     |  | (125,022 | )                   | 
|Reserves                   |  |           | 3,336    |   |                     |  | 3,988    |                     | 
|Total shareholders’ equity |  |           | (22,407  | ) |                     |  | (11,415  | )                   | 
|                           |  |           |          |   |                     |  |          |                     | 
|Loss of the parent entity  |  |           | (26,262  | ) |                     |  | (2,147   | )                   | 





(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.



For the year ended June 30, 2013, the parent
entity provided a financial guarantee in respect of an overdraft facility of $463,000 for its subsidiary eco-Kinetics Pty Ltd.
This overdraft was fully repaid in the 2014 financial year.



(c) Contractual commitments for the
acquisition of property, plant or equipment

As at June 30, 2014, the parent entity
had no contractual commitments for the acquisition of property, plant or equipment (2013: Nil; 2012: Nil).



Page 77







Notes to the financial statements



29 Auditors' remuneration



The auditor of BlueNRGY Group Limited is HLB Mann Judd.



|                                                                                                                |  | Consolidated |        
|--------------------------------------------------------------------------------------------------------------- |  | ------------ | -------
|                                                                                                                |  | 2014$’000    |        
|Amounts paid or payable to the Company’s auditors                                                               |  |              |        
|- an audit or review of the financial statements of the entity for the years ended June 30, 2014, 2013 and 2012 |  |              | 340,000



The following amounts were paid to the previous auditor of BlueNRGY
Group Limited, PricewaterhouseCoopers.



|                                                               |  | Consolidated |          
|-------------------------------------------------------------- |  | ------------ | ---------
|                                                               |  | 2014$’000    |          
|Amounts paid or payable to the Company’s auditors              |  |              |          
|- an audit or review of the financial statements of the entity |  |              | 1,256,512
|- other consulting and advisory services                       |  |              | -        
|- tax compliance                                               |  |              | -        
|                                                               |  |              | 1,256,512



Page 78







ITEM 19.   EXHIBITS





|Exhibit |  |                                                                                                                 |  | Incorporated by Reference |  | Filed orFurnished | 
|------- |  | --------------------------------------------------------------------------------------------------------------- |  | ------------------------- |  | ----------------- | 
|Number  |  | 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.                                             |  |                           |  |                   | 
|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              | 
|8.1     |  | For a list of all of our subsidiaries, see Item 4.C., Organization Structure.                                   |  |                           |  |                   | 
|11.1    |  | Code of Conduct and Ethics.                                                                                     |  |                           |  |                   | 
|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.





120







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 this annual
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: June 1, 2015





121