UNITED
STATESSECURITIES AND EXCHANGE

COMMISSION



WASHINGTON,
D.C. 20549



FORM
20-F



(Mark
One)

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



or

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



For
the fiscal year ended June 30, 2016



or



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



or



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



Date
of event requiring this shell company report



From
the transition period from ___________ to _____________



Commission
file number 001-36136



BlueNRGY
Group Limited

(Exact
Name of Registrant as specified in its charter)



|Australia                                           |  | Level 1132 Martin PlaceSydney NSW 2000Australia
|--------------------------------------------------- |  | -----------------------------------------------
|(Jurisdiction
    of Incorporation or Organization) |  | (Address
    of Principal Executive Offices)   





Richard
Pillinger

Chief
Financial Officer

BlueNRGY
Group Limited

Level
11

32
Martin Place

Sydney
NSW 2000

Tel:
+61 (0)2 8069 7970

E-mail:
Richard.pillinger@bluenrgy.com

(Name,
Telephone, E-mail and/or facsimile number and Address of Company Contact Person)



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



|Not Applicable            |  | Not Applicable                            
|------------------------- |  | ------------------------------------------
|(Title of
    Each Class) |  | (Name of
    Exchange On Which Registered)



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



None

(Title
of Class)



Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act.



Ordinary
Shares no par value

(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, 2016, 5,956,453 ordinary shares, no par value, were issued and outstanding.



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













If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes   ☐     No   ☒



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.   Yes   ☒     No   ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).   Yes   ☐     No   ☒



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the definitions
of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):



Large
accelerated filer  ☐                       Accelerated
filer  ☐                          Non-accelerated
filer  ☒



Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing



|US GAAP  ☐ | International
Financial Reporting Standards as issued by the International Accounting Standards Board  ☒ | Other  ☐
|---------- | -------------------------------------------------------------------------------------------------------- | --------





If
“Other” has been checked in the previous question, indicate by check mark which financial statement item the registrant
has elected to follow. Item 17  ☐  Item 18  ☐



If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities
Exchange Act of 1934).   Yes   ☐     No   ☒





2







FORWARD-LOOKING
STATEMENTS



|PART
I
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|Item  
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3







|Item    | 7.   | Major Shareholders and Related Party Transactions          | 76
|------- | ---- | ---------------------------------------------------------- | --
|        | 7.A  | Major Shareholders                                         | 76
|        | 7.B  | Related Party Transactions                                 | 76
|        | 7.C  | Interests of Experts and Counsel                           | 78
|Item    | 8.   | Financial Information                                      | 78
|        | 8.A  | Consolidated Statements and Other Financial Information    | 78
|        | 8.B  | Significant Changes                                        | 78
|Item    | 9.   | The Offer and Listing                                      | 80
|        | 9.A  | Offer and Listing Details                                  | 80
|        | 9.B  | Plan of Distribution                                       | 82
|        | 9.C  | Markets                                                    | 82
|        | 9.D  | Selling Shareholders                                       | 82
|        | 9.E  | Dilution                                                   | 82
|        | 9.F  | Expenses of the Issue                                      | 82
|Item    | 10.  | Additional Information                                     | 82
|        | 10.A | Share Capital                                              | 82
|        | 10.B | Memorandum and Articles of Association                     | 82
|        | 10.C | Material Contracts                                         | 82
|        | 10.D | Exchange Controls                                          | 82
|        | 10.E | Taxation                                                   | 84
|        | 10.F | Dividends and Paying Agents                                | 89
|        | 10.G | Statement by Experts                                       | 89
|        | 10.H | Documents on Display                                       | 90
|        | 10.I | Subsidiary Information                                     | 90
|        |      |                                                            |   
|PART II |      |                                                            |   
|        |      |                                                            |   
|Item    | 11.  | Quantitative and Qualitative Disclosures about Market Risk | 90
|Item    | 12.  | Description of Securities Other than Equity Securities     | 91
|        | 12.A | Debt Securities                                            | 91
|        | 12.B | Warrants and Rights                                        | 91
|        | 12.C | Other Securities                                           | 91
|        | 12.D | American Depositary Shares                                 | 91



4







|Item     | 13.  | Defaults, Dividend Arrearages and Delinquencies                              | 92
|-------- | ---- | ---------------------------------------------------------------------------- | --
|Item     | 14.  | Material Modifications to the Rights of Security Holders and Use of Proceeds | 92
|Item     | 15.  | Controls and Procedures                                                      | 93
|Item     | 16A. | Audit Committee Financial Expert                                             | 94
|Item     | 16B. | Code of Ethics                                                               | 94
|Item     | 16C. | Principal Accountant Fees and Services                                       | 94
|Item     | 16D. | Exemptions from the Listing Standards for Audit Committees                   | 95
|Item     | 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers       | 95
|Item     | 16F. | Change in Registrant’s Certifying Accountant                                 | 95
|Item     | 16G. | Corporate Governance                                                         | 95
|Item     | 16H. | Mine Safety Disclosure                                                       | 97
|        
|PART III
|        
|Item     | 17.  | Financial Statements                                                         | 97
|Item     | 18.  | Financial Statements                                                         | 97
|Item     | 19.  | Exhibits                                                                     | 98





5







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 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.





6







PART
I



ITEM
1.      IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



Not
applicable.



ITEM
2.     OFFER STATISTICS AND EXPECTED TIMETABLE



Not
applicable.



ITEM
3.      KEY INFORMATION



3.A.             Selected
Financial Data



The
following consolidated statement of operations data as of June 30, 2016, 2015 and 2014 and for the three years ended June 30,
2016, 2015 and 2014 and summary consolidated balance sheet data as of June 30, 2016 and 2015 and for the two years ended June
30, 2016 and 2015 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.





7







Consolidated
Statements of Operations Data:



|                                                                                                                     |  | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  | ------------
|                                                                                                                     |  | 2016        
|                                                                                                                     |  | $’000       
|                                                                                                                     |  |             
|Revenues from continuing operations                                                                                  |  |             
|Other income                                                                                                         |  |             
|Cost of raw materials, consumables used, and contractors                                                             |  |             
|Employee benefit expenses                                                                                            |  |             
|Amortisation and depreciation                                                                                        |  |             
|Impairment of asset                                                                                                  |  |             
|Other expenses                                                                                                       |  |             
|Net finance income/(costs)                                                                                           |  |             
|Loss from continuing operations before income tax                                                                    |  |             
|Income tax benefit/(expense)                                                                                         |  |             
|                                                                                                                     |  |             
|Loss from continuing operations                                                                                      |  |             
|                                                                                                                     |  |             
|Profit from discontinued operations                                                                                  |  |             
|                                                                                                                     |  |             
|Net (loss) / profit for the period                                                                                   |  |             
|                                                                                                                     |  |             
|Other comprehensive income                                                                                           |  |             
|Items that may be reclassified to profit or loss                                                                     |  |             
|Changes in the fair value of available-for-sale financial assets                                                     |  |             
|Exchange differences on translation of foreign operations                                                            |  |             
|Other comprehensive loss for the period, net of tax                                                                  |  |             
|Total comprehensive profit/(loss) for the period                                                                     |  |             
|                                                                                                                     |  |             
|                                                                                                                     |  |             
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |             
|Basic loss per share                                                                                                 |  |             
|Diluted loss per share                                                                                               |  |             
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |             
|Basic earnings/(loss) per share                                                                                      |  |             
|Diluted earnings/(loss) per share                                                                                    |  |             



8







|Consolidated
    Balance Sheet Data: |  |      |        |     
|------------------------------------ |  | ---- | ------ | ----
|                                     |  | 2016 |        | 2015
|Amounts
    in A$(000)               |  |      |        |     
|Current
    assets                   |  |      | 13,825 |     
|Non-current
    assets               |  |      | 19,857 |     
|Total
    Assets                     |  |      | 33,682 |     
|                                     |  |      |        |     
|Current
    liabilities              |  |      | 10,444 |     
|Non-current
    liabilities          |  |      | 10,336 |     
|Total
    liabilities                |  |      | 20,780 |     



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 4 pm 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 September 30, 2016, was AUD 1.00 = USD$0.7630.



|Australia
    / U.S. Dollar Exchange Rates |  | 
|------------------------------------------ |  | 
|A$1.00
    = US$ amount shown              |  | 



|                           |  | At Fiscal |  | Average  |  | High |  | Low   
|-------------------------- |  | --------- |  | -------- |  | ---- |  | ------
|Fiscal Year ended June 30, |  | Year End  |  | Rate (1) |  | Rate |  | Rate  
|2012                       |  |           |  | 1.0191   |  |      |  | 1.0319
|2013                       |  |           |  | 0.9275   |  |      |  | 1.0271
|2014                       |  |           |  | 0.9420   |  |      |  | 0.9187
|2015                       |  |           |  | 0.7680   |  |      |  | 0.8382
|2016                       |  |           |  | 0.7426   |  |      |  | 0.7272
|                           |  |           |  |          |  |      |  |       
|                           |  |           |  |          |  |      |  |       
|2016 Month                 |  |           |  |          |  |      |  |       
|April                      |  |           |  |          |  |      |  |       
|May                        |  |           |  |          |  |      |  |       
|June                       |  |           |  |          |  |      |  |       
|                           |  |           |  |          |  |      |  |       
|2017 Month                 |  |           |  |          |  |      |  |       
|July                       |  |           |  |          |  |      |  |       
|August                     |  |           |  |          |  |      |  |       
|September                  |  |           |  |          |  |      |  |       



(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.





9







Risks
Related to our Financial Condition



Since
our restructuring and emergence from Voluntary Administration during our 2015 fiscal year, we have experienced losses from continuing
operations that cannot be sustained by our liquidity and there is uncertainty that we can continue as a going concern.



We
entered Voluntary Administration, or VA, in Australia in November 2014. Pursuant to a deed of company arrangement, or DOCA, we
shed various unprofitable businesses and compromised liabilities of approximately A$38.8 million and exited VA on January 27,
2015, referred to as the Emergence Date. Notwithstanding the restructuring of our business through the VA process, several of
our operating units, have subsequently experienced operating losses and continue to do so in the current fiscal year. Moreover,
there is no assurance that the losses affecting some of our businesses can be avoided in the future or that cash flow from our
profitable businesses will be sufficient to offset such losses. In conjunction with our corporate overhead and our debt service
obligations, operating losses have depleted our liquidity to the extent that we cannot continue as a going concern unless we can
achieve one or more of the following: higher levels of operating profitably now and in the future, raising additional debt or
equity capital, deferring payment to creditors and selling assets. There is no assurance that we will have access to sufficient
funds from such initiatives on terms acceptable to our Board of Directors (the “Board”), or on any terms, to meet
our future needs.



Some
of our businesses are early in the commercialization stage and together with requirements to cover our corporate overhead will
cause us to consume cash for the foreseeable future, further straining our liquidity.



Our
business development and system development expenses for our monitoring line of business currently exceeds the gross margin earned
in this business and it is uncertain when, if ever, growth in revenues from this line of business will generate cash flow in excess
of costs. In addition, we have re-launched our solar business in Australia and the U.S. under our own brand and will require additional
working capital to fund growth to levels that would make a meaningful contribution to our profitability. We have plans to expand
our operations and maintenance (O&M) services for renewable installations and we require investment to do so that must be
recouped before these activities contribute to our overall cash flow. Together with meeting costs of our corporate overhead, these
initiatives are likely to consume substantial cash for the foreseeable future. To the extent that our liquidity permits us to
do so, our Board has determined to continue to pursue development of the monitoring, solar installations and renewable O&M
businesses and cash will continue to be used for these purposes. Consequently, our liquidity may be depleted to the extent that
we are unable to continue as a going concern.



Our
financial results often vary significantly from period-to-period and year-to-year, and results for a particular interim period
may not necessarily be indicative of the results for the following period or full year.



Certain
of our businesses are subject to irregular revenues or seasonality that have led to, and in the future are likely to result in,
significant fluctuations in profitability and cash flow from period to period. Our climate control and large-scale solar businesses
are project driven and individual projects in either business segment can represent a meaningful percentage of our revenue, net
income and cash flow in any single accounting period. Consequently, delays associated with any single project can lead to significant
shortfalls in our expected financial performance. This volatile revenue pattern in our project-related businesses will be exacerbated
by any projects that we choose to build, own (typically at least through the project commissioning phase) and transfer (to a third-
party), referred to as BOT projects.



In
addition, the solar installation business has historically experienced peaks and declines related closely to the timing of policy
incentive payments and this has exacerbated our quarter-to- quarter revenue and net income volatility and is expected to continue
to do so. 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.





10







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
project-based businesses, including monitoring, solar and energy efficiency / climate control systems, require continuing investment
in sales and marketing activities to generate leads to replenish or grow the sales pipeline. Consequently, our success depends
heavily on the ability to fund such initiatives. The time taken for a lead generated from marketing and advertising activity to
completion of the associated installation can vary from one month to over six months. All of our project-based businesses require
us to utilize our own working capital to fund operations between progress payments and through retention hold-back periods that
can extend up to a year. The monitoring business is a net consumer of cash due largely to the requirement to fund system development
expenses necessary to provide a competitive product offering to our customers. Our O&M business typically requires that we
invest in staff and other operational capability in advance of payment from customers. We currently lack the capital and liquidity
to adequately fund all of these businesses. Additional cash will be needed to fund any growth. Consequently, our project activities,
particularly in the large-scale solar sector have been constrained, leading to losses that are ongoing and an inability to fully
capitalize on opportunities to generate revenue. We must raise additional capital, further curtail operations in some of our lines
of business or divest some of our business units to achieve profitability. Failure to do so increases the likelihood that we will
not be able to continue as a going concern, or may cause the value of our ordinary shares to decline or become worthless.





Our
indebtedness to lenders and other creditors is significant relative to our liquidity and we may encounter demands for payment
that we cannot meet, which could have adverse consequences for our business and future prospects.



Our
instalment notes and other liabilities payable by our corporate parent and our major subsidiaries as of June 30, 2016 (excluding
current trade balances and accruals and Redeemable Preference Shares) was approximately A$8.6 million in the aggregate and has
increased subsequently. While we have negotiated to satisfy this indebtedness in the future, (refer to Item 5.B.
under the heading “Indebtedness”),
our ability to meet our obligations when payment is due will also depend on our cash reserves, available additional financing
and ongoing operating performance. There can be no assurance that we will possess or be able to secure the resources to meet these
obligations when they become due.



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, or in cases where there is no agreement to forbear, we may receive demands for immediate payment that exceed our ability
to pay or attempts to enforce collection of amounts due. Our failure to satisfy or refinance these obligations when due could
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.



Our
growth strategy and the future success of our company is based, in part, on pursuing acquisitions of operating companies that
operate as competitors or are complementary to our existing lines of business. 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 competitive and complementary operating companies. If we are not
successful in implementing such strategy and acquiring targeted companies, 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
yet receiving commensurate benefit for our efforts. The likelihood of our acquisition strategy being successful is greatly diminished
by our lack of liquidity. In addition, even if we are able to successfully complete targeted acquisitions, if we have misjudged
our value or that of the target company, or if we fail to successfully integrate any such assets or operations with ours, it could
have a material adverse effect on our results of operations and financial condition, and you could lose some or all of your investment
in the Company.





Applicable
accounting rules may result in positive reported earnings when our actual cash flow is negative and we lack the funds to adequately
operate the business or to grow.



International
Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB, such as those related
to recognizing revenue on a percentage of completion basis or from projects when control and the risks of ownership have been
substantially transferred to others, may require us to recognize revenue before payment is received. As a result, although our
accounting earnings may be positive, our cash flow may be negative and we may not have sufficient working capital to meet our
ongoing requirements or fund new business growth. Our management has not established reliable credit facilities or other mechanisms
such as selling receivables that allow us to convert receivables on incomplete projects or long-term assets into cash to overcome
this problem. Consequently, our reported earnings and financial statement net worth may not be indicative of our ability to meet
contractual obligations or to sustain the Company as a going concern. There can be no assurance that we will have access to working
capital from credit or equity markets that is sufficient to meet our needs as we grow.





We
require additional capital to execute on current and anticipated future business opportunities, including the pending completion
of the acquisition of Inaccess, and we 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 will be required 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. Additional capital will need to be raised
to (among other things):



| | ● | take advantage of expansion or acquisition opportunities, including completion of the pending acquisition of Inaccess Holdings Ltd., or Inaccess, to which we are committed in January 2017 (refer to Item 4.A. under the heading “Recent Acquisitions”);
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                          
| | ● | 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 downturn in the market climate.                                                                                                                                                                                                             



11







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.



Notwithstanding
write-offs of goodwill and intangibles in the VA restructuring and our 2015 fiscal year, we continue to have recorded substantial
goodwill and intangibles asset value as the result of acquisitions; these goodwill and intangible amounts are subject to periodic
reviews of impairment that could result in future reported losses and that may limit our ability to raise capital.



The
excess of the purchase price of companies and assets that we have acquired, after allocation of fair values to tangible and identifiable
intangible assets for those businesses, is allocated to goodwill. We conduct periodic reviews of goodwill and intangible values
for impairment. Any impairment would result in a non-cash charge against earnings in the period reviewed, which may or may not
create a tax benefit, and would cause a corresponding decrease in shareholders’ equity.



Significant
impairments of good will were recognized in conjunction with the effectiveness of the DOCA, with the result that we recorded impairments
of goodwill of A$6.2 million for our fiscal year ending June 30, 2015. Nevertheless, our assets as of June 30, 2015 included A$14.0
million of goodwill and intangibles. In keeping with our accounting policies, the value of goodwill and intangibles was again
reviewed as of June 30, 2016 and this practice will continue at the end of each subsequent fiscal year in light of the circumstances
at the time. Consequently, a further impairment of goodwill and intangibles may be recorded in the future 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 receive most 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 most revenue for Parmac and 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. Much of the revenue of Inaccess, which we are committed to
acquire, has similar characteristics. 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.





12









If
solar projects developed under our BOT model are not sold to buyers quickly after completion and commissioning, we are exposed
to significant risk of illiquidity and we may incur diminished profits or losses due to deterioration in market prices for such
projects and the costs of the credit currently available to us to finance these projects.



We
typically expect to complete projects initiated under the BOT model within one to three months from the commencement of construction.
However, our prior experience in selling a portfolio of solar projects demonstrates that closing a sale of commissioned projects
can be delayed for months for factors not anticipated at the time installation starts. When we complete a project under the BOT
model we may be exposed to changes in project value from the period between our commitment to undertake such a project and the
time we sell it for a set price.



Market
conditions and value for completed solar projects can be subject to significant fluctuations as a result of factors such as changes
in relative currency values, market interest rates, institutional demand for projects generating fixed cash flows and idiosyncratic
political and regulatory changes that affect investors’ perceptions of project risk. Moreover, based on our previous experience,
the cost of capital needed to finance projects under the BOT model 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 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 could strain the Company’s limited liquidity.



We
are highly dependent on our senior management and technical personnel and if we are unable to retain key personnel and attract
and train highly qualified personnel, particularly in regions or lines of business where we are expanding, the quality of our
services may decline and we may not successfully execute our growth strategies or achieve sustained profitability.



Our
success depends in large part upon our ability to continue to attract, train, motivate and retain highly skilled and experienced
employees, including technical personnel and members of our executive management. Qualified senior executives and technical employees
are generally in great demand and may be unavailable in the time frame required to satisfy the Company’s and customers’
requirements. All of our most senior executive managers, including our Executive Chairman and Managing Director, Chief Financial
Officer, Chief Technology Officer, Managing Director of Parmac and Senior Vice President & Managing Director of U.S.
Renewable Solutions are at-will employees. The absence of contractual financial incentives to continue their employment with the
Company increases the chances that they could be successfully recruited for alternative employment. We have no internal successors
for any of these executives and, if any of them departed, we would have to undertake a search for a replacement. There is no assurance
that a qualified replacement could be timely found or engaged on terms acceptable to our Board. While we currently have available
technical expertise sufficient to operate our business as currently configured, expanding into new jurisdictions, significantly
increasing our scale and further developing our monitoring technology will necessitate employing additional highly skilled technical
personnel. We expect competition for such personnel to increase as the market for solar and other renewable power systems and
post-installation monitoring and management expands worldwide.



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 businesses.



We
do not generally have long-term agreements with our major project customers and if our management is unable to identify andwin
new customers and projects we cannot maintain or grow revenue in this line of business.



Our
monitoring, solar PV and energy-efficiency / climate control projects are generally not sold pursuant to long-term agreements
with customers, but instead are sold on a one-time contract basis often in a competitive bidding process. We typically contract
to perform large projects with no assurance of
repeat business from the same customers in the future. Our experience is that customers may cancel or reschedule awards for 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 possibility that we may fail to obtain new projects from
existing customers could cause our revenues to decline, and, in turn, our operating results to suffer. Our post-installation 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 we or our customers can rely to
finance solar, monitoring 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 that can be relied on to provide debt or equity financing to us or
to our customers who require such financing in order to commit to projects or engage our services. The availability of financing
for projects and our project receivables in the markets we serve is specific to the particulars of the installation and customer
financial strength and varies widely. The consequence is that we are forced to compete for large-scale projects largely on price
or from the limited universe of buyers who have their own sources of financing for projects and can provide us with up-front payments
or frequent progress payments. As a result, the growth of our project-related business that is focused on the provision of engineering,
procurement, and construction / installation, 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 businesses with high EPC content will achieve consistent profitability.



Our
monitoring, solar 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 dynamic conditions in their served markets or because of idiosyncratic liquidity
or profitability issues. Lengthy and challenging sales cycles reduce the likelihood that our sales and marketing efforts will
result in rapid increases in revenue and delays may have adverse effects on our operating results, financial condition, cash flows,
and stock price.





13







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 skilled subcontractors or labor available to them 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 project customers require performance bonds issued by a
bonding agency. Due to the general performance risk inherent in construction activities, it is sometimes difficult for us to secure
suitable bonding agencies willing to provide performance bonding. In the event we are unable to obtain the requisite bonding,
we will be unable to bid on, or enter into, sales contracts for the projects. Delays in receiving solar or climate control system
components, other construction delays, unexpected performance problems or other events, including our own design and project management
deficiencies, could cause us to fail to meet project schedule or performance criteria, resulting in unanticipated and severe revenue
and earnings losses and financial penalties. We may be financially responsible for delays caused by factors outside of our control,
including inclement weather, failure of suppliers to timely meet orders or transportation providers to make timely deliveries.
We operate in multiple countries that have unique permitting requirements, which, if not met, may cause delays or failure to meet
completion requirements. The occurrence of any of these events could have a material adverse effect on our business and results
of operations.



A
portion of our revenue in Australia is generated by construction contracts for new or renovated buildings, and, thus, a decrease
in construction activity in our Australian markets could reduce our sales derived from construction-contracts 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, primarily in the region of Melbourne Australia. 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 project-related businesses, we are highly dependent upon suppliers for the components used in the systems and products we
design and install and any increases in the price of components, including as a result of the imposition of duties or tariffs,
or any interruptions to, or shortage or decline in, the quality of the components we purchase could adversely affect our business.



Key
components used in all of our renewable, monitoring 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
component 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.



Problems
with product quality and performance on projects and systems we design or install may damage our market reputation and cause our
revenue and operating results to decline.



Our
monitoring, solar and energy efficiency / climate control businesses involve the sale of systems that have long lifetimes (up
to 20 years or more in the case of solar PV 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 and pass-through warranties on
system components; for example, up to 5 years on monitoring system design and workmanship for. 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.



While
our legal obligations to address future warranty claims for systems we designed and installed before entering VA was extinguished
under the DOCAs that defined our Reorganization Plans, and we structured the Draker acquisition to limit legal obligations related
to warranties provided by Draker, Inc. (refer to Item 4.A. under the heading “Recent Acquisitions”) market
pressures may require us to expend resources to address warranty claims related to the legacy customer base if we are going to
grow the scale of our related businesses. Post VA, we do not have any reserves for addressing such 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 businesses. The possibility exists, however, that the adverse impact on our results of operations could be significant
and contribute to reducing the value of an investment in our ordinary shares.



Unanticipated
warranty or service claims or the failure of suppliers to meet backstop warranty obligations could expose us to incur incremental
expense that could significantly lower our profitability or threaten our viability.



Except
for system design and installation workmanship deficiencies, the warranty obligations related to our monitoring, climate control
and solar systems are limited to pass-through obligations of 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 organizing the
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, 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
do not fully meet their warranty obligations, we may find it to be a practical necessity to incur the expense to correct the problem
in order to preserve our market reputation for reliability and service and to maintain system sales. We have not reserved for
such a possibility and may not have the financial or other resources to respond to such a problem if and when it occurs. The result
could be adverse and unexpected profit volatility for our monitoring, solar and energy efficiency / climate control businesses
or a loss of market acceptance that could threaten the financial viability of these business segments or our company overall.





14







If
we fail to effectively manage our planned expansion, including the acquisition of Inaccess, 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 primary strategies for growing revenues from renewable
system monitoring and operations and maintenance, or O&M, services utilizing our monitoring technology software platform and
data. For example, our recent acquisition of Draker (refer to Item 4.A. under the heading “Recent Acquisitions”)
greatly expanded our customer base for monitoring services in the United States and we expect the Inaccess transaction (refer
to Item 4.A. under the heading “Recent Acquisitions”) to do the same for Europe, Africa and Latin America.
The resulting customer and geographic diversification is expected to mitigate the impact of downturns in renewable energy demand
in countries with large bases of installed capacity and in countries like the United States where we are currently installing
systems for new solar projects. However, undertaking further international expansion of our businesses supporting solar system
installations 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. 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 or mesh our work force and business systems with those of the businesses we
acquired. Additionally, our ability to generate cash from existing operations may be slower than expected, depend on new investments
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, we currently do business in the USA several other countries
whose political and regulatory environments and compliance regimes differ from those of our home territory 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 including the United States, Italy,
Thailand and the United Kingdom and this is expected to extend to other countries in Europe, Asia and Latin America with the planned
completion of the Inaccess acquisition and the assets of Draker, Inc. in September 2015 (refer to Item 4.A. under the heading
“Recent Acquisitions”). We expect that consolidated revenue from our international activities could
grow from approximately 13% and 60% for our 2015 and 2016 fiscal year respectively to more than 75%, by the end of our 2017 fiscal
year. 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;                                                                                               
| |   |                                                                                                                        
| | ● | 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.                              





15







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 will
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. Although the recruitment
of experienced managers from the businesses we acquire may mitigate these risks, 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 project 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 the systems and products that we sell or expect to sell are produced in places other than that where the
products and systems are used or installed. For example, currently, most solar modules for solar systems are produced in China
and must be shipped to installation sites in Australia, the United States, Europe and other jurisdictions where we operate and
key components for our energy efficiency / climate control 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 fulfilment occur, extended time can be required to remediate the problem
and could lead to delays in completing projects, recognizing revenue or receiving cash flow. Sometimes we must rely on a single
source of supply for key components and if a sole-source supplier fails to deliver on time it could impair our ability to perform
and subject us to delays and penalties.



Licenses
and permits are required to operate in some jurisdictions, and the loss of or failure to renew any or all of these licenses and
permits or failure to comply with applicable laws and regulations could prevent us from either completing current projects or
obtaining future projects and, thus, materially adversely affect our business.



We
are subject to various national, state, and local laws and regulations in the various countries in which we operate and we may
be required to make significant capital expenditures to comply with laws and the applicable regulations and standards of governmental
authorities and organizations. Moreover, the cost of compliance could be higher than anticipated. In addition, we are subject
to compliance with the U.S. Securities Act, Exchange Act and Foreign Corrupt Practices Act in addition to certain international
conventions and the laws, regulations and standards of other foreign countries in which we operate. It is also possible that existing
and proposed governmental conventions, laws, regulations and standards, including those related to climate and emissions of “greenhouse
gases,” may in the future add significantly to our operating costs or limit our activities or the activities and levels
of capital spending by our customers.



In
addition, many aspects of our operations are subject to laws and regulations that relate, directly or indirectly, to the renewable
industry or to public health and safety. Failure to comply with these laws and regulations may result in the assessment of administrative,
civil and even criminal penalties, the imposition of remedial obligations, and the issuance of injunctions that may limit or prohibit
our operations. The application of these requirements, the modification of existing laws or regulations or the adoption of new
laws or regulations curtailing production activity could materially limit our future contract opportunities, materially increase
our costs or both.



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



Our
international growth strategy involves complex transactions and presents financial, managerial and operational challenges, including
diversion of management attention from existing businesses, challenges in working across disparate time zones and cultures, 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 offer performance monitoring and control O&M and other services for renewable power generation systems targeting
markets in North America, the Eurozone and the Pacific region, including various island nations. Through our pending acquisition
of Inaccess (Refer to Item 4.A. under the heading “Recent Acquisitions.”) and other transactions, we
intend 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;                                                                                      





16







| | ● | difficulties and increased expenses in complying with a variety of U.S. and foreign laws, regulations and trade standards, including the Foreign Corrupt Practices Act;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                        
| | ● | potentially longer sales cycles;                                                                                                                                       
| |   |                                                                                                                                                                        
| | ● | higher volume requirements;                                                                                                                                            
| |   |                                                                                                                                                                        
| | ● | warranty expectations and statutory obligations; and                                                                                                                   
| |   |                                                                                                                                                                        
| | ● | cost, performance and compatibility requirements of software, business processes, products software and manufacturing methods.                                         



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, the assets
of Draker, Inc. in September 2015, and a minority equity position in Inaccess, a UK company, in July 2016,
with a commitment to acquire the equity interests we do not currently own by January 2017. Whether the mechanism we use
for expanding our business is through internal development or acquisition, failure to develop and introduce new products and services
successfully, to generate sufficient revenue from these products and services to offset associated marketing and installation
costs, or to otherwise effectively anticipate and manage the risks and challenges associated with expansion into new product and
geographic markets, could adversely affect our revenues and our ability to achieve or sustain profitability.



The
Company has experienced significant turnover of members of our Board and among members of our top management and we may lack sufficient
continuity or experience in these key positions to ensure success of the business.



Subsequent
to our restructuring in VA and the effectiveness of the DOCA in January 2015, through the date of this Report, we have experienced
the following changes among members of our Board and among members of our top management:



Board
members: 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. Subsequently, on June 16, 2015 and July 31, 2015 respectively, John Chapple and John
Donohue resigned due to concerns that they could not give adequate time to their other business commitments and to their role
with the Board. In May, 2016, Mr. Olivier Ferrari was unanimously appointed by the remaining directors to fill one of the vacancies
on our Board. 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.



Management.Effective June 5, 2015, Donald Reed, the senior executive officer and a former owner of GED resigned. Effective September
1, 2015 he was replaced by Peter Maros, who was also appointed a Senior Vice President and Managing Director of U.S. Renewable
Solutions. Effective December, 2015 we appointed Mr. Steve Ritacco as our Chief Technology Officer, replacing the manager who
held that position for BlueNRGY LLC. None of the executive managers of Draker, Inc. were hired following our acquisition
of the Draker assets.



We
anticipate that additional directors and executive managers with relevant experience and qualifications will be appointed in the
future, however, our corporate history and weak financial condition may make it more difficult or impossible for us to attract
suitable executives or independent directors. Consequently, there can be no assurance that we will be successful in making appointments
to our management and Board that can ensure our success.



If
we fail to retain and attract executives and Board members with the capabilities to meet the significant challenges we face in
all of our markets and lines of business, we may not meet the requirements for listing on the NASDAQ Capital Market or any other
national U.S. stock market, our stock price could decline or become completely illiquid and our shareholders could face a total
loss of their investment.



We
are subject to litigation that could have an adverse effect on our business and operating results.



In
December 2014, a class action securities suit was filed in a federal court in the Eastern District of Texas against the Company
and various current and past officers and directors, namely Mr. William Morro, Mr. Carlo Botto, Mr. Richard Pillinger, Mr. Todd
Barlow, Mr. Gerard McGowan and Mr. James Greer. Mr. Morro, formerly a non-executive independent director currently serves as Chairman
of the Company’s Board and its Managing Director (the Australian entity equivalent of a CEO); Mr. Botto continues as a non-executive
member of the Board; and Mr. Pillinger is the Company’s CFO. The other parties to the lawsuit are no longer associated with
the Company. On August 13, 2015 the Texas Action was amended to include the Company’s subsidiary, CBD Energy (USA) Limited.
In September 2016, a second class action securities suit was filed in the same Texas court based on substantially the same facts
and circumstances arising prior to the effectiveness of the DOCA and alleging violations of different provisions of the securities
regulations. Mr. McGowan is not named in this second action, presumably because the action would be stayed by his personal bankruptcy.
Together, the lawsuits are referred to as the Texas Actions.



In
December 2014, a different lawsuit was filed in New York State Supreme Court, referred to as the New York Action, by one of the
holders of Series B Preferred Shares against the Company and Messrs. Morro, Botto, and McGowan. A settlement with Mr. Botto and
Mr. Morro was reached pursuant to which the New York Action was withdrawn. However, the settlement imposes no restrictions on
the plaintiff with respect to reinstating the New York action against Mr. McGowan or other previously unnamed parties at any time
in the future.



We
believe that the claims against the Company related to the Texas and New York Actions are extinguished pursuant to the DOCA but
litigation against our subsidiary, CBD Energy (USA) Limited, prior and current officers and directors may continue. We have insurance
against losses arising from the Texas Actions, but it may not be sufficient to cover our financial exposure and we may have to
incur expenses related to defencing these matters that is uninsured or to enforce our insurance policies. 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. There is also a possibility 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.





17







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 arise 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.



Our
failure to timely consummate the purchase of the remaining Inaccess shares that we do not own could subject us to penalties that
would impair the value of our investment in Inaccess Preferred shares.



We
have committed to purchase all of the equity in Inaccess that we do not already own (refer to Item 4.A. under the heading “Recent
Acquisitions”). Our default on the purchase subjects us to various adverse consequences, at the discretion of Inaccess
or its other shareholders that could impair the value of our investment in Inaccess preferred shares, including any or all of
the following: (i) conversion of our preferred shares into Inaccess ordinary shares, (ii) loss of our rights to representation
on the Inaccess board of directors, (iii) redemption of our Inaccess shares by Inaccess at the original purchase price, and (iv)
extinguishment of our right to purchase the remaining shares of Inaccess on the terms negotiated or any terms. We have no intention
of defaulting, but circumstances beyond our control may cause us to do so, including our inability to timely raise funds necessary
to meet the cash portion of our purchase commitments. We do not currently have the cash on hand to meet our obligations
under the Inaccess share purchase agreement. The foregoing summary of consequences of a default under the Inaccess share purchase
agreement is qualified in its entirety by the terms of the agreement, a copy of which is filed as an Exhibit hereto.



Our
internal controls over financial reporting and other matters do not currently meet all of the standards contemplated by Section
404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls in accordance with Section 404
of the Sarbanes-Oxley Act could have a material adverse effect on our business and investor’s willingness to buy or hold
our stock.



Our
internal controls over financial reporting do not currently meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley
Act that we will eventually be required to meet. As soon as practicable, we intend to address deficiencies in our internal controls
over financial reporting and to establish enhanced formal policies, processes and practices related to financial reporting and
to the identification of key financial reporting risks and assessment of their potential impact and linkage of those risks to
specific areas and activities within our organization that are applicable to our business. Additionally, we will need to further
document our internal control procedures to satisfy the requirements of Section 404, which requires annual management assessments
of the effectiveness of our internal controls over financial reporting and, when available exemptions as an emerging growth company
under the JOBS Act or other applicable exemption is no longer available, a report by our independent registered public accounting
firm addressing these assessments. Although we have not yet tested our internal controls in accordance with Section 404, we do
have material weaknesses in our internal control over financial reporting that we know about and there may be other material weaknesses
about which we are unaware. The material weaknesses known to us include, but may not be limited to inadequate accounting oversight,
policies, procedures, and controls. 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 material weaknesses in internal controls and financial reporting and as a result of the concerns raised by the Company’s
previous independent registered public accounting firm as described in the Company’s October 24, 2014 Report of Foreign
Private Issuer on Form 6-K (the “October 6-K”), the Company’s financial statements for the fiscal years ended
June 30, 2012 and June 30, 2013 have been restated. We have been implementing new accounting policies and procedures and review
controls since Mr. Morro became our Managing Director following our emergence from VA. We acknowledge that additional resources,
as well as the completion of a comprehensive review of the design and operating effectiveness of our controls relating to financial
reporting, will be necessary in the future to fully remedy weaknesses in our financial reporting process. Further, if not fully
remediated, these control deficiencies could continue to impact the reliability of our financial statements. As a public entity,
we will be required to complete our initial assessment in a timely manner, subject to the exemption from auditor attestation requirements
that is accorded to us as an emerging growth company under the JOBS Act. Until we cease to be an emerging growth company or our
exemption from auditor attestation expires, we intend to avail ourselves of the exemption.



If
we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we or our independent
registered public accounting firm may not be able to certify as to the adequacy of our internal controls over financial reporting
when we are required to have them do so. Matters impacting our internal controls may cause us to be unable to prevent fraud or
report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions
by the SEC or violations of applicable stock exchange listing rules. There could also be a negative reaction in the financial
markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability
of our financial statements could also suffer if we and our independent registered public accounting firm were to report a material
weakness in our internal controls over financial reporting. This could materially adversely affect the Company and lead to a decline
in the price of our registered equity securities.



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 strategic
initiatives 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 product and other business development strategies. This could slow our growth and
delay our achievement of profitability and adversely impact our stock price.





18







We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging
growth companies” will make our ordinary shares less attractive to investors.



We
are an “emerging growth company,” as defined in the JOBS Act, and we are taking advantage of certain exemptions and
relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.”
In particular, while we are an “emerging growth company” (i) we will not be required to comply with the auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act, (ii) we will be exempt from any rules that may be adopted by the Public
Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial
statements, (iii) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements and (iv) we will not be required to hold nonbinding advisory votes on executive compensation or shareholder
approval of any golden parachute payments not previously approved. In addition, the JOBS Act provides that an emerging growth
company can delay its adoption of any new or revised accounting standards, but we have irrevocably elected not to avail ourselves
of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies
that are not emerging growth companies.



We
may remain an “emerging growth company” until as late as June 30, 2019 (the fiscal year-end following the fifth anniversary
of the completion of our initial public offering), though we may cease to be an “emerging growth company” earlier
under certain circumstances, including (i) if the market value of our ordinary shares that is held by non-affiliates exceeds $700
million as of any June 30, in which case we would cease to be an “emerging growth company” or

| | (ii) | if
                                         our gross revenue exceeds $1 billion in any fiscal year.
| | ---- | ----------------------------------------------------------------------------------------------------



The
exact implications of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies,
and we cannot assure you that we will be able to take advantage of all of the benefits of the JOBS Act, particularly whether or
not all of the exemptions will apply to foreign private issuers. In addition, investors may find our ordinary shares less attractive
if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our ordinary shares less attractive as
a result, there may be a less active trading market for our ordinary shares and our share price may decline and/or become more
volatile.



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



The
Company’s operations are affected by global political, economic and market conditions. The economic downturn following the
2008 global financial crisis generally reduced the availability of liquidity and credit to fund business operations worldwide.
In many countries the effects have lingered and slow economic growth and the inability of governments to fund incentives favouring
renewable energy development dampens demand for new renewable investment and makes it less predictable. In the markets of particular
interest to us, these effects are being acutely felt in Europe, where renewable developments are not growing at historical rates
and the situation is likely to worsen. This dynamic has adversely affected some of our customers, suppliers and lenders and the
lower pace of new solar installations in particular has limited opportunities for us to grow organically in Europe where competitors
are entrenched. Because of the large installed base of projects in Europe, however, we still consider this a promising market
to address through Inaccess and to extend additional services to the Inaccess customers.



Further,
such conditions and uncertainty about future economic conditions may make it challenging for us to obtain equity and debt financing
to meet our working capital requirements, forecast our operating results, make business decisions, and identify risks that may
affect our business, financial condition and results of operations.



If
we are unable to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, and declining
levels of incentives available in countries where we continue to operate, then we are likely to experience a reduction in demand
for our products and services and consequently will experience a material adverse effect on our operations and sales and on our
financial condition generally.





The
renewable energy sectors we serve depend on the availability of rebates, tax credits and other financial incentives and government
policies, the reduction or elimination of which is imminent or already occurring and is likely to reduce the demand for our services
in jurisdictions where we currently operate, including the U.S.



The
United States and many U.S. states, including California, Massachusetts, Nevada, New Jersey and North Carolina, and other countries
such as the United Kingdom, Australia and Italy, have offered substantial incentives to offset the cost of solar power or wind
generation systems. Although generally reduced from historical levels, such incentives continue to be available in many jurisdictions
and can take various forms, including direct rebates, state tax credits, system performance payments and feed-in tariffs, and
Renewable Energy Credits, referred to as RECs. However, there can be no assurance that these incentives will continue to be available
in any or all of the jurisdictions in which we operate and, in many places, government policies and regulations are structured
to will reduce over time or are scheduled to be eliminated. For example, in Australia the number of RECs received per KW installed
has been reduced continuously and actions of the regulator can reduce the value of RECs with little advance notice and the U.S.
federal tax credit applicable to solar projects is scheduled to be reduced from December 31, 2019. It is possible, and should
be considered likely that the surviving incentives in most countries will ultimately be phased out altogether. In the UK and many
European countries, minimum user prices for solar electricity production and feed-in tariffs are subject to reduction annually
for new applications and are potentially subject to unannounced change for new and installed renewable power generation facilities;
subsequent, unpredictable decrees and utility practices imposed or supported by regulators is likely to redefine rates and revenue
generation potential for solar power plants, regardless of the commissioning date. A reduction in or elimination of such incentives
could substantially increase the cost or reduce the economic benefit to owners of renewable power generation projects, resulting
in significant reductions in demand for new renewable installations and our products and services. Our sales and margins could
be disproportionally adversely affected because of our weak competitive position.



All
sectors served by the Company are highly competitive, with low or limited barriers to entry and intense price competition, which
could negatively impact our results and may prevent us from achieving sustained profitability. In addition, the Company does not
have significant market share in any sector we serve and we may lose business to larger companies that are better able to achieve
cost efficiencies, respond to customer needs or weather a decline in market conditions.



In
general, the industry sectors in which our businesses operate are highly competitive and fragmented, subject to rapid change and
have low or limited barriers to entry. Our project-related businesses have the attributes of most general contracting businesses,
that is, 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 software sales and services businesses, i.e. system
performance monitoring and O&M services are often subject to a competitive bid process initially and then on an annual basis
or after a short multi-year period. In particular, contracts for large projects are traditionally awarded on a competitive bid
basis, with pricing often being the primary factor in determining which qualified contractor is awarded a job, although each contractor’s
technical capability, safety performance record and reputation for quality also can be key factors in the determination. Small-scale
solar and energy efficiency segments and the O&M services we offer do not generally require the use of proprietary technology
and competitive alternatives are available to most of our customers and prospective customers. Many monitoring and control system
providers and companies offering O&M and other support services are larger than us or have corporate parents who are larger
than us. Consequently, our competitors generally 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 also compete with us for acquisitions of other businesses
as well as for customers and individual projects.





19







In
addition, 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
                                         purchasing power and scale economies that enable competitors to offer comparable services
                                         and equipment at lower prices;
| |   |                                                                                                                                                                                                               
| | ● | the
                                         extent of our competitors’ responsiveness to client needs;                                                                                                       
| |   |                                                                                                                                                                                                               
| | ● | risk
                                         of local or widespread economic decline or fiscal crisis; and                                                                                                   
| |   |                                                                                                                                                                                                               
| | ● | the
                                         evolution of installation or monitoring technology, including software and communications
                                         technologies.                 



Competition
in the provision of O&M and other support 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.





20







Our
proprietary monitoring business and that of Inaccess, which we believe to have great strategic importance for the Company, is
still immature and if it does not function as planned or rapidly gain more market acceptance, our ability to penetrate this market
may be limited or foreclosed by our competitors, our liquidity will be strained and the value of our shares may be severely impaired.



The
first commercial version of our monitoring system software was released in February 2015 and was deployed to only a few institutional
customers on a trial basis when we acquired the monitoring platform of Draker, Inc. in September 2015. We have fully integrated
and harmonized the BlueNRGY and Draker monitoring software to better serve the market and build on the more established base of
U.S. customers served by the Draker system. However, if we complete the acquisition of Inaccess as expected, we will face a similar
challenge of integrating its monitoring software and control technologies with our own and, notwithstanding their collective deployment
on thousands of systems having a capacity of more than 6GW, neither entity’s software or services offerings are mature.
The roll-out of our monitoring systems and related services to a broad spectrum of users comprising significant market share will
require that we hire additional personnel to effectively and efficiently integrate the data feeds from a larger universe of sources
than is currently possible. Because of the uncertainties about our ability to win customers and earn revenue, and the expectations
that development and marketing costs will accelerate, we are unable to determine when, or if, the monitoring business will make
a significant positive contribution to our profits and cash flow. This uncertainty is magnified by the competitive dynamics of
the monitoring services and controls market. There are numerous competitors developing or marketing monitoring and control systems
with at least some characteristics similar to ours and several of these competitors currently offer robust systems with features
and capabilities similar or superior to those we are able to provide. Despite the proliferation of renewable power generating
systems worldwide, asset ownership is beginning to concentrate and we believe that the market for monitoring services may be largely
locked up by a small number of competitors within a few years. Primarily for this reason, we are investing aggressively, within
the limitations of our liquidity, to accelerate system development and deployments. If we cannot capture meaningful market share
quickly, we may be foreclosed from pursuing much of the available revenue from this sector and we may not realize a return on
investment in the development of our monitoring system or related acquisitions or to cultivate a customer base of sufficient scale
that purchases of support services such as O&M would be material to our financial results.



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, and the monitoring and controls and related software business in particular, 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 products and service offerings and prevent us
from achieving sustained profitability.



We
are offering products and services to participants in the renewable energy industry, with a focus on the solar sector. In part
because of the large amounts of capital deployed in the sector and the global growth, the renewable energy industry is highly
competitive. To meet our clients’ needs, we must continually develop, source, qualify and offer updated technology for the
projects we support 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 obsolete the existing technologies known and used by us and our customers, requiring substantial new
capital expenditure or negatively impacting customer acceptance and our market share, pricing and margins. Any failure by us to
anticipate or to respond adequately to changing technology, market demands and client requirements could adversely affect our
business and financial results.



Solar
and wind energy are, in some jurisdictions, more expensive sources of energy than the wholesale cost of conventional alternatives
and recent low prices of conventional energy and other factors affecting energy costs and utility acceptance of renewable power
may negatively impact demand for renewables and reduce our revenues and profitability.



We
believe that an end customer’s decision to purchase or install renewable power generation systems is primarily driven by
the cost and return on investment resulting from such installations. Fluctuations in economic and market conditions that affect
the prices of conventional and non-solar alternative energy sources, such as sustained weakness or 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, net metering policies and curtailment of renewable inputs to the power grid;
| | - | ---------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                
| | ● | increases in the installed costs of solar or wind power due to changes in tariffs, taxes and subsidies; and    
| |   |                                                                                                                
| | ● | adverse customer experience with performance and reliability of renewable power installations as they age.     



If
demand for solar or wind power products fails to develop sufficiently or declines, we might not be able to generate enough revenue
to sustain profitability. In addition, demand for solar power products in the markets and geographic regions we target may not
develop or may develop more slowly than we anticipate.





21







Overcapacity
and financial distress among manufacturers of renewable solar power generation equipment is commonplace and also occurs to a lesser
extent among climate control equipment manufacturers; if OEM or component suppliers for systems we install fail to meet warranty
obligations to our customers, or backstop warranty commitments to us, our business and profitability could be impaired.



Many
large and well-known manufacturers of solar PV panels, wind turbines and related equipment necessary to implement functioning
systems, such as inverters, trackers and electrical controls components, have failed in recent years, including two of our significant
past suppliers, Solon and Oelmaier. The same is true for manufacturers of wind turbines. Others OEM and component suppliers in
these sectors 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 installations of
monitoring, solar and climate-control systems are covered by warranties from our component suppliers which may not be met. While
we do not generally have direct warranty obligations related to components produced by our 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 backstop the warranty obligations of our suppliers who fail to do so,
we may face precipitous declines in our sales. We believe the importance of reputation as a provider of reliable systems is
a critical factor in the sustainability of our businesses. 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 damage or 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 or our systems used to monitor and manage them, which may significantly reduce demand for such
systems and could harm our business.



Installations
of solar power systems, including the sub-systems we provide to monitor and manage them, 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 markets we serve, 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, including certain U.S. and Australian states, have ordinances that restrict or increase the cost of installation
of our monitoring and control systems and solar power systems. For example, there currently exist metering caps in certain jurisdictions
such as Queensland and Hawaii 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. Government regulations
or utility policies pertaining to solar and wind power systems are unpredictable and may result in curtailment of system use or
significant additional expenses or delays which, as a result, could cause a significant reduction in demand for our monitoring
and control systems and solar and wind generation systems generally and post-installation services.



Our
business is highly dependant on and benefits from the declining cost of solar power generation systems per unit of electricity
generated and an ample supply of key components and our financial results would be harmed if these dynamics reversed or did not
continue.



A
key driver in the pricing of solar energy systems and customer adoption of this form of renewable energy has been the declining
cost of solar panels and the raw materials necessary to manufacture them, reductions in the costs of other components, lower power
losses from electricity distribution and power conversion components and efficiencies in regulatory costs of installations. If
these changes do not continue to produce reductions in the delivered cost of power produced from solar installations, growth in
the industry could slow and our sales and financial results would suffer. Global supplies of solar panels have increasingly been
provided by 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 perceived instability of revenues or other factors, there could be a reduction in demand for solar PV systems and the monitoring,
control and support services we offer.



Many
developers and owners of solar PV systems depend on readily available financing to fund new systems and underpin liquidity and
value of installed 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, perceived financial or operating instability of owners and asset managers or
a change in tax incentives could make it difficult for owners to secure financing on favorable terms, or at all. We believe that
a substantial majority of solar PV system owners utilize significant debt financing in making their investments. Difficulties
in obtaining or increased costs of debt financing could lower an investor’s return on investment in a solar PV installation,
or make alternative power generation systems or other investments more attractive relative to solar PV systems. Any of these events
could result in reduced demand for our systems and services, which could have a material adverse effect on our financial condition
and results of operations.





22







Public
opposition to development of solar and wind farms, particularly in the U.S., Europe and more recently in Australia, is expected
to make it more difficult to obtain the necessary permits and authorizations for such projects and may reduce opportunities available
to us, especially in familiar markets.



Over
the last few years, public disfavor of solar and wind farms in the United States, certain European countries and Australia that
have historically encouraged such projects has been manifested in changes in government policies. In the opinion of our management,
the public opposition to renewable power generation projects has been triggered by concerns such as that scarce farm land was
being displaced, local aesthetics were being compromised and the cost of the power supplied from ground-based systems in particular
did not justify government policy concessions and was leading to the approval of excessively high feed-in tariff rates 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 in some locales. Consequently, the number of economically feasible projects has declined in many areas. The resulting and
expected reduction opportunities for us to support large-scale solar projects in these proven markets for us may constrain our
overall market opportunity and will necessitate that we rely more heavily on serving emerging markets and developed markets that
are unfamiliar to us. This is likely to reduce our growth potential and poses operational challenges that could adversely affect
our financial performance.



Regulations
applicable to the U.S. market may exacerbate competitive pressures for solar PV development and reduce margins, making it harder
for us to grow profitably in the United States.



In
certain U.S. jurisdictions government regulations or utility policies pertaining to solar power systems are unpredictable
and have the potential to cause significant additional expenses or delays for projects of all sizes. Also, some jurisdictions
have imposed regulations that effectively limit the aggregate amount of power that may be sold by solar power generators into
the power grid. In addition, the United States has imposed tariffs on Chinese-manufactured solar panels that have disrupted
established supply relationships and increased costs. Collectively, these and similar factors may constrain implementation of
U.S.	solar energy systems and opportunities to sell our monitoring and O&M services relative to expectations. Our
management expects these dynamics to increase competitive pressures among system developers and service providers that could
lead to reduced pricing and profits. Our system and services sales initiatives in the United States may not meet our growth
expectations or be profitable as a result.



In
our projects-related 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, including solar monitoring systems and new installations and energy
efficiency / climate control systems, 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 or produce products to our specifications. We believe that our commercial relationship with
our critical suppliers in each of our business segments is currently good, but if we experience difficulty in making
timely payments, our past experience has demonstrated that it will lead to immediate curtailment of shipments to us by
suppliers, which in turn would reduce revenues and increase our supply costs. We do not maintain, or expect to be able
to maintain, sufficient inventories to allow us to buffer the consequences of supply interruptions. Although alternative
suppliers exist for most of the components we sell in our solar and climate control businesses, new suppliers may not be
willing to ship to us on customary trade terms, or at all, due to our financial condition. Sometimes we are in a position of
having only one source of component supply. The sudden loss of any of our current primary component supply relationships
could cause a delay in order fulfilment 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







We
lack strong brand identity in our served markets and our failure to achieve greater prominence and favourable recognition of our
brands could severely and adversely affect the viability of our solar-related businesses and the ability of the Company to continue
as a going concern.



We
have determined to apply our own BlueNRGY brand to some of our businesses and the acquired Draker brand to our monitoring products
in the markets where Draker, Inc. was historically active, notably North America and Japan. 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 us to be profitable. Although it was once recognized as the solar monitoring technology leader in the United
States the Draker brand is associated with some execution and reliability problems for its systems and software in the period
immediately prior to our acquisition of the Draker assets. Although we have invested heavily in remediating performance issues
with the Draker software platform and in the fulfilment of new system orders, this may not be sufficient to overcome adverse market
reputation and allow us to rebuild market share. If our brand choices constrain revenue and margin growth and delay our attainment
of profitability, it would be detrimental to our overall business. If our brand gains recognition and acceptance in our
served markets, our failure to effectively execute on delivery or service promises would be highly adverse to our prospects and
create a window of opportunity for the continued growth of competitors utilizing similar technology and could foreclose us from
establishing ourselves in key markets. The expense of simultaneously building two brands in multiple markets is significant and
could further impair our liquidity and chances for success.



Risks
Related to our Ordinary Shares



We
have never paid a dividend on our ordinary shares and do not intend to do so in the foreseeable future, and consequently, investors’
only opportunity to realize a return on their investment in the Company is through the appreciation in the price of and sale of
our ordinary shares.



We
do not anticipate paying cash dividends on our ordinary shares in the foreseeable future and intend to retain all earnings, if
any, for our operations. If we decided to pay dividends at some future time, we may not have sufficient funds legally available
to do so. Even if funds are legally available for distribution, we may be unable to pay any dividends to our shareholders because
of limitations imposed by our credit agreements or a lack of liquidity. Accordingly, our shareholders may have to sell some or
all of their ordinary shares in order to generate cash flow from their investment. Our shareholders may not receive a gain on
their investment when they sell their ordinary shares and may lose some or all of their investment. Any determination to pay dividends
in the future on our ordinary shares will be made at the discretion of our Board and will depend on our results of operations,
financial conditions, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors
that our Board deems relevant.



We
require additional capital to fund our businesses, and the sale of additional shares or other equity securities would result in
dilution to our shareholders; such sales, or the perception that such sales may occur, may also depress our share price.



We
require additional cash resources to fund our business plan and to continue operating as a going concern. The Company may sell
additional equity to obtain needed funds and the use of such funds could include:



| | ● | funding losses and paying existing creditors;                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                 
| | ● | expanding into new product markets and geographies;                                                                                                             
| |   |                                                                                                                                                                 
| | ● | acquiring complementary businesses, products, services or technologies, including completion of the remainder of the Inaccess equity that we do not already own;
| |   |                                                                                                                                                                 
| | ● | hiring additional technical and other personnel for purposes of business development, research and other activities consistent with our strategy; or            
| |   |                                                                                                                                                                 
| | ● | otherwise pursuing strategic plans and responding 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.



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.





24







Our
financing needs may require us to obtain additional debt financing to fund losses, future capital expenditures and to meet working
capital requirements, which may be obtained on terms that are unfavorable to the Company and/or our shareholders.



We
will require additional financing in the future in connection with execution of our growth strategy, to fund future capital expenditures,
working capital and losses. Additional debt financing may include conditions that would restrict our freedom to operate our business,
such as conditions that:



| | ● | increase our vulnerability to general adverse economic and industry conditions;                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                              
| | ● | require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital, growth and other general corporate purposes; and
| |   |                                                                                                                                                                                                                                              
| | ● | limit our flexibility in planning for, or reacting to, changes in our business and our industry.                                                                                                                                             



The
incurrence of additional indebtedness could require acceptance of covenants that, if violated, could further restrict our operations
or lead to acceleration of the indebtedness that would necessitate winding up or liquidation of the Company. In addition to the
foregoing, our ability to obtain additional debt financing may be limited and there can be no assurance that we will be able to
obtain any additional financing on terms that are acceptable.



Rule
144 may not be available for public resales of our securities.



Rule
144 under the Securities Act, permits the resale, subject to various terms and conditions, of limited amounts of restricted securities
after they have been held for six months. The SEC prohibits the use of Rule 144 for resale of securities issued by issuers that
have been at any time previously a shell company. It is our view that in 1999 we were a shell company. We were originally formed
on August 18, 1989 in Australia as London Securities Limited, a corporation subject to the laws of Australia, specifically, the
Australian Corporations Act. Our ordinary shares were first listed on the Australian Stock Exchange, or ASX, in 1989. Following
our inception, we began acquiring energy generation assets and on December 19, 1996, changed our name to Asia Pacific Infrastructure
Limited. We were, however, suspended from trading on ASX on October 8, 1998. In calendar year1999 we had nominal non-cash assets
and we had nominal operations. We resumed trading on ASX on April 18, 2000.



The
SEC prohibits the use of Rule 144 for resale of securities issued by shell companies (other than business transaction related
shell companies) or issuers that have been at any time previously a shell company. The SEC has provided an important exception
to this prohibition, however, if the following conditions are met: the issuer of the securities that was formerly a shell company
has ceased to be a shell company; the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d)
of the Exchange Act; the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable,
during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other
than Form 8-K reports; and at least one year has elapsed from the time that the issuer filed current Form 10 type information
with the SEC reflecting its status as an entity that is not a shell company. We believe that, upon the filing of this Report,
we will have met all of these requirements. In the 2014 and 2015 fiscal years, however, we did not file our Annual
Report on Form 20-F in a timely fashion.



Our
ordinary shares have only recently commenced trading in the United States on the OTC Markets, trading is thin and the market price
of our shares is volatile, conditions that individually or in combination may render our shareholders unable to sell the ordinary
shares at or near “ask” prices, or at all; consequently, if our shareholders need to sell their shares to raise money
or otherwise desire to liquidate their shares they could incur substantial losses.



Although
our NASDAQ listing application is currently pending until we meet the NASDAQ Capital Market’s initial listing requirements,
there is no assurance that our  application will be approved or that an active public market for our ordinary shares
will develop or be sustained. Our ordinary shares only began trading on the OTC Markets on September 10, 2015 following a nine-month
suspension and delisting from the NASDAQ Capital Market and it is not clear if an active market for our shares will develop. Since
trading recommenced on the OTC Markets and we completed a 1-for-80 share consolidation on December 17, 2016, the highest trading
volume recorded in a single day through September 30, 2016 was 11,560 shares, representing a total value of shares traded on such
day of $23,120. This lack of an active market means that the number of persons interested in purchasing ordinary shares at or
near bid prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors,
including the fact that many of our shareholders are located in Australia and lack the capability or knowledge to trade in the
U.S. markets, were issued unregistered shares, pursuant to the DOCA or in private placement transactions following our emergence
from VA that are not currently eligible to trade in the U.S. market, the Company’s history of losses and the fact that we
are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the U.S.
investment community that generate or influence sales volume. Even if we came to the attention of such persons, they tend to be
risk-adverse and may be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares
until such time as our business has demonstrated viability and we become larger and more seasoned. As a consequence, there may
continue to be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to
a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without
an adverse effect on our stock price. There are no assurances that a broader or more active public trading market for our ordinary
shares will develop or be sustained, or even that current trading levels experienced on the OTC Markets will be sustained.





25







The
market price and trading volume of our ordinary shares may be volatile and may be affected by variability in the Company’s
performance from period to period and economic conditions beyond management’s control.



The
market price of our ordinary shares may be highly volatile and could be subject to wide fluctuations. This means that our shareholders
could experience a decrease in the value of their ordinary shares regardless of our operating performance or prospects. The market
prices of securities of companies operating in the renewable energy sector have often experienced fluctuations that have been
unrelated or disproportionate to the operating results of these companies. In addition, the trading volume of our ordinary shares
may fluctuate and cause significant price variations to occur. If the market price of our ordinary shares declines significantly,
our shareholders may be unable to resell our ordinary shares at or above their purchase price, if at all. There can be no assurance
that the market price of our ordinary shares will not fluctuate or significantly decline in the future.



Some
specific factors that could negatively affect the price of our ordinary shares or result in fluctuations in their price and trading
volume include:



| | ● | actual or expected fluctuations in our operating results;                                                         
| | - | ------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                   
| | ● | actual or expected changes in our growth rates or our competitors’ growth rates;                                  
| |   |                                                                                                                   
| | ● | our inability to raise additional capital, limiting our ability to continue as a going concern;                   
| |   |                                                                                                                   
| | ● | expectations
that we will raise needed capital through share issuances that will dilute our existing shareholders;
| |   |                                                                                                                   
| | ● | changes in market prices for our product or for our raw materials;                                                
| |   |                                                                                                                   
| | ● | changes in market valuations of similar companies;                                                                
| |   |                                                                                                                   
| | ● | changes in key personnel for us or our competitors;                                                               
| |   |                                                                                                                   
| | ● | speculation in the press or investment community;                                                                 
| |   |                                                                                                                   
| | ● | changes or proposed changes in laws and regulations affecting the renewable energy industry as a whole;           
| |   |                                                                                                                   
| | ● | conditions in the renewable energy industry generally; and                                                        
| |   |                                                                                                                   
| | ● | conditions in the financial markets in general or changes in general economic conditions.                         



In
the past, following periods of volatility in the market price of the securities of other companies, shareholders have often instituted
securities class action litigation against such companies. If we were involved in a class action suit, it could divert the attention
of senior management and, if adversely determined, could have a material adverse effect on our results of operations and financial
condition.





If
we do not meet the initial listing standards of the NASDAQ Capital Market (or, once listed, the continued listing standards in
the future), the Company’s stock will not trade on a national exchange and liquidity and share price may suffer.



Our
ordinary shares are currently only traded on the OTC Markets. Although our NASDAQ listing application is currently pending
until we meet the NASDAQ Capital Market’s initial listing requirements and believe that listing on NASDAQ will result
in a more active public market and liquidity for our ordinary shares than is observed on the OTC Markets, there can be no assurance
that this is will be the case or that our NASDAQ listing application will be approved. There may be significant consequences associated
with our ordinary shares trading on the OTC Markets rather than a national exchange. The effects of not being able to list our
ordinary shares on a national exchange include:



| | ● | limited
                                         release of the market price of our securities;                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                       
| | ● | limited
                                         news coverage;                                                                                                                       
| |   |                                                                                                                                                                                       
| | ● | limited
                                         interest by investors in our securities;                                                                                             
| |   |                                                                                                                                                                                       
| | ● | volatility
                                         of our ordinary share price due to low trading volume;                                                                            
| |   |                                                                                                                                                                                       
| | ● | increased
                                         difficulty in selling our securities in certain states due to “blue sky”
                                         restrictions; and
| |   |                                                                                                                                                                                       
| | ● | limited
                                         ability to issue additional securities or to secure additional financing.                                                            



If
our shares are eventually approved for listing on the NASDAQ Capital Market or any other national exchange, there is no
assurance that the Company will be able to continue to meet all necessary requirements for such listing; therefore, there is no
assurance that our ordinary shares will continue to trade on a national securities exchange. At any time when our shares do not
trade on a national exchange, liquidity may be reduced and our stock price could decline.





26







We
recently completed a 1-for-80 reverse share split which could may have adversely affected the market liquidity of our ordinary
shares and could continue to do so and impair the value of your investment and harm our business.



On
December 17, 2016 we effected a 1-for-80 share consolidation. This action may have depressed the value of our shares and continue
to do so with the following adverse consequences:



| | ● | the
                                         per share price may be too low to attract brokers and investors who do not trade in lower
                                         priced stocks;                                                                                                                                                                                                                                                                                                                            
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ● | the
                                         share consolidation may have reduced the share price to a level that will jeopardize
                                         our ability to attract and retain employees and other service providers;                                                                                                                                                                                                                                                                       
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ● | the
                                         share consolidation may have reduced the share price to a level that fails to incentivize
                                         the Inaccess shareholders, or shareholders of any company targeted for acquisition in
                                         the future, to accept our ordinary shares as consideration, necessitating that we raise
                                         cash from new shareholders on dilutive terms to our existing shareholders;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ● | the
                                         market price per share will not equal or exceed the price required to qualify for initial
                                         listing or remain in excess of the US$1.00 minimum bid price as required by NASDAQ following
                                         initial listing;                                                                                                                                                                                    



In
addition, the share consolidation has reduced the number of shares available in the public float and this may have impaired the
liquidity in the market for our ordinary shares and continue to do so on a sustained basis, which may in turn reduce the value
of our ordinary shares. We may in the future undergo one or more additional share consolidations. If we issue additional shares
in the future, it will likely result in the dilution of our existing shareholders.



As
a foreign private issuer, we follow certain home-country corporate governance practices that afford less protection to holders
of our ordinary shares than would be available to U.S. issuers listed on NASDAQ.



As
a foreign private issuer, we follow certain home-country corporate governance practices and intend to continue to do so in lieu
of certain NASDAQ requirements, even if we are successful in regaining our NASDAQ listing. Australian law does not require us
to follow NASDAQ requirements, including with respect to the composition of our Board and nominations committee and executive
sessions, having a majority of our Board be independent, establishing a nominations committee or holding regular executive sessions
where only independent directors are present and the requirement to obtain shareholder approval in all circumstances where we
issue shares constituting more than 20% of our outstanding shares. (Refer to Item 16G “Corporate Governance”.)



Such
Australian home-country practices may afford less protection to holders of our ordinary shares than would be available to our
shareholders if we were incorporated in the United States, governed by U.S. law and subject to all applicable NASDAQ regulations
for U.S. issuers.



We
are a “foreign private issuer” under the rules and regulations of the SEC and are thus exempt from a number of rules
under the Exchange Act and will be permitted to file less information with the SEC than a company incorporated in the United States.



As
a “foreign private issuer” under the Exchange Act, we are exempt from certain rules under the Exchange Act, and will
not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies
whose securities are registered under the Exchange Act, or to comply with Regulation FD, which restricts the selective disclosure
of material non-public 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.
There can be no assurance that we will be able to maintain our status as a foreign private issuer and the incremental costs incurred
in complying with the SEC requirements could be substantial.



Because
we are organized under the laws of Australia, U.S. investors may face difficulties in protecting their interests and may be
limited in their ability to protect their rights through the U.S. federal courts.



It
may be difficult to bring and enforce suits against us because we are organized under the laws of Australia. Some or all of our
directors will reside in various jurisdictions outside the United States. As a result, it may be difficult for investors to effect
service of process within the United States upon our non-U.S. directors, or enforce judgments obtained in the United States courts
against us or our non-U.S. directors. In addition, there is some doubt as to whether the courts of Australia and other countries
would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities
provisions of the federal or state securities laws of the United States or would hear actions against us or those persons based
on those laws. We have been advised by our legal advisors in Australia that the United States and Australia do not currently have
a bilateral arrangement providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters.
Consequently, a party seeking to enforce a judgment of a U.S. court must rely on common law principles for recognition and enforcement.
Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities
laws, may not be allowed in Australia courts as contrary to that jurisdiction’s public policy. Therefore, a final judgment
for the payment of money rendered by any federal or state court in the United States based on civil liability, whether or not
based solely on United States federal or state securities laws, would not automatically be enforceable in Australia. Similarly,
those judgments may not be enforceable in countries other than the United States.



A
large fraction of our shares are held by a few shareholders, some of whom are members of our Board and management. As these principal
shareholders substantially control our corporate actions, our other shareholders may face difficulty in exerting influence over
matters not supported by these principal shareholders.



Our
principal shareholders include affiliates of W.H. Soul Pattinson and certain affiliates, referred to as WHSP, ESOL B.V., Mr. Y-R
Cotrel, Mr. Emmanuel Cotrel, and Mr. Morro (the latter three are officers and/or directors of the Company) and they collectively
control over 52.6% of our outstanding ordinary shares as of September 30, 2016.



27







These shareholders,
acting individually or as a group, could exert control over matters such as electing directors, amending our certificate of incorporation
or bylaws, and approving mergers or other business combinations or transactions. In addition, because of the percentage of ownership
and voting concentration of these principal shareholders and their affiliated entities, elections of our Board may be within the
control of these shareholders and their affiliated entities. While all of our shareholders are entitled to vote on matters submitted
to our shareholders for approval, a concentration of shares and voting control presently lies with these principal shareholders
and their affiliated entities. As such, it would be difficult for shareholders to propose and have approved proposals not supported
by these principal shareholders and their affiliated entities. There can be no assurance that matters voted upon by our officers
and directors in their capacity as shareholders will be viewed favorably by all shareholders of the Company. The stock ownership
of our principal shareholders and their affiliated entities may discourage a potential acquirer from seeking to acquire our ordinary
shares, which, in turn, could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.



A
significant portion of our total outstanding shares has recently or may become eligible to be sold into the market, which could
cause the market price of our ordinary shares to drop significantly or be sustained at low levels, even if our business is doing
well.



Our
ordinary shares issued in conjunction with the DOCA and to former holders of shares of BlueNRGY LLC who received our shares as
consideration for its acquisition have recently become eligible to be sold or will be eligible to be sold immediately following
effectiveness of the resale registration statement that we intend to file as soon as practicable following the filing of this
Annual Report on Form 20-F. Sales of such shares could cause the market price of our ordinary shares to drop significantly or
be sustained at low levels that impair realization of shareholder value and preclude acceptance of application to trade on
the NASDAQ Capital Market.



Our
Constitution grants to our Board the authority to issue a preferred stock without further approval by our shareholders, which
could adversely affect the rights of the holders of our ordinary shares



Our
Board has the power to fix and determine the relative rights and preferences of preferred stock. Our Board also has the power
to issue preferred stock without further shareholder approval, subject to the provisions of our Constitution and the Act. As a
result, our Board could authorize the issuance of new series of preferred stock that would grant to holders thereof certain preferred
rights to (i) our assets upon liquidation; (ii) receive dividend payments ahead of holders of ordinary shares; (iii) and
the redemption of the shares, together with a premium, prior to the redemption of our ordinary shares. In addition, our Board
could authorize the issuance of new series of preferred stock that is convertible into our ordinary shares, which could decrease
the relative voting power of our ordinary shares or result in dilution to our existing shareholders



Research
analysts do not currently publish research about our business, limiting information available to shareholders, and if this continues
to be the case, or if analysts do publish unfavorable commentary or downgrade our ordinary shares, it could adversely affect our
stock price and trading volume.



The
trading market for our ordinary shares will depend, in part, on the research and reports that research analysts publish about
us and our business and industry. The price of our ordinary shares could decline if one or more research analysts downgrade our
stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business. If one or
more of the research analysts ceases coverage of the Company or fails to publish reports on us regularly, demand for our ordinary
shares could decrease, which could cause our stock price or trading volume to decline.





We
may be classified as a foreign investment company for U.S. federal income tax purposes, which could subject U.S. investors in
our ordinary shares to significant adverse U.S. income tax consequences.



Depending
upon the value of our assets, which may be determined based, in part, on the market value of our ordinary shares, and the nature
of our assets and income over time, we could be classified as a “passive foreign investment company,” or “PFIC,”
for U.S. federal income tax purposes. Based upon our current income and assets and projections as to the value of our ordinary
shares, we do not presently expect to be a PFIC for the current taxable year or the future taxable years. While we do not expect
to become a PFIC, if, among other matters, our market capitalization is less than anticipated or subsequently declines, we may
be a PFIC for the current year or future taxable years. The determination of whether we are or will be a PFIC will also depend,
in part, on the composition of our income and assets, which will be affected by how, and how quickly, we use our liquid assets.
Because PFIC status is a factual determination made annually after the close of each taxable year, including ascertaining the
fair market value of our assets on a quarterly basis and the character of each item of income we earn, we can provide no assurance
that we will not be a PFIC for the current taxable year or any future taxable year.



If
we are classified as a PFIC in any taxable year during which a U.S. holder holds our ordinary shares, a U.S. holder would be subject
to special rules generally intended to reduce or eliminate any benefits from the deferral of U.S. federal income tax that a U.S.
holder could derive from investing in a non-U.S. corporation that doses not distribute all of its earnings on a current basis.
Further, if we are classified as a PFIC for any year during which a U.S. holder holds our ordinary shares, we generally will continue
to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ordinary shares.



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 or 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. Subsequently,
we undertook major adjustments in strategic focus and changed our name in 1996. After a suspension in trading on the ASX in 1998
and a restructuring in 1999, during which we had nominal non-cash assets and operations and again changed our name, we resumed
trading on ASX on April 18, 2000. We adopted the name CBD Energy Limited on December 6, 2002. Operating as CBD Energy Limited,
we reemphasized development of energy-related businesses and undertook new initiatives to acquire installation and service contractors
delivering energy-efficient commercial-scale climate control systems. We entered VA on November 14, 2014 and our corporate organization
and liabilities were restructured pursuant to the DOCA. We emerged from the VA on January 27, 2015 having retained a strategic
focus on delivering and managing renewable energy generation and energy-efficient climate-control systems. On March 20, 2015 the
Company’s name was changed to BlueNRGY Group Limited.



Our
ordinary shares were listed on the Australian Stock Exchange from 1989 through (other than the 18 months mentioned above) January
31, 2014, when we voluntarily delisted them in connection with our U.S. listing. Our ordinary shares traded on the OTC Markets
from February 10, 2014 until June 13, 2014 under the ticker symbol CBDNF, and began trading on the NASDAQ Capital Market on June
13, 2014. However, trading in our ordinary shares was suspended on November 14, 2014 following commencement of the VA process.
Our ordinary shares began trading again on September 10 2015 in the over-the-counter market under the ticker symbol CBDEF. We
are endeavouring to complete the steps necessary to relist our ordinary shares on the NASDAQ Capital Market, but there is no assurance
that we will be successful in doing so.



Recent
Acquisitions



In
July 2016 we acquired 22.41% of the equity interests of Inaccess Holdings Ltd., or Inaccess, a UK company specializing in monitoring
and control systems and related software services. While the Inaccess technologies have broad applicability to the control and
management of distributed operating systems applicable to many sectors, the company’s focus and product development has
been targeted on the Solar PV and telecom sectors. Inaccess is one of the leading independent providers of systems for monitoring
large-scale Solar PV installations and the generating capacity of the projects on which it is installed is approximately 4GW.
We believe that the Inaccess business is complementary to that of our subsidiary, Draker Corporation and so, in September
2016, we elected to exercise our rights to acquire the remainder of the Inaccess equity that we do not already own. The agreement
for doing so contemplates a closing in January 2017 on the terms set forth in the agreements included as an exhibit to this Annual
Report.



On
September 16, 2015, we acquired, through a newly formed U.S. subsidiary, the monitoring platform, accounts receivable, inventory,
plant, property and equipment and certain other assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”),
including the Draker name, trademark, and all copyrights then owned by the Sellers. Immediately subsequent to the transaction,
referred to as the Draker Transaction, our acquisition subsidiary changed its name to Draker Corporation and the names of the
Sellers were changed to delete the “Draker” name. With the exception of the Seller’s secured indebtedness to
the Vermont Economic Development Authority (“VEDA”), Draker Corporation did not assume Seller’s liabilities.
As a result of the Draker Transaction, we are supplying monitoring services to Seller’s customers while we negotiate and
document continuing service agreements at more than 2,000 sites where the Draker system was installed in the Americas, Japan and
Europe and new installations are being implemented for those customers and new customers. As a result of the Draker Transaction,
we believe we are one of the leading independent companies providing equipment and monitoring software and related services to
measure the performance of solar PV generation installations in the U.S.



In
January 2015, we acquired 100% of the equity interests of BlueNRGY LLC, a U.S. company specializing in data acquisition, analysis
and management related to the performance of geographically distributed energy generation systems and providing related operations
and maintenance, or O&M, services. At the time of the BN Acquisition, BlueNRGY LLC was a development-stage company serving
a small number of customers in Europe and Asia. Subsequently it has expanded the scope of its operations to include customers
with U.S. and Australian generating assets. Consideration paid to the BlueNRGY LLC shareholders and shares issued to key executives
and Directors of the Group as part of the transaction comprised in aggregate 1,927,175 of our ordinary shares. Based on
the issuance of our ordinary shares to investors in a contemporaneous private placement at US$3.03 per share (after giving effect
to the 1:80 share consolidation that occurred in December 2015) per share, the value of our shares issued to the BlueNRGY LLC
shareholders was US$5.8 million. BlueNRGY LLC has its principal offices in Fort Lauderdale, FL.





29







On
July 3, 2014, through our wholly-owned subsidiary CBD Acquisition Holdings, Inc., we acquired all of the outstanding equity interests
of Green Earth Developers LLC, referred to as GED, a solar and electrical EPC contractor based in North Carolina. The acquisition
was intended to bolster our ability to capitalize on large-scale solar PV project opportunities in the U.S. market. At the time
of the acquisition, GED had a track record of successfully completing projects of 1MW – 5MW in size and GED remains active
in this market.



Recent
Divestitures/Liquidations



Pursuant
to the VA process that commenced on November 14, 2014 and the Reorganization Plans effective on January 27, 2015, we divested
or liquidated the following subsidiaries and they are no longer part of our corporate organization:



|Subsidiary                               |  | Jurisdiction
of Incorporation |  | 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           |  | 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 fundingthrough
issue of retail bond |  | 100    
|Secured
Energy Bonds Plc                 |  | United
Kingdom                |  | Single-purpose
entity formed to raise fundingthrough
issue of retail bond |  | 100    





30







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



Our
principal office is located at Level 11, 32 Martin Place, Sydney, NSW 2000, Australia. Our telephone number is +61 (0)2 8069 7970.
Our website address is bluenrgy.com. Information on our website and websites linked to it do not constitute part of this Report.
Process can be served in the United States at our United States office address – BlueNRGY Group Limited, 110 E Broward Ave,
Suite 1900, Fort Lauderdale, FL 33301.



4.B.             Our
Business



Overview



We
are an Australian corporation operating in the global renewable energy and energy-efficiency sectors. Our businesses provide
technology and services that allow owners of renewable generation assets to maximize power production and return on
investment throughout the lifecycle of this long-lived class of assets. In some regions where we operate, most notably in
Australia and the U.S., this includes the application of our engineering know-how and extensive data resources to design and
install efficient new renewable systems and to upgrade, retrofit and optimize existing facilities. In Australia, we also
deliver differentiated products and services that are designed to allow electricity consumers to reduce power costs and
increase efficiency of their climate control and other systems. In recent years we have expanded the scope of operations
throughout Australia and to Asia, Europe and the United States. The scope of our activities was curtailed by the VA process
described in Item 4.A. but we continue to conduct business through multiple subsidiaries operating in the aforementioned
regions. Our continuing activities are divided among the following lines of business:



| | ● | Monitoring, Control & Performance Analytics                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                 
| | ● | O&M and Facilities Management for Renewable Systems (including our Chatham Island generating assets formerly included in our Remote Area Power Systems (“RAPS”) unit prior to emergence from VA)
| |   |                                                                                                                                                                                                 
| | ● | Solar Photovoltaic (or PV) System Design & Installation program management, primarily for customers of our Monitoring, Control and Performance Analytics systems, including:                    



| | ● | systems
for commercial applications generally ranging from 25kW to 2MW, sometimes referred to as small-scale solar
| | - | ------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                   
| | ● | Utility-scale
solar systems and generally above 2MW                                                               





| | ● | Energy
                                         Efficiency/Technology Solutions (and RAPS prior to our emergence from VA), including
                                         climate control systems.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



In
conjunction with effecting our Reorganization Plans, we acquired BlueNRGY LLC, a company focused on the collection and application
of performance data from distributed renewable power generation facilities. We augmented these capabilities with the Draker Transaction,
establishing us as one of the leading independent providers of solar monitoring and data analytics in North America. We currently
receive and compile operating performance and other pertinent data from approximately 2GW of solar PV installations in the Americas,
Australia, Asia and Europe. Our system monitoring and control solutions, and those of Draker in particular, have gained wide acceptance
for their reliability, durability and accuracy.



BlueNRGY’s
operations support and maintenance optimization, or O&M businesses, are still in the development stage and not yet
material to our operations. However, we intend to scale these rapidly in response to requests from our customers who want the
benefit of applying our data-driven processes for maximizing the financial performance of their projects. In addition, our O&M
unit oversees our own small portfolio of renewable generation assets, including the Chatham Project, which is discussed further
below.



Over
the past five years, we actively diversified our solar PV business geographically in order to capitalize on changing demand for
new renewable energy generation. Since emergence from the VA process, we have continued our activities in Australia. We
have focused expansion initiatives in selected U.S. states and to serve customers of our monitoring business because we have limited
resources to extend our services to multiple markets and we believe we can expand profitably in the chosen markets and by serving
our established customers. Including the experience of our GED subsidiary, acquired in July 2014, we have designed and completed
more than 70MW of large-scale projects in Australia, the U.S. and other international markets and we have designed and installed
more than 17,000 small-scale and residential systems in Australia. Because of market factors, we stopped pursuing residential
installation opportunities following our emergence from VA.



In
our energy efficiency and technology solutions business segment we are currently active only in the Australia region where strong
incentives exist for end- users to employ energy efficiency measures to reduce cost and/or comply with government regulations.
Included in this business segment is our Melbourne Australia based HVAC contracting subsidiary. Historically, this segment of
our business also included our CapTech Division, which was divested in August 2013 and our RAPS division, which developed and
operated wind and solar power generation systems on Chatham and King Island respectively and held interests in the Larkden energy
storage technology. The Larkden Technology was divested in April 2013 and our interests in King Island were divested during the
VA. Following our emergence from VA, management of our continuing interests in the Chatham Project is being handled in our O&M
unit described above.



Our
wind project development business was historically confined to Australia and was active during our 2012 to 2014 fiscal
years. During that period, we developed and managed the construction of wind farms with peak generating capacity of 107MW,
including a 0.5 MW installation that we still own on Chatham Island and a wind farm at Taralga in New South Wales that was
constructed at a cost of approximately A$290 million. As developer, we developed demonstrated competencies in negotiation of
long-term energy off-take agreements, or PPAs, New development activities in the wind segment were curtailed upon emergence
from VA, but we retained core competencies that we believe will have application in our Data Management and Performance
Analytics business.





31







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 and technological advances that have reduced the cost
of energy derived from renewable resources. 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:
http://fs-unep-centre.org/sites/default/files/publications/globaltrendsinrenewableenergyinvestment2016lowres_0.pdf



Although
Figure 1 illustrates that the growth rate of aggregate investment levels in renewable energy capacity has slowed, installed generating
capacity continues to grow rapidly because unit costs of installing renewable capacity are declining. According to the Renewables
2016 Global Status Report, or the REN21 Report, published by the Renewable Energy Policy Network for the 21st Century
(http://www.ren21.net/status-of-renewables/global-status-report/),installed global capacity of wind and solar generation systems
reached 433GW and 227GW respectively at the end of 2015 and had year-over-year growth rates compared with 2014 of 63GW and 50GW
respectively. This REN21 report also stated that in 2015, for the first time in history, investments in renewable energy in developing
countries exceeded investments in developed economies.



32







We
are active in the solar, wind, and energy efficiency sectors in specific geographies, however, our experience and technology can
be applied in in any market. In the solar market we have historically focused primarily on small-scale commercial and residential
installations, particularly in Australia, but we expect a continued shift in our revenue mix in our applicable lines of business
toward larger-scale projects.



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 REN Report, solar generating assets attracted $161 billion of investment commitments in in 2015, 56% of the total
invested in clean energy for that year excluding large hydro projects >50MW. The solar sector encompasses a wide variety of
commercial activity ranging from PV solar to solar thermal concentrators, including the monitoring and management of data pertaining
to installed capacity. Progress in each of these areas of the Solar PV sector has contributed to making solar power more cost
effective over time and this trend is continuing.



Costs
of energy delivered are declining to or below the level of energy derived from traditional sources in many markets



Figure
2, shown below, illustrates the Levelized Cost of Energy, or LCOE, for solar PV at year-end 2014 is at or below the retail price
of electricity in many major markets, including markets served by us. As further discussed below, our management believes that
the trend toward LCOE parity is continuing.



Figure
2: Energy Cost vs LCOE in Selected Markets - 2014







Source:
Renewable Energy World article is utility scale solar growth economically viable by Philip Wolfe





33







Over
the last several years, a dramatic reduction in the cost of components for solar PV systems, most notably in the modules that
generate electricity, has led to reductions in the installed cost per watt of system capacity. The trajectory of the decline between
2009 and 2016 for the U.S. was charted by the Solar Energy Industry Association, or SEIA and is shown in Figure 3 below:



Figure
3: Prices and installation rates of solar PV systems in the United States (2000 – Q2, 2016)







Source:
Industry Data SEIA Research and Resources



Similar
dynamics are evident in other markets we serve, as illustrated for an example system in Australia in Figure 4 below:





34







Figure
4: Reduction in solar PV modules Prices in Australia







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



As
the unit costs of PV Solar continue to decline and it becomes more cost-competitive, we expect the market for solar installations
to expand. We also believe that this trend will increase if and as storage technologies evolve to cost-effectively allow electricity
from renewable generation to be used after sunset or when the wind isn’t blowing.



The
convergence rate of solar energy cost with traditional energy costs has been accelerated by increases in 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:
Australian Energy Council





35







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, despite occasional reductions,
as illustrated in Figure 6 below:



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







Regulatory
structures that incentivize solar installations are prevalent, important to driving demand in our markets in the near-term, but
declining in importance over the long-run.



Regulatory
structures to incentivize renewable energy solar vary by jurisdiction, and can include tariffs, grants, and Renewable Energy Certificates,
or RECs, as a traded commodity for the renewable energy markets.



Australia.Small-scale solar in Australia is incentivized primarily by the Small-scale Renewable Energy Scheme, or SRES, under which
power generators and some industrial companies are obligated to purchase annually a number of small-scale technology certificates,
or STCs, specified by the government agency responsible for administering the SRES program. Eligible installations are credited
with a onetime allocation of STCs when completed. The regulator establishes the aggregate annual STC purchase obligation for power
generators at a level approximately equal to the supply of STCs that it expects to be created from new installations, adjusted
for over or under creation of STCs in prior years. STCs may be purchased by any person and freely traded. Consequently, an unregulated
market for STCs has developed since the inception of the program. 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 typically represents less than 25% of the
value of a system at market prices for STCs. The Australian government is expected to leave the SRES program unchanged through
2020, but there is no assurance that government policy will not change.



Large-scale
renewable energy installations in Australia, which generally include wind systems, receive annual credit for the energy produced
and this is reflected in the issuance of RECs. Power generators are obligated to meet targets for renewable energy generation
and may do so by receiving credit in the form of RECs for the renewable power they generate, or they may buy RECs from others
who are generating power from renewable sources in excess of their mandated requirements. Regulations recently adopted revised
large-scale renewable generation targets through 2020 at 33,000GWh, almost double the 17,000GWh of energy that is expected to
be produced by large-scale renewable generation in 2015. This target creates ample opportunity for large-scale installations over
the next five years that, according to the Australian Clean Energy Council, would represent investment of more than A$10 billion
over the period. The value of RECs has trended up as a result, making more renewable projects financially viable. However, there
can be no assurance that government policy will remain stable and there is a possibility that renewable generation targets will
be reduced.





36







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 availability of federal tax credit program
was extended at the end of 2015 and now begins to step down toward phase out beginning in 2019. Incentive programs of states that
were early boosters of solar are generally also declining in significance. In general, state level incentives such as net metering
have tended to be most favorable to residential or small-scale solar installations and we expect this to continue to be the case.
Our management also expects that the impending reduction in the federal tax credit will produce a high level of activity in calendar
year 2016 – 2019, followed by a downturn in the pace of U.S. solar PV installations. The magnitude of any future downturn
is unpredictable and depends on various factors including changes in system installation costs and expectations for retail and
wholesale power generation costs.



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



Research
funded by the Australia Renewable Energy Agency demonstrates the rapid and continuing growth of Solar PV in Australia.



Figure
7: Historical and projected residential capacity increases – 2001 to 2016







Source:
Australia PV Institute (APVI) Solar Map



This
data supports our management’s view that that there will be a sustainable long-term solar market in Australia, although
the market is maturing and we believe that rooftop residential penetration is now in excess of 40% in some regions.



United
States. Overall demandfor PV solar installations has continue to grow in the United States following the extension of the
Federal investment tax credit program at year-end 2015. As illustrated by Figure 8 below, according to a publication of the Solar
Energy Industries Association, recent growth has been driven primarily by utility-scale and residential installations and this
is forecast to continue. Other non-residential PV installations (commercial and industrial, or C&I, projects), which could
fall into either small-scale or large-scale categories, have been relatively stable but are also forecast to grow. We expect this
pattern to continue as long as the ITC remains at the 30% level, currently through 2019.



Figure
8: U.S. PV Installations, Q2 2016 Solar PV Forecast









Source:
gtmresearch / Solar Energy Industries Association: http://www.seia.org/research-resources/solar-industry-data



This
market opportunity creates substantial overall growth potential for participants in the U.S. market, including us.



Competition
among solar developers and installers is intense in all of our markets and they are highly fragmented, although market-share consolidation
is occurring in some markets.



The
small-scale solar PV market in Australia is fragmented, with no dominant competitors. The three major energy retailers (Origin
Energy, AGL and Energy Australia) have active installation businesses, and there are a number of other, even larger competitors.
An Australian consultancy, Sunwiz, identified the largest installation businesses and their relative sales for the first six months
of 2016 are depicted in Figure 9 below.





37







Figure
9: Sunwiz Top 10 Small-scale Solar PV Installers in July 2016







Source:
Sunwiz- http//reneweconomy.com.au 2016 australia-break-5gw-rooftop-solar-mark-july-16858



In
the United States, where our addressable market includes both large utility-scale and C&I segments, the market is highly fragmented.
Based on the 2016 listing of the 500 Top Solar Contractors published by Solar Power World (http://www.solarpowerworldonline.com/2016-top-500-north-american-solar-contractors/):



| | – | None
of the 53 largest utility-scale constructors of solar PV has more than a 15% market share and the list excludes various large
or vertically integrated constructors who are known to our management. Representative competitors include Mortenson Construction,
SunEdison, Swinerton Renewable Energy, FLS Energy and Watson Electrical Construction
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                          
| | – | None
of the 100 largest C&I installers of solar PV has more than a 12% market share and the list may not include all large participants.
Representative competitors include Phoenix Solar, Safari Energy, Standard Solar and Joule Energy.                                                                                                               



Large-Scale
Wind



Wind
energy is currently among the most economic forms of large-scale renewable energy and can often be developed at scale in the regions
where power is needed if the wind resource is strong. The wind sector encompasses the design and installation of the generating
system (turbines & towers) and ongoing maintenance and management. 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. Hence, the wind sector represents an attractive market for the application of our monitoring
and control systems and related services.



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:





38







Table
10 - Cumulative Installed Wind Capacity in Australia







Sourced:
http_ramblingsdc.net_Australia_WindPower.html#Wind_power_capacity_in_Australia



To
satisfy the recently adopted Australian renewable energy target, the Australian Clean Energy Council estimates growth in wind
capacity averaging between 500MW and 750MW per year will be required through 2020 is required in Australia’s installed wind
generation capacity. As shown in Table 11 below, as of October 2105 there were 17 wind projects announced representing 2.6GW of
wind generation capacity, with more than 10GW of projects in a less advanced stage.



Table
11. Major renewable electricity generation projects – October 2015







Source:
Australian Bureau of Resources and Energy Economics – Electricity Generation Major Projects Report - 2015



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 fewer than
five have development pipelines of greater than 1,000MW.



Our
understanding of the wind development markets in the US and Europe is less complete, but based on the Ren21 Report, we believe
that there are expected to be numerous large-scale wind projects developed in both regions over the coming years.



39







Monitoring
& Performance Analytics and O&M Services



The
addressable market for services targeting the data management and operations and maintenance of renewable generation projects
of any type and in any region is defined largely by the installed generation capacity, with adjustments for differences that exist
in project sizes and vertical integration among regional markets. According to the REN21 Report, worldwide as of the end of 2015,
785GW of renewable power generation systems were in operation, including 227GW for Solar PV and 443GW for Wind.



Solar
PV:

Distributed
solar projects come in a wide variety of sizes, roughly characterized as residential (typically rooftop), small-scale commercial
(often located on rooftops or elevated structures) and utility- or megawatt-scale. Data acquisition and 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 capabilities
to provide data management, operations and maintenance, the markets that are immediately relevant for our data management services
and O&M services range from small-scale commercial installations, often involving fleets of systems and megawatt-scale installations
for both small- and large-fleet owners. With the enhanced capabilities we will have gained through the Inaccess transaction, very
large utility-scale projects and project fleets owned by vertically integrated solar companies are now also part of our target
market scope.



United
States: Based on statistics published by the Electric Industries Association shown in Figure 12 below,the total addressable
market in the United States for monitoring and O&M for Solar PV distributed generation (which excludes large utility scale
projects, approximated 8GW by the fourth quarter of 2015. Given growth rates, we estimate that this will represents more than
an $800 million market by 2020. The geographic concentration of these installations is also illustrated in the chart below and
provides perspective on states with the greatest market potential:



Figure
12: Representative Solar PV Installations







Source:
US EIA Electric Power Monthly



We
believe that competition for O&M services in the below-utility-scale market is highly fragmented and includes such firms as
MaxGen Energy Services, Burke Electrical Solar, Petersen Dean, BorregoSolar and Trinity Solar. Notable competitors serving the
U.S. market (both small-scale and utility- scale) with specialized data management and control systems for solar PV (both small-scale
and mega-watt scale) include MeteoControl, Green Power Monitor, Power Factors, Solar Log, Swinerton, Also Energy, TriMark and
various inverter OEMs.



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 various utilities. While the solar installations run by
these companies are potentially within our addressable market, our market share in this sub-segment is insignificant. We have
had success in winning projects of this scale with special-purpose funds and operating entities (both public and private) that
invest in renewable energy assets with PPAs for the cash flows derived from the projects and Inaccess has distinct competitive
advantages in serving this market segment. Funds of this nature are increasingly providing the renewable energy industry with
access to cost-effective capital, particularly in North America, that is one of the factors 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. The figures do not include acquisitions by other
funds or independent power producers that we believe to be significant in number and to be amassing portfolios of renewable energy
projects. YieldCos and similar aggregators of renewable generation assets, whether public or private, have requirements for enhanced
data analytics delivered through a single platform and we believe they will form an important new category of customer in North
America for our data analytics and O&M services that help to maximize power plant generation and revenue. 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.





40







Many
of the same firms who provide O&M services for the distributed generation market also serve the utility-scale market, including
MaxGen Energy Services, Borrego Solar and Swinerton. Other companies such as EDF Renewables, the Global Asset Management unit
of SunEdison and Next Phase Solar are providing services to the utility-scale market, however, we are not aware that any of these
companies has significant market share.



Australia:We believe that the preponderance of solar PV installations in Australia have been residential or were constructed by the
major vertically-integrated utilities. Only the latter of these categories is currently addressable by us with our current capabilities
to provide either monitoring or O&M services in Australia. As the market matures and financing becomes more readily available,
we believe that fleets of commercial installations will grow and that a viable distributed generation market for both our monitoring
solutions and O&M services for solar PV will emerge.



Europe.
Because of the evolution of policies favoring the construction of commercial and small-utility-scale solar PV installations in
Europe, we believe that there is a large universe of solar PV installations in this region that could be targets for our data
management and O&M services. However, the reduced and declining pace of large solar PV installations in Europe in recent years
limits the points of entry for us into this relatively mature market. GTM Research has reported that the competitive framework
for megawatt scale solar installations in Europe is highly fragmented, with an aggregate fleet of more than 24 GW being handled
by approximately 60 vendors of O&M services. If and when asset aggregation by YieldCos or similar specialized entities accelerates
in Europe, it could bolster our ability to access this market for data analytics and certain O&M services.



Wind.Because data management, asset management and maintenance contracts on wind projects typically extend for several years, we
believe our best opportunities to win new business in the wind sector are in areas where new projects are likely to be commissioned
over the next several years rather than endeavoring to displace established service providers at seasoned projects. Collectively,
the pipeline projects in our targeted regions represent an attractive market opportunity for our maintenance and data management
services, but there can be no assurance that we will be successful in garnering contracts with any of these prospective customers
or projects. For Australia this opportunity is illustrated by the pipeline information in Figure 11 above. In the last several
years there has been slow but steady growth in wind generation capacity in the United States, but the rate of new project completions
has been moderate. The most recent Ren21 Report indicates that investment levels for in wind projects in Europe will continue
in line with current levels or grow moderately.



Figure
13 – Wind Capacity Under Construction









Source:
EIA AWEA into the wind the AWEA blog



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, Breeze, Osisoft and their primary served markets are North America and Europe.



Energy
Efficiency



Our
business segment targeting energy efficiency / climate control is currently focused only on the Australian market. 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 providing efficient HVAC systems and a related servicing business operating in 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.





41







The
Melbourne HVAC market is regional and highly fragmented, with the largest competitors having market shares between 5-10% (individually).
These companies include AG Coombs, AE Smith, D & E Air Conditioning, Allstaff Air Conditioning and JL Williams. Other competitors
with a similar or smaller market share include: RKH Air Conditioning, PJM Air Conditioning, Quadrant Air Conditioning and Proair
Air Conditioning.



Our
Competitive Strengths



We
believe we demonstrate the following strengths that can differentiate us in a competitive and fragmented market and will allow
us to participate effectively in the expected growth of the renewable energy sector:



Clear
strategic focus–We have a singular focus on management and optimization of renewable energy and energy efficiency
systems over their full life cycle informed by our database and related analytics technology. Specifically, we offer our customers
post-commissioning performance measurement of their systems, system management and control capability through our subscription
software and portal, operations and maintenance services and, selectively, system design and technology integration for new projects
and system upgrades and retrofits. This positioning allows the Company to partner effectively with a wide base of equipment and
component suppliers, project owners and financing sources. Our customers look to us to help them achieve competitive costs for
systems, optimize energy delivered or used, limit risks and maximize return on investment. We believe that our focus also positions
us within the highest value-added segment of the renewable supply chain where we can distinguish ourselves through execution,
branding and the development of proprietary technology in system data management and optimization.



Track
record-As the renewable energy industry matures, execution experience and prior project success are increasingly
important to securing bidding opportunities and winning contract awards. Notwithstanding our restructuring in VA, we have retained
core competencies in, and have a solid track record of successfully developing, designing and implementing large and small-scale
renewable projects in both developed countries and remote and difficult geographies. This gives us experience to understand and
better serve our customers and credibility when handling the challenges of integrating renewable power into diverse local power
grids. In Australia and through our foreign subsidiaries, we have successfully installed more than 80 MW of solar capacity worldwide,
including over 17,000 residential systems. Our wind projects include completed systems with more than 100MW of capacity. In addition,
we have handled numerous complex climate control system installations with total value of more than A$250 million.



Management
skills, experience and local presence–Members of our Board and our managers have extensive knowledge of and
experience in the utility and energy sectors. We believe such knowledge and experience gives us the credibility to effectively
navigate complex contracts involving interconnect PPA arrangements. We deem these capabilities to be a critical factor for our
success in providing management tools and services to participants in the renewable energy asset management sector. We also have
the relevant experience in operating and maintaining renewable systems to provide a foundation for development of this line of
business. We intend to augment our executive ranks through direct hires and acquisitions such as the Inaccess transaction to ensure
we have the capabilities to fully capitalize on the market opportunities we in the growing sector we serve.



Diversified
Revenue Streams–Within our strategic focus, we benefit from being diversified across:



| | ● | technologies, i.e., solar, wind, and energy efficiency/climate control;                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                       
| | ● | products and suppliers of sub-systems or components;                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                       
| | ● | geography, including Australia and the United States which have robust legal systems and currencies; independent regulatory bodies; and stable policy agendas; and                                                                                    
| |   |                                                                                                                                                                                                                                                       
| | ● | types of revenue streams, ranging from recurring revenues from data management and O&M services with contracts that typically run for multi-year periods to project-related revenue, often with established customers who use our services repeatedly.



Over
time, and as we build scale in our businesses, we expect this diversification to mitigate adverse impacts of volatility in exchange
rates, government policy changes, technological evolution and other risks. The breadth of our business also opens a range of opportunities
for us to extend the scope of our activities to capture new revenues and build profits in the future.



Our
Business Strategies



To
build, over time, a high-growth and profitable business that takes advantage of our strengths and the opportunities in our served
markets, we intend to:



Create
multiple revenue streams in different jurisdictions.We intend to continue to diversify our sources of revenue while
remaining focused on delivering technology and services for the renewable energy sector. In addition to further broadening our
geographic reach, we are constantly evaluating new revenue generation opportunities in the countries and business lines in which
we operate. We believe that this will make our business more resilient and help us build scale without sacrificing operating efficiency.
Our strategy of accessing multiple complimentary markets limits risks arising from government policy changes in a single country
or related to a single segment and offers the potential to access a larger overall market. Systems, marketing, and best practices
developed in one market are tailored to other markets once they are proven.



Ensure
customers access to best-in-class technologies and services.We do not have exclusive commitments to use any specific
supplier of equipment or system components. This gives us the flexibility to shift suppliers as the relative costs, efficiency
or effectiveness of products and components changes and to integrate components and technology to optimize system design and performance.
Through our proprietary data management system, we have empirical perspectives on the performance of renewable generation system
components and engineering that is generally unavailable to many service providers and system designers. With these insights,
we are selectively nurturing strong direct relationships with leading manufacturers of best-in-class components and technology
and with customers who value our guidance on their system specifications and management practices.



Deploy
a flexible business development organization utilizing consistent business processes.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.



42







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 our served markets. When possible, we try to sell systems and
services directly to end-users, generally asset owners. In such cases, we have the opportunity to price our installations based
on the maximum economic benefit provided, thereby capturing 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 end- customers for
energy having to be directly involved in system installation or ongoing management.



Monetize
information derived from our proprietary data management system.We collect voluminous data on the performance of
projects, components and systems in our proprietary data management system. From this data we are able to discern trends and correlate
relationships affecting system and component performance that is not generally available in the market. Subject to our commitments
regarding customer data confidentiality, we anticipate being able to monetize this data resource by analyzing data and selling
information to risk managers, asset managers, financial intermediaries manufacturers and project owners. Although we have not
yet realized material revenue from this strategy and there is no assurance that we will be able to do so, our management expects
the value of our database for renewable generation projects, together with the empirical information it can provide, to grow in
value over time.



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, although we
are not currently making such investments.



Acquire
complimentary businesses.We have grown and evolved the Company through acquisitions and intend to continue to do
so (see “—Acquisitions” below). We recently completed the acquisition of GED, BlueNRGY LLC and the operating
platform, certain assets of Draker and an equity investment in Inaccess. We are taking steps to complete the acquisition of the
Inaccess equity we do not already own 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 indebtedness at the
corporate parent level. However, we remain thinly capitalized and are currently not profitable. Some of our operating subsidiaries
that were not part of the VA process require cash infusions to meet working capital needs, including paying deferred trade creditors
and funding for new projects. In addition, our renewable system monitoring and management business has required significant additional
investment in the software to satisfy competitive requirements that have been reflected in our financial statements as expenses
and operating losses. 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 and acquisitions 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 those with stronger capitalization and limits our control over margins. We must work hard to originate
new business leads and we expend significant resources doing so. With respect to obtaining financing to deliver projects for our
customers, we believe we are operating at a disadvantage to larger competitors who can more easily build alliances with project
financing resources and negotiate better rates. We may also be at a disadvantage with respect to purchasing components at the
lowest cost, although we believe that the component markets for the systems we install are currently so competitive and commoditized
that this is not a significant concern. We are seeking to overcome these disadvantages by: growing the scale of our business;
differentiating ourselves through use of the BlueNRGY and acquired brands; and applying innovative technology.



Difficult
to manage international growth strategy– We are seeking to grow in multiple jurisdictions, geographically dispersed
from each other and from our Australian headquarters. The renewable energy projects and monitoring technologies with which we
are involved are complex and present significant financial, managerial and operational challenges, including difficulties of coordinating
the activities of scattered personnel, integrating and financial and control systems, high travel expenses, the assumption of
unknown liabilities and risks of operating in unfamiliar legal and regulatory environments. These difficulties are exacerbated
by our small size and the limited number of seasoned executives in our management ranks and on our Board. We are seeking to overcome
these obstacles by employing the most capable personnel we can find and linking their compensation to our corporate performance,
making efficient use of information technology, standardizing best practices across geographies, engaging specialized qualified
resources when necessary to handle unique jurisdictional issues and, throughout each line of business, closely monitoring performance.





43







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 beginning in 2019. But other changes can occur with little advance warning and opportunities to mitigate
the consequences of policy changes in any single jurisdiction may be limited. Our strategy to diversify our operations across
renewable energy technologies and geographies is intended to ameliorate this risk but cannot eliminate it.



Rapidly
Evolving Technology and Industry Structure –The data monitoring and performance analytics business, which forms
the core of our business activity, is undergoing rapid technological change and customers and grid-interconnect authorities are
requiring (among other things);



| | – | improved
and new functionality such as the ability to gather, process and store more granular data collected at a higher frequency
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                   
| | – | additional,
often unique, control features with more rapid automatic response capabilities                                        
| |   |                                                                                                                                   
| | – | more
secure communications protocols                                                                                              
| |   |                                                                                                                                   
| | – | enhanced
integration with maintenance, operations, billing and asset management systems                                           
| |   |                                                                                                                                   
| | – | more
robust long-term data security and access.                                                                                   





Our
competitors are constantly innovating in response to dynamic customer demands and this creates a substantial challenge and investment
burden for us to do the same. We have recognized that it will be necessary for us to strengthen our technical capabilities and
our financial position to compete effectively.



In
addition to the technological changes that are driving success and failure in our industry, significant new competition is emerging
to the independent providers of monitoring systems from component suppliers, such as inverter manufacturers, who are bundling
software tools for gathering data and managing site performance into their product offerings. Many of our independent monitoring
competitors have been acquired by larger, better capitalized companies with complementary lines of business that can facilitate
growth and provide efficiencies. These dynamics make it harder for us to compete successfully and necessitate our growth through
acquisition to rapidly achieve scale and synergies from complementary business activities.



Description
of Our Business Segments



Monitoring
& Performance Analytics



The
integration of BlueNRGY LLC with the Company in conjunction with our emergence from VA, the subsequent acquisition of the Draker
monitoring platform and the Inaccess transaction give us capabilities that our management believes will allow us to access the
growing market for data acquisition, control systems and recurring services related to operating and maintaining the large global
pool of distributed renewable generating assets over their multi-decade life-cycles. We also have the expectation that these capabilities
will allow us to sell products and services for the management of other infrastructure operating assets as Inaccess has demonstrated
with its application of systems for the telecom sector.



Data
Management.– Our proprietary data acquisition and control technologies, together with our capability to deliver actionable
information and reporting to customers comprise a powerful tool set for asset owners and managers. Our systems and software deliver
the capability to cost-effectively collect, store and analyze performance data on their renewable power generation systems over
time with a high degree of granularity and accuracy. Our system, together with the Inaccess technologies, enable performance monitoring
and control at the system component level and overall, and can be applied across a wide spectrum of component suppliers. Renewable
system component performance and overall plant performance can be compared over time and across portfolios of projects, system
performance can be compared across portfolios of assets and with design expectations, and correlations between performance and
external factors can be evaluated and applied for operations management and system maintenance. Data and information from the
system is accessed by our customers through internet cloud-based applications, sometimes referred to as software as a service
or SAAS. We believe that system data, once accumulated, will have alternative applications in validating billing and revenue collection,
to support asset valuations and for financing providers, risk managers & insurers.



Our
proprietary data management system is monitoring over 2,000 sites with a combined power generation capacity of more than 2GW and,
when considered with the Inaccess customer base, more than 6GW. We provide data and performance analytics are PV solar installations
located in the U.S., Europe, throughout the Americas and in Japan, China and Australia. To meet local regulations regarding data
security we have established server and storage capacity in the U.S., China and Europe. Typically, our customers for data management
services subscribe to multi-year contracts and we expect to serve most of them over the useful lives of their systems.



We
also integrate and sell to many of our SAAS customers, data logger, metrology and communications hardware supplied by third parties.
Typically, such equipment is installed at newly-built renewable power generation facilities and is configured with our proprietary
firmware to interface with our cloud-based data management system to collect and transmit performance data from the equipment
at each site. We also have the capability to collect and manage data gathered from third-party data acquisition hardware and supervisory
control and data acquisition or SCADA systems. In China, we have engaged a reseller on a non-exclusive basis to reach prospective
customers and we intend to continue and broaden our use resellers in markets where we do not have operations.





44







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 begun to offer similar services for operators of solar PV systems in those regions where we have
operations, but this business activity is still in the development stage and revenues are not yet material to our business or
broken out separately. There is no assurance that this activity will gain market acceptance or have a material impact on our financial
performance.



We
believe that our proprietary data management system and integrated software tools greatly enhance our ability to cost-effectively
provide targeted O&M services for renewable energy projects and an opportunity to differentiate our offerings and those of
our strategic service partners from those of competitors. We have found that we can use the system to pinpoint maintenance requirements
and to increase the efficiency of work scheduling. It also provides us with clear metrics to demonstrate the effectiveness of
O&M results. Since our emergence from VA and following our acquisition of the Draker monitoring platform, our O&M specialists
based in the U.S. have developed a pipeline of prospects that we expect will lead to our growth in this line of business. We are
also applying the BlueNRGY tools to enhance the O&M service offerings of service partners who wish access to them to improve
effectiveness and efficiency and for our operations in Australia. There can be no assurance, however, that we will be successful
expanding our O&M services business in the renewables sector to a level that is material to our overall business.



Solar
PV Design & Installation



In
addition to our data management and O&M services businesses, we design and install, primarily through the use of local contractors,
small-scale (typically roof-top) solar PV systems in Australia. Since 2010 we have installed over 17,000 small-scale (mostly residential)
systems in Australia and we expect, over time, to be able to apply our home market experience in the United States and other regions,
particularly to small-scale installers and selected other customers who can benefit from our know-how and services. Our backlog
as of the date of this report on Form 20-F includes approximately 1MW of small-scale systems globally.



Following
our emergence from VA, we re-launched commercial sales in Australia under the BlueNRGY brand and are currently undertaking residential
sales in Australia only an opportunistic basis due to the high costs of customer acquisition and commodity-nature of this market.



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. We consider the opportunity to participate in this market to be attractive and we are currently developing
plans to do so in league with customers of our monitoring and O&M business, sometimes utilizing their services as local contractors
and using our BlueNRGY brand.



We
also have capabilities to design, construct and update / upgrade large-scale systems. This capability was 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. Our large-scale solar business now employs two 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 us as the EPC contractor (or program manager if we are utilizing an EPC partner for execution)
on a milestone or percentage of completion basis as project construction progresses and ownership of project work-in-progress
is turned over to the customer. The EPC contractor typically takes responsibility for:



| | ● | completing
                                         the project engineering, procuring components and materials for the project and performing
                                         the construction work; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                   
| | ● | paying
                                         vendors, subcontractors and its own staff for their respective contributions to the project.                                                                      



The
timing of project progress payments is generally negotiated to allow the EPC contractor to receive funds at approximately the
same time it expects to have to pay for system components, materials and sub-contractor fees related to the project. Sometimes,
however, contract terms dictate that the EPC contractor must defer receiving payment for 30 to 60 days. If the EPC contractor
is effective in matching its payment obligations related to the project with cash receipts from the customer, low or limited capital
resources are required by the EPC contractor to operate under this model. Consequently, many companies can qualify to bid for
contracts under the EPC model, bidding is often highly competitive and our experience is that gross margins are consequently lower
than those of an alternative business models that we seek to utilize when circumstances permit and that is further described below.
Working capital requirements can rise sharply if customers impose deferred payment terms in their contracts and, in such cases,
competition can be less intense. All of GED’s business has been carried out under the EPC model.





45







Build,
Own and Transfer (BOT)



Under
the BOT model, which we employed beginning in our 2013 fiscal year, we acquire site development rights, with permits and off-take
agreements in place, from small or thinly capitalized developers and we complete the projects on a turnkey basis. The BOT model
requires application of our EPC capabilities and that we provide the funding to acquire the, power generation equipment, complete
construction and have the project connected to the grid before getting paid. 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 if not arranged prior to project
commencement. 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 these projects were sold during our 2014 fiscal year. Following our emergence
from VA, we have not had sufficient capital available at a cost that allows us to employ the BOT model, although we are expecting
to do so in connection with some small-scale sites currently in our backlog. There are no assurances that we will be able to do
so again in the foreseeable future.



Although
our large-scale solar experience is substantial, our projects generally represented less than 1% of the installations in our served
markets at the time they were performed. Nevertheless, these experiences in designing and building large-scale solar PV projects
have focused us on the potential profitability of this line of business and our familiarity with project design and construction
issues makes us effective in serving EPC customers of our monitoring systems and handling projects on request for our asset owners
with whom we have established relationships.



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 the capability to perform the required services or can direct the project to customers with whom
we have strategic alliances. Such contracts, if awarded, normally have a multi-year term and sometimes are in place for the life
of these projects, but there is no assurance that an O&M contract will be awarded to the project constructor. Our opportunity
and success in winning O&M awards through this channel has been limited and there is no assurance that it will be material
to our future sales.



Except
for monitoring system hardware, all of the system components for our solar installations are procured from third parties suppliers.
We have no commitments to use components or technology from any particular manufacturer, but 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 and our customers an advantage
in some bidding situations. In countries where we are undertaking large-scale solar projects our procurement activities 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. In such cases, we believe that, 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. In Australia and other regions where project volumes are not significant in the aggregate, 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 from current
levels or expanding cooperation with our customers to pool purchasing power.



Our
staff members located in the key markets we serve are constantly soliciting and responding to bid and development opportunities
sourced through a network of contacts in the industry. We do not believe that our large-scale solar business is subject to significant
seasonality in any region where we are operating.



Wind



Our
wind project business was substantially curtailed in January 2015, following the VA process. Prior to that, it functioned solely
in Australia and the scope of activity included acting as a project developer, project manager, operator and, to a lesser extent,
owner. We did not manufacture or distribute wind generation equipment. Our decision to withdraw from active pursuit of wind projects
was driven largely by recent changes in Australian renewable energy policy that we believe will constrain new wind project developments
in Australia for the foreseeable future.



Following
our emergence from VA, we intend to confine our activities in the wind sector primarily to data management and supporting 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 and projects that are combined with PV solar and/or energy storage
installations.





46







Energy
Efficiency



Our
business segment targeting energy efficiency comprises business units whose products and services generally reduce the amount
of energy and related services consumed by end-users for a given activity. In Australia, powerful incentives exist for end-users
to employ energy efficiency measures to reduce cost and/or comply with government regulations. Australia has experienced sharp
increases in electricity charges in the last five years and these are expected to continue. The country’s power cost increases
have been primarily driven by investment in regulated infrastructure and the introduction of carbon pricing and other government
policy mandates that are intended to promote the use of energy resources deemed to be more sustainable. The range of products
and services associated with energy efficiency is broad. We have chosen to serve this market in niche areas through separate subsidiaries
focused on commercial and industrial customers in Australia. Our management believes these businesses provide the following strategic
advantages to the Company as a whole:



| | ● | We can provide our customers with access to a greater depth of technology and engineering resources than they would have otherwise.
| | - | -----------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                    
| | ● | The diversification provides additional pathways for growth in the rapidly evolving and uncertain renewable energy industry.       



Parmac
Air Conditioning & Mechanical Services Pty Ltd, or Parmac,is a contracting and servicing company, based in Blackburn,
Victoria, Australia and primarily serving the Melbourne market for energy-efficient climate control systems (including heating,
ventilation and air conditioning). As shown in the table below, the primary service provided by Parmac is: tendering of air conditioning
systems and mechanical services to building owners, consulting engineers, project managers and architects:



|Period           |  | Installation/
Contracting |    | Other
Services
|---------------- |  | ------------------------- | -- | --------------
|Fiscal year 2015 |  |                           | 81 | %             
|Fiscal year 2016 |  |                           | 82 | %             







47







Other
capabilities include:



| | ● | Computer
                                         aided design, design checking facilities, project management, computerized drafting;                                                                                      
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                             
| | ● | Execution
                                         of installations as a project contractor; and                                                                                                                            
| |   |                                                                                                                                                                                                                             
| | ● | Warranty
                                         and maintenance services to our constructed projects and maintenance and service work
                                         to other mechanical services installations.



Parmac
competes in a regional market with a number of other contractors and, we believe, holds approximately a 2% share of our addressable
market. The principal competitors with larger market share between 5-10% (individually) are AG Coombs, AE Smith, D & E Air
Conditioning, Allstaff Air Conditioning and JL Williams. Other competitors with a similar or smaller market share include: RKH
Air Conditioning, PJM Air Conditioning, Quadrant Air Conditioning and Proair Air Conditioning.



Parmac
is not positioned to grow significantly in our regional home market and thus revenue growth is bounded by and highly correlated
to construction activity levels in and around Melbourne, Australia. Because of the favorable weather patterns in the region, the
construction cycle is not seasonal in nature. Parmac’s business on major new installations is awarded primarily by competitive
tender where price is a key determinate of success. Parmac often submits tenders as part of a syndicate of contractors and sources
opportunities through long-standing relationships with construction general contractors. Parmac sources air conditioning system
components through competitive bid processes involving multiple vendors and has no exclusive representation relationships with
suppliers that constrain its procurement of the most cost-effective equipment. Service sales are generated by in-house sales personnel
and from relationships with prior installation customers. In other areas of our business such as equipment and systems maintenance,
Parmac seeks to distinguish itself by providing a high level of service and typically enjoys higher margins from providing post-installation
services than it does when it functions a contractor on new installations.



Since
the emergence from VA, our management has determined that Parmac should serve as an implementation arm for our PV solar business
in the Melbourne region. Over time the scope of this activity is expected to encompass local sales, installations and project
management and post-installation servicing / maintenance.



Remote
Area Power Systems (RAPS).Our RAPS business segment historically includes generating assets. 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 a 450kW installation on Chatham Island, completed in 2010. 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.
The Chatham Project is not currently operating due to a dispute with the counterparty to the power purchase agreement, Chatham
Islands Electricity Limited. Chatham Islands Electricity Limited is seeking to terminate its power purchase agreement with our
subsidiary, Chatham Islands Wind Ltd (“CIWL”), and acquire the assets in accordance with contractual rights triggered
by our VA. At this time it is not possible to predict how this matter will be resolved or what economic impact it will have on
us.



As
availability of capital permits, we will consider retaining future equity positions in other renewable generation assets, if we
can:



| | ● | reasonably
                                         expect to generate a reliable and steady income stream above our cost of capital and
                                         we are able to exchange EPC profits and development fees for equity in the project on
                                         terms we deem favorable; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                             
| | ● | develop,
                                         construct and own projects with acceptable returns from inception.                                                                                                                                                                                                                        



Our
capability to manage such assets, should we able to acquire them, is enhanced by our demonstrated capabilities in monitoring and
analyzing operating performance of such systems and the provision of O&M services. Utilizing these core competencies, we also
intend to purchase already-commissioned assets from third parties if we can do so on terms we consider favorable and if capital
is available to do so at a cost deemed acceptable to our Board. 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.





48







Seasonality



Our
current businesses are not seasonal and neither demand for our services, nor supply of products used in connection with our business,
is significantly impacted by seasonal factors.



Intellectual
Property



Our
intellectual property includes trade names and trademarks that we own.



We
also own numerous patents covering the Draker Corporation and BlueNRGY LLC data collection and monitoring software systems
used within our Monitoring & Performance Analytics business. The patent portfolio consists of 10 distinct applications in
varying stages of patent prosecution, including six issued U.S. patents and three pending published U.S. applications, as well
as similar international applications. The subject matter of the patents pertains primarily to optimization and monitoring of
solar modules and wireless mesh network communications as applied to arrays of solar panels and the display of a graphical user
interface for power plant monitoring. The Company may not prosecute all applications to issuance.



Research
and Development



We
did not conduct research and development through the end of our 2016 fiscal year.



OH&S
and Environmental Regulations



Our
operations are subject to laws and regulations of the jurisdictions in which we operate relating to the energy and construction/building
industries. Occupational Health and Safety (OH&S) and Environmental laws have in recent years become more stringent and have
generally sought to impose greater liability on a larger number of potentially responsible parties. Because we provide services
that involve construction/manufacturing hazards or may be perceived to be unfavorable to the environment, we may become subject
to sanctions or claims resulting from these activities.



We
strive to conduct our business activities in a safe and environmentally sustainable manner and have appropriate corporate policies
and procedures in place. In Australia, we have OH&S committees in place in our operating subsidiaries to ensure regulatory
compliance. While our management is not currently aware of any situation involving environmental or OH&S matters that would
likely have a material adverse effect on us, it is possible that situations could arise that could cause our business to suffer.
Our management does not anticipate any material expenditure to comply with OH&S or environmental regulations affecting our
operations.



Insurance



Our
operating subsidiaries carry property and casualty and general liability insurance to mitigate the economic consequences of an
adverse event affecting our assets. Our insurance currently meets the contractual and statutory requirements of our businesses.
As we enter new markets, we assess the form of insurance required and procure such insurance through brokers that our management
deems appropriate.



Currently,
no material insurance claims are outstanding.





49







4.C.
            Organization Structure



The
table below lists, as of October 20, 2016, our material direct and indirect subsidiaries and the jurisdictions in which they are
registered:



|Name                                                  |  | Country
of Incorporation |  | Principal
Activity      |  | %  
|----------------------------------------------------- |  | ------------------------ |  | ----------------------- |  | ---
|BlueNRGY
Group Limited                                |  | Australia                |  | Holding
company         |  | 100
|IHL
Acquisition Co Pty Ltd                            |  | Australia                |  | Holding
company         |  | 100
|BlueNRGY LLC                                          |  | USA                      |  | Data
Managementand
O&M  |  | 100
|Draker
Corporation                                    |  | USA                      |  | Data
Management         |  | 100
|Parmac
Air Conditioning & Mechanical Services Pty Ltd |  | Australia                |  | Energy
efficiency       |  | 100
|BlueNRGY
Renewable Solutions Pty Ltd                  |  | Australia                |  | Solar                   |  | 100
|Chatham
Island Wind Ltd                               |  | New
Zealand              |  | Special
purpose vehicle |  | 100
|Green
Earth Developers LLC                            |  | USA                      |  | Solar
EPC               |  | 100



4.D.             Property, Plants and Equipment



Our
facilities, as of October 20, 2016, 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               
|USA       |  | 110 E. Broward Blvd, 19th Floor, Fort Lauderdale,
FL 33301 |  | 350 sq-m               
|USA       |  | 431 Pine Street, Suite 114, Burlington, VT 05401           |  | 260 sq-m               





50







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 October 20, 2016:



|          |  |                                                      |  | Approximate Size (sq-m) |  | Primary BusinessUnit
|--------- |  | ---------------------------------------------------- |  | ----------------------- |  | --------------------
|Country   |  | Address                                              |  | Warehouse               |  | Office              
|Australia |  | 15 Terra Cotta Dr., Blackburn, VIC                   |  | 180sq-m                 |  | 290sq-m             
|Australia |  | Unit 6, 806 Beaudesert Road, Coopers Plains QLD 4108 |  | 200sq-m                 |  | 125 sq-m            



The
production and logistics activities at the above facilities generally operate on a single shift and thus have capacity available
that would accommodate currently foreseeable growth. Accordingly, we have no plans for expanding or making material improvements
to our production or logistics facilities or our complement of production equipment. We do not have any environmental issues or
deficiencies at any of our production facilities.



As
of October 20, 2016, we owned or held under leases assets in the categories shown in the following table having an aggregate value
of A$2.1 million, which comprised an “at cost” total of A$4.1 million less depreciation and impairment of A$2.0 million



|Amounts in A$’000    |  |      |       |                          |  |          
|-------------------- |  | ---- | ----- | ------------------------ |  | ---------
|Asset Category       |  | Cost |       | Accumulated Depreciation |  | Net Value
|Plant & Equipment    |  |      | 2,581 |                          |  |          
|Office and Leasehold |  |      | 955   |                          |  |          
|Motor Vehicles       |  |      | 631   |                          |  |          
|Total                |  |      | 4,167 |                          |  |          



Capital
Expenditures



Our
capital expenditures for property, plant and equipment for the fiscal year ended June 30, 2016 and 2015 respectively were approximately
A$0.03 million and A$0.2 million. In the year ended June 30, 2016 property, plant and equipment with a net value of A$0.1 million
was acquired as part of the Draker Corporation acquisition.



Our
capital expenditures for the 2016 fiscal year mainly related to replacement of vehicles and computer assets which had reached
the end of their useful lives. There were no significant one-time asset purchases.



The
capital expenditure total for fiscal year 2015 was primarily for essential upgrades to our motor vehicle fleet in Parmac and leasehold
assets.





51







ITEM
4E.    UNRESOLVED STAFF COMMENTS



Not
applicable.



ITEM
5.      OPERATING AND FINANCIAL REVIEW AND PROSPECTS



The
following discussion and analysis of our financial condition and results of operations should be read together with our consolidated
financial statements, including the accompanying notes, included in this Report. Unless otherwise specified, all dollar amounts
are presented in Australian dollars and represented by the notation A$. Some of the information in the discussion and analysis
set forth below and elsewhere in this Report includes forward-looking statements based on current expectations that involve risks
and uncertainties. See “Special Note Regarding Forward-Looking Statements” and Item 3.D. under the heading, “Risk
Factors” for a discussion of important factors that could cause actual results to differ materially from the results described
in the forward- looking statements contained in this Report.



5.A.
            Operating Results



We
are an Australian corporation operating in the renewable energy and energy-efficiency sectors. Our businesses provide technology
and services that allow owners of renewable generation assets to maximize power production and return on investment throughout
the lifecycle of this long-lived class of assets. In some regions where we operate, most notably in Australia and the USA, this
includes the application of our engineering know-how and extensive data resources to design and install efficient new renewable
systems and to upgrade, retrofit and optimize existing facilities. In Australia, we also deliver differentiated products and services
that are designed to allow electricity consumers to reduce power costs and increase efficiency of their electricity consumption.



Our
activities are currently divided among the following principal lines of business:



| | ● | Monitoring
& Performance Analytics (including O&M services)
| | - | -----------------------------------------------------------
| | ● | Solar
Photovoltaic (or PV) Design & Installation           
| | ● | Energy
Efficiency / Climate Control Solutions              





Previously,
and into our 2015 fiscal year, we were active in developing large-scale wind projects, but our involvement with wind generation
systems is now, and is expected to continue to be, limited to providing data management and system management services. In addition
we operate owned power generation facilities in a separate business unit we refer to as RAPS. Although there is a possibility
that RAPS will grow in the future, it is not currently material to our operations.



In
keeping with customary practice in Australia, our fiscal years end on June 30. During the fiscal years ended June 30, 2016 (fiscal
year 2016); June 30, 2015 (fiscal year 2015) and June 30, 2014 (fiscal year 2014), we incurred a net loss from continuing operations
of A$9.3million, A$13.6 million and A$22.2 million respectively, of which A$Nil, A$6.2 million and A$10.0 million for fiscal years
2016, 2015 and 2014 respectively were attributable to asset impairments and non-recurring expenses, as further described below.
However, as a result of 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, 2016, 2015 and 2014:



|Fiscal Year Ended June 30,                             |  | 2016                  |      | 2015               |  | 2014                 
|------------------------------------------------------ |  | --------------------- | ---- | ------------------ |  | ---------------------
|                                                       |  | Revenue (A$ millions) |      | Revenue Percentage |  | Revenue (A$ millions)
|Amounts in A$(000) except as noted                     |  |                       |      |                    |  |                      
|Monitoring & Performance Analytics                     |  |                       | 2.6  |                    |  |                      
|Solar PV Design & Installation                         |  |                       | 17.3 |                    |  |                      
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                       | 12.2 |                    |  |                      
|Large-scale Wind                                       |  |                       | —    |                    |  |                      
|RAPS                                                   |  |                       | —    |                    |  |                      
|Total reported revenue                                 |  |                       | 32.1 |                    |  |                      



Monitoring
& Performance Analytics



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. At the time we acquired BlueNRGY LLC, the BlueNRGY data management and O&M businesses
were in the early stages of commercialization.



In
September 2015 we acquired the Draker data management platform. The Draker Transaction substantially boosted our U.S. market position
to being, in the judgment of our management, one of the leading independent providers of monitoring and data management services
for solar PV facilities in the United States. Despite Draker’s market standing and broad customer base, numerous customers
suffered delivery or service interruptions prior to our consummation of the Draker Transaction. Consequently, we experienced some
short-term customer attrition and interruption of the historical growth pattern for this business for several months following
the acquisition. To reverse this dynamic, we were obliged to invest substantial resources to upgrade the Draker software platform,
integrate it fully with the BlueNRGY LLC technology and improve the subscriber experience. Although the integration with the BlueNRGY
LLC technology is now complete, we are continuing to invest in software and platform upgrades and development to further enhance
the software functionality and its capabilities relative to competitors’ systems. Consequently, our monitoring and performance
analytics business sustained losses throughout our 2016 fiscal year that have continued into our 2017 fiscal year.





52







However,
as a result of our investment, and also due to the positive industry growth dynamics, particularly in the USA, we foresee our
monitoring and performance analytics revenue growing strongly during our 2017 fiscal year. This growth is expected to come from
an increased share of the business of existing customers, significant new customer additions based on the improved value proposition
of the Draker products and services, and efforts to broaden the served market base for Draker to other countries where we operate
or there is substantial growth in PV deployments. In addition, we are succeeding in garnering subscription renewals for our enhanced
software from the legacy customers where Draker systems and software were installed prior to the Draker Transaction.



Consequently,
our management expects a turnaround to positive profitability for this line of business in the 2017 fiscal year, however, there
can be no assurances about when, if ever, the data management business will become profitable.



To
further improve our competitive posture, to provide a range of products and system control technologies that are often required
by our utility-scale customers and that we cannot currently supply, and to broaden our market access, we completed an investment
in Inaccess in July 2016 (refer to Item 4.A under the heading “Recent Acquisitions”). We expect to acquire
the remainder of the Inaccess shares that we do not own in two tranches in January 2017 and July 2017 in accordance with the share
purchase agreement. If the Inaccess transaction is consummated as planned, we will have sufficient ownership of the equity to
consolidate the Inaccess revenue for financial reporting purposes beginning in January 2017. This factor, together with additional
market penetration that we expect to achieve through application of Inaccess technologies, is expected to substantially boost
revenue in our Monitoring and Performance Analytics line of business for our 2017 fiscal year as compared with our 2016 fiscal
year. Inaccess is currently profitable and the scale economies and other efficiencies that we expect to achieve through the Inaccess
transaction are expected to accelerate the timing and magnitude of our turnaround to positive profitability for this line of business.



Since
the acquisition of BlueNRGY LLC the revenues in our O&M services line of business have not been material to our overall operations
and this business continues to be incubated in our Data Management segment under bundled service contracts. Although we are working
actively to accelerate the growth of O&M services, there can be no assurance as to when or whether this line of business will
be large enough to significantly affect our financial performance.



Solar
PV Design & Installation



The
increase in revenue in the solar PV segment from our 2014 to 2015 fiscal years was attributable to the acquisition of GED in July
2014. The subsequent increase from our 2015 to 2016 fiscal years was primarily derived from contracts for the design and delivery
of approximately 50MW of large-scale solar projects by GED. This is a project-based business focused on design and installation
of solar PV facilities for customers with which we have or are seeking to have a strategic relationship over the life-cycle of
the assets. Because of the intense nature of the competition in this business line and competitive disadvantages that we have
with respect to bidding against large, well capitalized EPC contractors, we have chosen to focus our business development initiatives
in the solar design and installation business on situations where we have competitive advantage in design or program management
as a result of our technology. Consequently, the number and installation rate of projects awarded to us, and large-scale projects
in particular, has been and is expected to be irregular. We have evolved our cost structure for this segment to be scalable, both
up and down. Other than a core team of staff members based in Australia and the USA who handle project design and overall program
management, we rely heavily on outsourcing and sub-contractors working in markets where projects are constructed, often with customers
of our other lines of business. As a consequence of these initiatives, our large-scale solar business in some of our served markets
made a positive contribution to operating profit in our 2016 fiscal year with a low net working capital requirement. Our management
expects this dynamic to continue and an overall positive contribution from this line of business for our 2017 fiscal year, but
there can be no assurance that such expectations will be borne out or that this segment of our business will avoid losses in the
future.



With
a few exceptions, project fulfilment cycles for our Solar PV projects have been short, typically less than 6 months, and we are
paid on a progress-payment basis. In general, the timing of payments to suppliers has been closely linked to progress payments,
where applicable, thereby limiting the net working capital requirements the company needs to support these projects. In cases
where we construct projects and on-sell the project at completion, construction financing has been sourced to meet working capital
requirements. Because of the short execution cycle, we have not historically tracked backlog for our large-scale solar business
but it is our intention to begin to do so as new projects are awarded. As of September 30, 2016 our backlog of large-scale solar
projects was approximately 1MW, mostly at our GED unit. Because of uncertainties in the contract bidding process, there can be
no assurance about when we will win further new contracts.



Until
mid-way through fiscal year 2016, we maintained a three person organization in Europe intended to allow us to transact future
projects in that market. Because of diminished opportunities in the UK market caused by a declining feed-in-tariff rate and lower
policy incentives, this team has been wound down and we have shifted of our business development focus to the Americas and Australia.



53







Energy
Efficiency / Climate Control Solutions.



Our
Parmac business unit primarily designs and installs energy efficient HVAC systems and controls for commercial customers. It often
works as a sub-contractor on larger projects and it 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.
Parmac also have a low fixed cost structure typical of construction contractors and 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 2014 fiscal year as those contracts were completed.
These losses are believed by our management to be contract-specific and are not necessarily indicative of the Parmac’s expected
future performance. During the 2015 fiscal year, Parmac’s net profit was impacted by one-time expenses totalling A$1.1million
relating to a parent entity loan extinguishment in the VA process and a bad debt arising from a major customer entering voluntary
administration. During the 2016 fiscal year the Parmac business has been impacted by cyclical industry wide downward pressure
on margins for large tendered projects, coupled with poor cost control on a number of projects. Following a strategic review of
this business in May 2016 a number of personnel changes have been made, business development has been refocused on customer and
project segments which have historically returned operating margins in excess of recently achieved levels and project cost control
processes have been improved. As a result, our management believes that Parmac will return to historical levels of profitability
in the current fiscal year, however, there can be no assurance that this will be the case.



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



This business segment currently comprises solely of The Chatham Island Project, which was completed in 2010 and is 100% owned
by us as a power generating asset. There is currently a dispute regarding the status of the Chatham Island contract and consequently,
no revenue is currently being received from the project. At present we are unable to project the outcome of this dispute or whether
we will realize continuing value from the Chatham Island Project Assets that are recorded in our financial statements without
provision for impairment.



Large-scale
wind.During our 2013 to 2015 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 has now been curtailed and we are no longer incurring expenses related to this line of business and we do not
expect to realize additional revenues from this segment of our business related to our prior activities. When we were active in
the Large-scale wind development arena, we typically incurred costs on early-stage development of projects with a view to sourcing
the equity and/or debt funding required to take it through to construction and operation. Such expenses were undertaken with no
assurance of being able to realize a recover of the development expense. The Taralga Project is an example of a project for which
equity funding to complete construction was secured and we were able to recover our costs and profit from the activity.



In
our 2012 fiscal year we earned a development fee in connection with the Taralga project and reinvested this fee as equity into
the project. As a result, we retained a residual equity ownership of the completed project. During the 2014 financial year, the
timeline for the completion of the Taralga project was delayed as a result of design changes and the subsequent requirement to
amend Development Approvals. The impact of these delays, coupled with cost overruns has negatively impacted the value of our residual
equity interest in the project, and our holding was fully impaired at June 30, 2014, resulting in an impairment charge being recognized
in the Statement of Comprehensive income for our 2014 fiscal year of A$10.8 million. We also entered into a separate project management
agreement for the Taralga Project, but this was terminated in our 2015 fiscal year and we did not realize any management fee revenue
in our 2016 fiscal year.



Other
Factors Materially Affecting Our Businesses and Results of Operations



Although
the trajectory and dynamics of each of our lines of business vary substantially from segment to segment as described above, our
management believes that a few external forces will have a major, and generally positive, influence on all of our business segments
other than Parmac.





54







The
cost competitiveness of renewable versus conventional power generation is improving and parity has been or is expected to be reached
in most targeted markets within the next two to three years, favorably affecting growth prospects for our solar PV businesses.



This
situation is due to a confluence of factors:



| | ● | Average energy costs have been and are widely projected to continue to rise in most markets over time due to increasing global demand and limited availability of reliable low-cost supplies.                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                      
| | ● | Capital costs are at historical lows in many markets we serve (especially senior debt for infrastructure projects).                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                      
| | ● | The costs of renewable power systems and PV solar systems in particular have been declining as a result of scale efficiencies in manufacturing, some overcapacity for the production of certain components such as PV cells and continuing technological innovations.



Consequently,
our management anticipates that the global trend of increasing demand for renewable energy developments, both large and small-scale,
will continue for several years, stimulating strong growth and profit opportunities for downstream industry participants and companies
such as ours providing services applicable to the large and growing base of renewable assets.



Government
policies and mandates favoring energy efficiency and the use of renewable energy are further adding to near-term demand for renewable
energy capacity in both developed and emerging markets.



Many
government policies in place including those applicable to the largest markets we serve, such as Europe and the United States,
call for increasing levels of renewable energy usage over time and impose mandates or incentives for purchases of renewable power
even though such power may cost more than conventionally generated power. This pressure tends to add to the pace of renewable
power adoption in specific countries, states and municipalities where the mandates apply. Favorable tax incentives in the USA,
most notably the 30% federal investment tax credit (ITC) applicable to renewable energy projects are expected to create a bubble
of growth in the 2017 - 2019 calendar years that should be favourable to us.



The
complexity and inconsistency of the regulatory and legislative frameworks can create localized barriers to entry in some markets,
which we anticipate may limiting competition or increasing pricing and margins in the near-term in markets such as the USA, where
we have already established operations.



Pressure
on government budgets and liquidity constraints are expected to serve as a partial offset to otherwise favorable growth trends
for the renewable energy sector and will lead to volatility in some countries and regional markets.



As
individual governments experience fiscal constraints that make direct subsidies impractical or are forced to adjust mandates because
their constituents demand limits on premium payments for renewable energy, some of the demand for new renewable energy capacity
will abate. This impact will fall unevenly across countries and regions as corrections are made to compensate for policies that
were not sustainable or sound when implemented. Our management expects the effect of this trend will most greatly affect our business
development initiatives and we have already seen supply-demand imbalances for services corrected in some of our served markets
such as the UK.



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 have experienced reduced profitability
and consolidation. We expect that the impact on downstream participants will be muted because of market fragmentation and the
ability of smaller companies to adjust their business models. 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 Item 3.D.- Risk
Factors under the heading “Risks Related to our Financial Condition” and the information below under
the heading “—Liquidity and Capital Resources”).



| | ● | Obtaining significant penetration of our data management business in new geographic markets and in renewable sub-segments such as wind and small-scale hydro can only be funded in the near term from new capital infusions to the Company                                                                            
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                       
| | ● | Without the necessary additional working capital, which we estimate to be at least A$1.0 million and as much as $3.0 million if we are successful in securing larger megawatt-scale contract awards, our solar PV businesses cannot grow to management’s targeted revenue run-rate in our 2016 fiscal year and beyond.
| |   |                                                                                                                                                                                                                                                                                                                       
| | ● | The net working capital deficit and deferred creditor balances in some of our operating subsidiaries can only be relieved with an infusion of new debt or equity capital, or an exchange of indebtedness for equity or a compromise of creditor claims.                                                               
| |   |                                                                                                                                                                                                                                                                                                                       
| | ● | We cannot complete and integrate beneficial acquisitions, without supplementary liquidity such as that raised to fund the Draker Transaction.                                                                                                                                                                         





55







Recent
Acquisitions



We
have developed our current business in part through several strategic acquisitions and we expect to pursue additional acquisitions
in the future. Summary descriptions of the material acquisitions we completed during fiscal year 2014 through the date of this
Report are as follows, but the terms described below are qualified in their entirety by the applicable acquisition documents included
as Exhibits to our filings with the SEC:



Inaccess
Transaction



The
Company subscribed to €3.25 million of convertible preferred shares (‘Preferred Shares’) of Inaccess Holdings
Ltd (‘IHL’) on July 7, 2016. IHL is a UK company that provides hardware and software systems for monitoring and controlling
the performance of distributed renewable energy and telecom facilities worldwide. Our management believes that the Inaccess business
is highly complementary to our own Monitoring and Data Analytics business. At the time of the Preferred Share subscription, the
Preferred Shares were convertible into 20% of the IHL ordinary equity interests, although subsequent repurchases of its ordinary
shares by IHL boosted this percentage to approximately 23%. The rights and designations of the Preferred Shares make such
shares senior to other classes of IHL equity, provide for a preferential payout upon liquidation equal to the subscription price
and entitle the holder thereof to a board seat.



Subject
to a withdrawal right that expired on September 15, 2016 and that we elected not to exercise, we also entered into an agreement
on July 7, 2016 to purchase all of the remaining equity of Inaccess that we do not own in two tranches scheduled to close in January
and July 2017 (together with the IHL share subscription referred to as the Inaccess Transaction). We are therefore obligated
to acquire the remaining shares at a price that would value 100% of the IHL equity in a range from €16.3 million to €20.0
million. Consideration will be made in a combination of ordinary shares of the Company and/or cash in ratios that are not determinable
as of the date of this report on Form 20-F. The foregoing summary of terms of the Inaccess Transaction is qualified in its entirety
by the subscription and share purchase agreements included as Exhibits hereto.



Draker
Transaction



On
September 16, 2015, we acquired, through a newly formed U.S. subsidiary, the monitoring platform, accounts receivable, inventory,
plant, property and equipment and certain other assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”),
including the Draker name, trademark, and all copyrights then owned by the Sellers. Immediately subsequent to the transaction,
referred to as the Draker Transaction, our acquisition subsidiary changed its name to Draker Corporation and the names of the
Sellers were changed to delete the “Draker” name. With the exception of the Seller’s secured indebtedness to
the VEDA amounting to approximately US$0.2 million, Draker Corporation did not assume Seller’s liabilities. As a result
of the Draker Transaction, we are supplying monitoring services to Seller’s customers while we negotiate and document continuing
service agreements at more than 2,000 sites in the Americas, Japan and Europe. Cash consideration paid to Sellers, including interim
operating loans that were not recoverable, totalled approximately US$2.4 million.



BlueNRGY
LLC



On
January 27, 2015 we acquired 100% of the equity interests of BlueNRGY LLC, a U.S. company specializing in managing data related
to geographically distributed energy generation systems and providing related operations and maintenance, or O&M, services.
At the time of its acquisition, BlueNRGY LLC was serving customers in Europe and Asia. Subsequently we have expanded the scope
of its operations to include customers with U.S. and Australia and fully integrated its technology and operations into that of
Draker Corporation. Consideration paid to the BlueNRGY LLC shareholders and shares issued to key executives and Directors of the
Group as part of the transaction comprised solely our ordinary shares. Based on the issuance of our ordinary shares to investors
in a contemporaneous private placement at US$3.03 per share (after giving effect to the 1-for-80 share consolidation that we implemented
in December 2015), the value of our shares issued to the BlueNRGY LLC shareholders was US$5.8 million.



56







Green
Earth Developers LLC (GED)



On
July 1, 2014 we acquired Green Earth Developers LLC, a solar and electrical EPC contractor in the Southeastern U.S. that has bolstered
our ability to capitalize on commercial project opportunities in the U.S. market. GED had 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 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$3.03 per share (after
giving effect to the 1-for-80 share consolidation that we implemented in December 2015) following the effectiveness of the Reorganization
Plans in January 2015.



Results
of Operations



Fiscal
Year Ended June 30, 2016 Compared to Fiscal Year Ended June 30, 2015 —Consolidated Results



|                                                         |  | Year ended    |         | Year ended   
|-------------------------------------------------------- |  | ------------- | ------- | -------------
|Amounts in A$(000) except as noted                       |  | June 30, 2016 |         | June 30, 2015
|                                                         |  |               |         |              
|Revenues from continuing operations                      |  |               | 32,082  |              
|                                                         |  |               |         |              
|Operating Expenses                                       |  |               |         |              
|Cost of raw materials, consumables used, and contractors |  |               | (23,905 | )            
|Employee benefit expenses                                |  |               | (12,025 | )            
|Compliance and consultants                               |  |               | (1,280  | )            
|Insurance                                                |  |               | (516    | )            
|Occupancy expenses                                       |  |               | (627    | )            
|Travel costs                                             |  |               | (598    | )            
|Bad and doubtful debts                                   |  |               | (19     | )            
|Other expenses                                           |  |               | (1,088  | )            
|Amortisation and depreciation                            |  |               | (527    | )            
|Sub-total - operating costs                              |  |               | (40,585 | )            
|                                                         |  |               |         |              
|Other income                                             |  |               | 50      |              
|Net finance income/(costs)                               |  |               | (822    | )            
|Impairments                                              |  |               | —       |              
|Loss from continuing operations before income tax        |  |               | (9,275  | )            
|Income tax benefit/(expense)                             |  |               | —       |              
|Net profit/(loss) for the period                         |  |               | (9,275  | )            
|Net profit from discontinued operations                  |  |               | —       |              
|Net (Loss) / Profit for the period                       |  |               | (9,275  | )            
|                                                         |  |               |         |              
|Other comprehensive income                               |  |               | (35     | )            
|                                                         |  |               |         |              
|Total comprehensive profit/(loss) for the period         |  |               | (9,310  | )            



57







Operating
revenue



Total
operating revenues from continuing operations increased from A$16.9 million for the year ended June 30, 2015 to A$32.1 million
for the year ended June 30, 2016. The revenues increases were mainly attributable to the acquisition of Draker and an increase
in revenue for GED.



|Amounts in A$(000) except as noted                     |  | Year ended
June 30, 2016 |        | Year ended
June 30, 2015
|------------------------------------------------------ |  | ------------------------ | ------ | ------------------------
|                                                       |  |                          |        |                         
|Monitoring & Performance Analytics*                    |  |                          | 2,599  |                         
|Solar PV Design & Installation (Solar PV)              |  |                          | 17,270 |                         
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                          | 12,177 |                         
|Large scale wind                                       |  |                          | —      |                         
|RAPS                                                   |  |                          | 36     |                         
|Total reported revenue                                 |  |                          | 32,082 |                         



*
Includes O&M Services



Monitoring
& Performance Analytics revenue increased from A$0.2 million for the year ended June 30, 2015 to A$2.6 million for the year
ended June 30, 2016, following the Draker Transaction in September 2015.



Solar
PV revenue increased by 464% from A$3.1 million for the year ended June 30, 2015 to A$17.3 million for the year ended June 30,
2016, due to the performance of large scale EPC contracts performed in the USA by our GED subsidiary. In May 2015, GED commenced
the design and construction of part of its contracted backlog resulting in the recognition of revenue for these projects in line
with the percentage completed through the year ended June 30, 2016. The installation of these projects was largely completed by
June 30, 2016.



Parmac
revenue remained consistent at A$12.2 million for both years ended 30 June 2016 and 2015. Around 80% of Parmac’s revenue
is derived from its contracting business with the 20% balance from its services division. This ratio also remained consistent
between the 2015 and 2016 fiscal years. RAPS revenue decreased by A$0.1m from 2015 to 2016 primarily as a result of an ongoing
contractual dispute regarding the Chatham Island wind project triggered by the 2015 VA process.



Revenue
from our Large-scale Wind segment recognized during our fiscal year 2015 was from the provision of project management services
to the now-competed Taralga wind project. In conjunction with our Reorganization Plans the project management agreement was terminated
in January 2015, we withdrew from the development and construction of wind projects and, accordingly, we did not generate any
revenue for these services during our 2016 fiscal year.



Operating
costs



For
the year ended June 30, 2016 and 2015, respectively, total operating costs including the cost of raw materials, consumables and
contractors are presented in the table below for our various business segments:



|Amounts in A$(000) except as noted                                |  | Year ended
June 30, 2016 |        | Year ended
June 30, 2015
|----------------------------------------------------------------- |  | ------------------------ | ------ | ------------------------
|                                                                  |  |                          |        |                         
|Monitoring & Performance Analytics *                              |  |                          | 6,752  |                         
|Solar PV Design & Installation (Solar PV)                         |  |                          | 17,775 |                         
|Energy Efficiency / Climate Control Technology Solutions (Parmac) |  |                          | 12,990 |                         
|Large scale wind                                                  |  |                          | —      |                         
|RAPS                                                              |  |                          | 222    |                         
|Corporate                                                         |  |                          | 2,846  |                         
|Consolidated                                                      |  |                          | 40,585 |                         



*
Includes O&M Services





58







Monitoring
& Performance Analytics operating costs increased from A$0.9 million for the year ended June 30, 2015 to A$6.8 million for
the year ended June 30, 2016, following the Draker Transaction in September 2015. We estimate that A$2.0 of these costs
were related to re-establishing the Draker monitoring system within the market place including system development and stabilization
and servicing the existing Draker customer base the period prior to renewal of their subscriptions.



The
136% increase in Solar PV operating costs from A$7.5 million for the year ended June 30, 2015 to A$17.8 million for the year ended
June 30, 2016 is due to the increase in revenues in the same time frame. The rate of cost increase from our 2015 to 2016 fiscal
years (136%) was disproportionate to the revenue increase in that timeframe (464%) as a result of improved utilization
of the core base of personnel in the division, coupled with targeted operating cost reductions.



Parmac
operating costs were A$13.0 million for the year ended June 30, 2016 as compared to A$12.4 million for the year ended June 30,
2015. The 5% increase in operating costs for Parmac was as a result of gross margin deterioration in Parmac’s contracting
division for a period of time during the 2016 fiscal year driven by increased competition in the Melbourne construction market.
These market pressures appear to have started to ease in the quarter ended 30 June 2016. RAPS operating costs in fiscal year 2015
were fully offset by an unrealized foreign currency gain of A$0.2 million on liabilities of the segment. There was no such offset
in the 2016 fiscal year and the costs largely represent depreciation charges on the wind turbines.



No
costs were incurred in our large-scale wind division in the 2016 fiscal year as following withdrawal from this business pursuant
to our Reorganization Plans.



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



The
cost of raw materials, consumables and contractors used increased from A$8.5 million for the year ended June 30, 2015 to A$23.9
million for the year ended June 30, 2016 as a result of the increase in revenue levels between the two periods. The percentage
increase in this category of expense for the fiscal year ended June 30, 2016 as compared with the year ended June 30, 2015 was
180%, which exceeds the increase in revenue of 90% in that period which reflects the fact that revenue growth was largely from
the sale of equipment in our projects-based businesses.



Employee
compensation and benefit expense has increased by 6% from A$11.4 million for the year ended June 30, 2015 to A$12.0 million for
the year ended June 30, 2016, primarily due to personnel increases associated with the Draker Transaction in September
2015. These increases were to some level offset by a reduction in headcount in our Solar PV division during the 2016 fiscal year.



Total
compliance and consultant’s expense decreased by 39% from A$2.1 million for the year ended June 30, 2015 to A$1.3 million
for the year ended June 30, 2016. The most significant contributor to the cost reductions were lower professional fees in relation
to capital raising activities, compliance and auditor fees. The 2016 fiscal year expense includes $0.4 million of fees associated
with the acquisition of the Inaccess Group of companies which concluded in July 2016.



Insurance
costs increased by 12% to $0.5 million for the year ended June 30, 2016 as a result of additional insurances required for the
Draker business and annual price increases across the other group premiums.



Occupancy
expenses decreased by 4% from A$0.7 million for the year ended June 30, 2015 to A$0.6 million for the year ended June 30, 2016
as a result of the renegotiation of lease terms on some of our office spaces and the termination of our GED office lease. These
savings were partly offset by increased costs following the assumption of the Draker office lease in September 2015.



Travel
costs reduced by 6% to A$0.6 million as the level of expenditure for senior operational executives to travel to the United Kingdom
and United States of America to oversee our businesses there was reduced.



Our
expense for impairment of receivables and bad debts expense was negligible for the year ended June 30, 2016 compared to an expense
of A$0.8 million for the same period in 2015. The 2015 expense resulted from a major customer of Parmac entering voluntary administration,
difficulties in recovering some debts during the VA process and provisions against some debtors in GED, none of which were repeated
in the 2016 fiscal year.



Total
depreciation and amortization expense remained consistent at A$0.5 million per year between the 2015 and 2016 years as it relates
to RAPS, Parmac and corporate assets which have remained largely unchanged between the two periods.



Other
Income



We
recognized negligible amounts of other income in the year ended June 30, 2016 from gains on asset disposals and negotiated creditor
payment reductions as compared to A$1.9 million of other income in the year ended June 30, 2015. The other income in the
year ended June 30, 2015 was attributable to gains from the extinguishment of debt from creditors and lenders as a result of the
VA process.



Finance
Costs



Finance
costs comprise interest expenses and foreign exchange differences on loan balances. In the 2016 fiscal year net interest expense
was A$0.7 million and foreign exchange losses A$0.1 million. We reported a gain in the finance costs category of A$0.1 million
in 2015 resulting from foreign currency gains on borrowings of A$0.9 million which exceeded interest charges of A$0.8 million.
Net interest expense reduced between the 2015 and 2016 fiscal years as a result of the extinguishment of borrowings following
the VA process in 2015.



Impairments



No
impairment charge was recognised in the 2016 fiscal year. The impairment loss in the 2015 fiscal year of A$6.2 million was due
to an impairment charge of that amount relating to the goodwill carrying value of our Solar CGU.



Income
taxes



No
income tax expense was recorded for the years ended June 30, 2016 and 2015.





59







Fiscal
Year Ended June 30, 2015 Compared to Fiscal Year Ended June 30, 2014 —Consolidated Results



|Amounts in A$(000) except as noted                                |  | Year Ended June 30,
|----------------------------------------------------------------- |  | -------------------
|                                                                  |  | 2015               
|Revenues from continuing operations                               |  |                    
|Operating Expenses                                                |  |                    
|Cost of raw materials, consumables and contractors                |  |                    
|Employee compensation and benefit expenses                        |  |                    
|Compliance & consultants                                          |  |                    
|Travel costs                                                      |  |                    
|Occupancy expenses                                                |  |                    
|Provision for impairment of receivables and bad debts written off |  |                    
|Other expenses                                                    |  |                    
|Depreciation and amortization expenses                            |  |                    
|Sub-total - operating costs                                       |  |                    
|Other income                                                      |  |                    
|Finance costs                                                     |  |                    
|Impairments                                                       |  |                    
|(Loss) / Profit before income tax                                 |  |                    
|Income tax (expense) / benefit                                    |  |                    
|Net (Loss)/profit from continuing operations                      |  |                    
|Net profit / (loss) from discontinued operations                  |  |                    
|Net (Loss) / Profit for the period                                |  |                    
|Other comprehensive income                                        |  |                    
|Total comprehensive income/(loss)                                 |  |                    



Operating
revenue



Total
operating revenues from continuing operations increased from A$13.7 million for the year ended June 30, 2014 to A$16.9 million
for the year ended June 30, 2015. The revenues increases were mainly attributable to the acquisition of GED and an increase in
revenue for Parmac.



|                                                                  |  | Revenue for Year Ended June 30,
|----------------------------------------------------------------- |  | -------------------------------
|Amounts in A$(000) except as noted                                |  | 2015                           
|Monitoring & Performance Analytics                                |  |                                
|Solar PV Design & Installation (Solar PV)                         |  |                                
|Energy Efficiency / Climate Control Technology Solutions (Parmac) |  |                                
|Large-scale Wind                                                  |  |                                
|RAPS                                                              |  |                                
|Total reported revenue                                            |  |                                





The
Monitoring & Performance Analytics business was acquired in January 2015 when it was in its early stages of commercialization
so it did not contribute significantly to revenues in 2015 and there are no comparative revenues for 2014.



Solar
PV revenue increased by 59% from A$1.9 million for the year ended June 30, 2014 to A$3.1 million for the year ended June 30, 2015,
due to the revenue contribution of A$0.9 million from GED which was acquired in July 2014. In May 2015, GED commenced the design
and construction of part of its contracted backlog resulting in the recognition of revenue for these projects in line with the
percentage completed by June 30, 2015. The balance of the revenue was generated from the sale of small scale solar PV projects
in our Australian and USA businesses.



Parmac
recorded an increase in revenue of A$2.0 million from A$10.2 million for the year ended June 30, 2014 to A$12.2 million for the
year ended June 30, 2015. The 2014 revenues had been negatively impacted by a change in our focus from larger greenfield developments
to smaller retro-fitting and service opportunities, which are considered more in line with the Parmac team’s capabilities
to manage profitably. In 2015, this focus lead to improvements in our success at securing and retaining customers for these revenue
streams. RAPS revenue decreased by A$0.2m from 2014 to 2015 primarily as a result of a contract dispute regarding the Chatham
Island wind project triggered by the VA process.



Revenue
from our Large-scale Wind segment recognized during our fiscal year 2014 and 2015 was from the provision of project management
services to the Taralga project. The project management agreement was terminated in January 2015 and we discontinued this line
of business pursuant to our Reorganization Plans.





60







Operating
costs



For
the year ended June 30, 2015 and 2014, respectively, total operating costs including the cost of raw materials, consumables and
contractors are presented in the table below for our various business segments:



|                                                                 |  | Year Ended June 30,
|---------------------------------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted                               |  | 2015               
|Monitoring & Performance Analytics                               |  |                    
|Solar PV Design & Installation (Solar PV)                        |  |                    
|Large-scale Wind                                                 |  |                    
|Energy Efficiency / Climate Control (Parmac)Technology Solutions |  |                    
|RAPS                                                             |  |                    
|Corporate                                                        |  |                    
|Total reported operating costs                                   |  |                    



The
Monitoring & Performance Analytics business was acquired in January 2015 so there are no comparative operating costs for 2014.



The
134% increase in solar PV operating costs from A$3.2 million for the year ended June 30, 2014 to A$7.5 million for the year ended
June 30, 2015 is due to the costs of GED for a twelve-month period in fiscal year 2015 and other costs incurred in establishing
further solar operations within the USA outside of GED. The increase in costs is disproportionate to the increase in solar PV
revenues in the same time frame due to the interruption to sales and marketing activity during the VA process. A core base of
personnel was maintained over this period in order to enable the re-establishment of operations upon conclusion of the VA process.



Parmac
operating costs were A$12.4 million for the year ended June 30, 2015 as compared to A$11.0 million for the year ended June 30,
2014. The 13% increase in operating costs for Parmac was less than the 20% increase in revenue reflecting the margin improvements
being realized from our change in customer focus to smaller retro-fit projects and service clients.



Large-scale
wind operating costs increased by A$0.1 million to A$0.7 million for fiscal year 2015 as compared with A$0.6 million for fiscal
year 2014 due to hiring additional resources to fulfil our obligations under the project management agreement for the Taralga
project.



RAPS
operating costs were fully offset by an unrealized foreign currency gain of A$0.2 million on liabilities of the segment. Other
operating costs of RAPS were consistent between 2014 and 2015 fiscal years.



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



The
cost of raw materials, consumables and contractors used increased from A$6.1 million for the year ended June 30, 2014 to A$8.5
million for the year ended June 30, 2015 as a result of the increase in revenue levels between the two periods. The percentage
increase in this category of expense for the fiscal year ended June 30, 2015 as compared with the year ended June 30, 2014 was
40%, which exceeds the increase in revenue of 23% in that period which reflects the fact that revenue growth was largely from
the sale of equipment in our projects-based businesses.



Employee
compensation and benefit expense has increased by 22% from A$9.3 million for the year ended June 30, 2014 to A$11.4 million for
the year ended June 30, 2015 through the acquisition of GED and BlueNRGY LLC. These increases were to some level offset by a reduction
in headcount across many of our continuing operations during the VA process.



Total
compliance and consultant’s expense decreased by 40% from A$3.5 million for the year ended June 30, 2014 to A$2.1 million
for the year ended June 30, 2015. The most significant contributor to the cost reductions were lower professional fees in relation
to capital raising activities, auditor fees and costs associated with the preparation for registration of our securities in the
United States in 2014 which were not repeated in 2015.



Travel
costs reduced by 15% from A$0.7 million to A$0.6 million as the level of expenditure to allow senior operational executives to
travel to the United Kingdom and United States of America to oversee our businesses there was reduced.



Occupancy
expenses increased by A$0.1 million from A$0.6 million for the year ended June 30, 2014 to A$0.7 million for the year ended June
30, 2015 as a result of the acquisition of the GED and BlueNRGY LLC. These increases were largely offset by reductions following
the VA process, whereby a number of leases were disclaimed by our Australian operations.



Our
provision for impairment of receivables and bad debts expense was A$0.8 million for the year ended June 30, 2015 compared to a
negligible expense for the same period in 2014. This resulted from a major customer of Parmac entering voluntary administration,
difficulties in recovering some debts during the VA process and provisions against some debtors in GED.



Total
depreciation and amortization expense remained consistent between the 2014 and 2015 years as it relates to RAPS, Parmac and corporate
assets largely unaffected by the VA process.





61







Other
Income



We
recognized A$1.8 million of other income in the year ended June 30, 2015 as compared to A$0.7 million for the year ended June
30, 2014. The other income in the year ended June 30, 2014 was attributable to gains from the extinguishment of debt from creditors
and lenders as a result of the VA process. The other income in 2014 was from the reversal of contingent consideration payable
in relation to the acquisition of eco-Kinetics in 2010 of A$0.6 million.



Finance
Costs



Finance
costs comprise interest expenses, debt restructuring fees, share option expenses directly related to financing activities and
foreign exchange differences on loan balances. We reported a gain in the finance costs category of A$0.1 million in 2015 resulting
from foreign currency gains on borrowings of A$0.9 million which exceeded interest charges of A$0.8 million. In 2014 net interest
expense was A$3.8 million, share option expensesA$0.1 million and foreign exchange losses A$0.2 million. Net interest expense
reduced significantly between the 2014 and 2015 fiscal years as a result of the extinguishment of borrowings following the VA
process.



Impairments



The
impairment loss in the 2015 fiscal year of A$6.2 million was due to an impairment charge of that amount relating to the goodwill
carrying value of our Solar CGU. The impairment loss of A$10.0 million for the year ended June 30, 2014, was due to a decline
in the value of our investment in the Taralga wind farm project to $ Nil as a result of construction delays and cost overruns
during the year.



Income
taxes



No
income tax expense was recorded for the years ended June 30, 2015 and 2014.



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, 2014, 2015 and 2016. The preparation of our financial statements required
management to make judgments, estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities
and expenses. Our management re-evaluates estimates on an on-going basis and such estimates are based on historical experience
and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. Unless otherwise stated, all dollar amounts stated in our financial
statements are expressed in the currency of the Commonwealth of Australia.



Critical
accounting policies



Critical
accounting policies that reflect our industry and activity specific accounting treatments used in preparing our financial statements
as of and for the fiscal years ended June 30, 2014, 2015 and 2016 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,” we have net operating cash outflows of A$7.8 million for the year ended June 30, 2016. We remain
dependent upon receiving continuing support from existing lenders, raising additional funds in new financings, and monetizing
long-term assets to fund the business and to continue as a going concern.



(b)
Revenue recognition



Revenue
is recognized to the extent that it is probable that the economic benefits will flow to us and the revenue can be reliably measured,
regardless of when payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking
into account contractually defined terms of payment and excluding taxes or duty. The specific recognition criteria described below
are applicable to the primary sources of our revenue:



(i)
Sale of products, materials and parts



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



(ii)
Construction contracts



Contract
revenue and expenses, such as those related to large-scale solar and air conditioning projects where we are acting as a general
contractor, are recognized in accordance with the percentage of completion method unless the outcome of the contract cannot be
reliably estimated. Revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in reporting
revenue, expenses and profit, which can be attributed to the work completed. When it is probable that a loss will arise from a
construction contract, the excess of total costs over revenue is recognized immediately as an expense. Where the outcome cannot
be measured reliably, revenue is recognized only to the extent that related expenditure is deemed recoverable. The stage of completion
of a contract is measured by reference to the recoverable costs incurred to date as a percentage of estimated total costs for
the contract.



(iii)
Project development revenue



Revenue
from large-scale solar 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.





62









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.



(iv)
Subscription revenue



Revenue
from the sale of subscriptions to our data analysis and monitoring software products is recognised over the life of the contract
in line with when the significant risk and rewards of ownership have been transferred to the customer, recovery of the consideration
is probable and the amount of revenue can be measured reliably. The timing of the transfer of risks and rewards varies depending
on the individual terms of the subscription agreement.



(c)
Work-in-progress



Project
work in progress includes both work in progress on construction contracts, such as those performed for customers of our large-scale
solar and air conditioning systems customers and projects in progress in which we are a principal such as certain large-scale
solar projects.



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 not recognized for deductible temporary differences as management does not consider that it is probable
that future taxable profits will be available to utilize those temporary differences.



Judgment
is required in assessing whether deferred tax assets are recognized in the statement of financial position. Deferred tax assets,
including those arising from un-recouped tax losses, capital losses and temporary differences, are recognized only where it is
considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable
profits.



Assumptions
about the generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates
of future sales, operating costs, capital expenditure and other capital management transactions. Judgments are also required about
the application of income tax legislation. These judgments and assumptions are subject to risk and uncertainty, hence there is
a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred
tax liabilities recognized on the balance sheet and the amount of other tax losses and temporary differences not yet recognized.
In such circumstances, some or all of the carrying amounts of recognized deferred tax assets and liabilities may require adjustment,
resulting in a corresponding credit or charge to the income statement. Should operating performance and prospects improve in the
future, then deferred tax assets may be recognized in future on prior year operating losses. As of June 30, 2016, we had A$19.4
million of derecognized deferred tax assets and A$16.6 million at June 30, 2015.



(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.





63







(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 15 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.



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, 2016, 2015 and 2014 as reflected in our audited financial statements presented elsewhere in this document.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2016               
|                                                       |  |                    
|Net cash flows used in operating activities            |  |                    
|Net cash flows used in investing activities            |  |                    
|Net cash flows from financing activities               |  |                    
|Net (decrease) / increase in cash and cash equivalents |  |                    
|Cash and cash equivalents at beginning of period       |  |                    
|Cash and cash equivalents at end of period             |  |                    



At
June 30, 2016 our cash and cash equivalents had decreased to A$0.3 million from A$0.5 million at June 30, 2015 primarily as a
result of the application to operating and investing activities of funds raised from the issuance of ordinary shares and subsidiary
preference shares in the year ended June 30, 2016. During each of the last three fiscal years ended June 30, 2016, 2015 and 2014
and subsequently through the date of this Report, our liquidity has been generated primarily from borrowings and sales of equity
securities. Of the cumulative funding from financing activities of A$36.9 million during fiscal years 2016, 2015 and 2014, A$4.9
million was used to fund our acquisition in July 2014 of GED and the acquisition of the assets of Draker, Inc. and
Draker Laboratories, Inc. in September 2015 with the remainder used to fund cumulative losses from operations.



During
fiscal year 2016 we negotiated extensions to the maturity dates of US$5.6 million and A$0.8 million of borrowings which have been
classified as non-current liabilities at June 30, 2016. Additionally, US$2.2 million of Subsidiary Preferred Shares which were
classified as liabilities at June 30, 2015 were renegotiated and are classified as equity at June 30, 2016. In July 2016 we received
A$6.6 million of funds from the issue of subsidiary preferred shares, of which A$5.2 million was used to fund the investment in
Inaccess (see Item 4.A “Recent Acquisitions”) and associated transaction costs. The balance was used
for working capital. At June 30, 2016 our current assets exceeded our current liabilities by A$3.4 million, however, A$4.8 million
of assets classified as current at June 30, 2016 were invested in non-current financial assets subsequent to the fiscal year end.



At
the end of our 2014 fiscal year and in the first quarter of our 2015 fiscal year our cash availability and liquidity remained
too low to sustain our operating outflows and continuance as a going concern, as further discussed below. Our liquidity deficiencies
were exacerbated by our acquisition in July 2014 of GED to which we allocated US$1.5 million for purposes of consummating the
transaction and addressing GED’s working capital deficit within 60 days following the June 2014 offering in which
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), before giving effect to any share price adjustment from the 1-for-80 share consolidation that we effected
in December 2016 (22,625 ordinary shares at a price of US$32.00 per share after giving effect to the consolidation). 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 classified
the remaining indebtedness we had incurred during the two prior fiscal years and which was not converted into equity prior to
June 30, 2014 became current liabilities as of June 30, 2014 as a result of default events that occurred with respect to bonds
issued by our subsidiaries and the acceleration of other obligations. Consequently, we had a working capital deficit on June 30,
2014 of A$30.5 million, payments to many trade creditors were substantially deferred, liquidity was severely constrained and we
were unable to continue as a going concern without voluntarily placing the Company and three of our subsidiaries into Administration.
We restructured our operations under VA and emerged with limited indebtedness on January 27, 2015.



Despite
having reduced our liabilities through the Reorganization Plans, we have sustained losses and made acquisitions since our emergence
from VA and our liquidity has again been depleted. 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:Few of our subsidiaries are contributing cash flow to cover 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
                                         maximise cash flow and profitability. New business opportunities are carefully assessed
                                         with a view to ensuring their potential to contribute to profits without undue consumption
                                         of working capital. Specifically, during the financial year ended June 30, 2016 the number
                                         of employees in the Solar PV business units and corporate units has been reduced to lower
                                         costs and better match the current scope of Group activities. In addition, the Company
                                         has completed corporate acquisitions which gives the Group a platform to achieve profitability
                                         in its Monitoring & Performance Analytics business within the next 12 months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ● | Raise
                                         new debt and/or equity capital:: During the twelve months ended June 30, 2016 we
                                         have been successful in raising funds through the issuance of ordinary shares and subsidiary
                                         preference shares under Share Purchase Agreements. A total of US$2.0 million (A$2.8 million)
                                         of cash has been raised from the issuance of 660,507 ordinary shares at US$3.028 per
                                         share. Additionally, a further US$0.4 million (A$0.6 million) of liabilities for fees
                                         and salaries due to executives of the company were extinguished through the issuance
                                         of 144,125 ordinary shares in the company. Subsidiary preference shares convertible into
                                         our ordinary shares with a face value of US$6.5 million (A$8.8 million) were issued during
                                         2016 fiscal year (although payment was received in July 2016 during the 2017 fiscal
                                         year) to fund the Draker asset acquisition and our investment in the IHL (Inaccess)
                                         (refer to Item 4.A “Recent Acquisitions”). Proceeds from borrowing
                                         during the financial year ended June 30, 2016 across the group were A$5,832,000.
                                         The lenders of over 90% of the Group’s borrowings are either affiliates of members
                                         of our Board of Directors or our significant shareholders and our Directors expect that
                                         their financial support will continue to be provided.





64







Our
management and Board have determined that there is a risk that our funding requirements may not be successfully met through the
foregoing initiatives and that some of our initiatives may not be successful. However, as previously mentioned, we have achieved
significant operating and financing objectives and our management and board believe that we have a reasonable prospect of achieving
others; consequently, we have no intention to liquidate or cease trading or to cause any of our material subsidiaries to do so



Operating
activities



As
shown in the table below the cumulative utilization of cash over the last three fiscal years has been A$33.5 million.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2016               
|                                                       |  |                    
|Cash flow from operating activities                    |  |                    
|Receipts from customers (inclusive of GST)             |  |                    
|Payments to suppliers and employees (inclusive of GST) |  |                    
|Finance costs                                          |  |                    
|Interest received                                      |  |                    
|Net cash flows used in operating activities            |  |                    



For
the year ended June 30, 2016, net cash used in operating activities was A$7.8 million as compared with an outflow of A$5.6 million
for the year ended June 30, 2015. The excess of disbursements to suppliers and employees over receipts in the year ended June
30, 2016 was A$7.8 million and was largely driven by funding of ongoing operating losses, mostly related to investments in our
Monitoring and Performance Analytics business that we are unable to capitalize under applicable accounting rules.



For
the year ended June 30, 2015, net cash used in operating activities was A$5.6 million as compared with an outflow of A$20.2 million
for the year ended June 30, 2014. The excess of disbursements to suppliers and employees over receipts in the year ended June
30, 2015 was A$5.1 million and was largely driven by funding of ongoing operating losses. 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.



Investing
activities



In
the latest two out of the last three fiscal years, we have expended funds in acquiring businesses as part of our growth strategy
as detailed in the table below.



|                                                                      |  | Year Ended June 30,
|--------------------------------------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted                                    |  | 2016               
|                                                                      |  |                    
|Cash flow from investing activities                                   |  |                    
|Proceeds from sale of property, plant and equipment                   |  |                    
|Purchase of property, plant and equipment                             |  |                    
|Cash forfeited during reorganisation                                  |  |                    
|Proceeds from sale of investments                                     |  |                    
|Payment for the purchase of controlled entities, net of cash acquired |  |                    
|Net cash flows used in investing activities                           |  |                    



Net
cash used in investing activities was A$3.0 million for the year ended June 30, 2016, as opposed to A$2.0 million cash used in
investing activities for the year ended June 30, 2015. Payment for the purchase of controlled entities, net of cash acquired of
A$3.0 million in the year ended June 30, 2016 which related to the purchase of the Draker assets. Net investing outflows for the
year ended June 30, 2015 was utilized for the payment for the purchase of controlled entities, net of cash acquired of A$1.3 million
related to the purchase of GED and cash of A$0.4 million held at the time of entering VA was forfeited. For the year ended June
30, 2014, A$1.8 million was received following the sale of CapTech and net investments of A$0.7 million were made for purchases
of plant, property and equipment predominantly for the construction of solar generating assets owned by one of our UK subsidiaries.



Financing
activities



As
shown in the table below, we generated the cash used in operating and investment activities during fiscal years 2016, 2015 and
2014, with net contributions from financing activities during those years Over the three-year period ended in June 2016 we generated
A$36.9 million cumulatively from financing activities:





65







|                                         |  | Year Ended June 30,
|---------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted       |  | 2016               
|                                         |  |                    
|Cash flow from financing activities      |  |                    
|Proceeds from ordinary share issues      |  |                    
|Proceeds from preference share issues    |  |                    
|Proceeds from issue of convertible notes |  |                    
|Convertible note and share issue costs   |  |                    
|Proceeds from borrowings                 |  |                    
|Repayment of borrowings                  |  |                    
|Payment of finance lease liabilities     |  |                    
|Net cash flows from financing activities |  |                    



For
the year ended June 30, 2016, net cash inflows from our financing activities was A$10.6 million as compared with net cash inflows
from our financing activities of A$6.6 million for the year ended June 30, 2015. In the year ended June 30, 2016 we raised $4.9
million from the issuance of ordinary and preference shares and our parent company and operating subsidiaries borrowed A$5.8 million
as follows: Parmac (A$2.0 million), Draker (A$2.0 million) and BlueNRGY Group Limited (A$1.8 million). In the year ended June
30, 2015 we raised $4.5 million from the issuance of ordinary and preference shares and our parent company and operating subsidiaries
borrowed A$2.2 million as follows: Parmac (A$0.7 million), GED (A$0.5 million) and BlueNRGY Group Limited (A$1.0 million). In
the year ended June 30, 2014, A$14.1 million of borrowings were from the issuance of bonds in the United Kingdom by (our then-subsidiaries)
Secured Energy Bonds Plc and Energy Bonds plc, A$2.1 million from a working capital loan facility and A$1.1 million from the issuance
of secured notes at the Group level. 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 notes, from the proceeds of the sale of our CapTech subsidiary, 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), before giving effect to any share price adjustment from
the 1-for-80 share consolidation that we effected in December 2016 (22,625 ordinary shares at a price of US$32.00 per share after
giving effect to the consolidation). 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.





66







Indebtedness



BlueNRGY
Group Limited (parent company)



As
a result of the Reorganization Plans, we emerged from VA in January 2015 with no outstanding debt at the level of our parent company.
Subsequent to our emergence from VA we have obtained corporate debt financing of A$3.4 million from shareholders and affiliates
of our Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”) and Item 8.B.
under the heading “(b) Financing”. A$2.7 million of the debt is convertible into parent company Ordinary
Shares at a price of US$3.028 per share. The debt at our parent company level all has a maturity date of October 30, 2017 and
is classified as non-current liabilities in the Statement of Financial Position. Interest is charged at rates ranging from 6.0%
- 15.0% per annum on the outstanding balances until the loans are repaid. As further described below, as of October 20, 2016,
three of our subsidiaries, Parmac, GED and BlueNRGY LLC have obligations that are non-recourse to our Parent Company under separate
secured credit facilities or deferred payment plans with trade creditors or both and, in the case of Parmac, finance leases undertaken
for the purchase of motor vehicles, equipment and machinery as further described below.



Parmac



Working
Capital Facility - secured: In April 2015 one of our subsidiaries, Parmac, secured a line of credit with an affiliate of our
Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”), for up to US$0.5 million,
referred to as the Second Parmac Liquidity Facility, against which Parmac has drawn the maximum amount of funds available to meet
its working capital needs. The Second Parmac Liquidity Facility has a maturity date of October 30, 2017 and we have an obligation,
that we intend to honor in due course to secure this facility with a second lien on all of the assets of Parmac except statutory
liens and liens under finance leases, Interest is charged at 24.0% per annum on the outstanding balance until the loan is repaid.



Working
Capital Facility - unsecured: In March 2016 one of our subsidiaries, Parmac, secured a line of credit with an affiliate of
our Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”), for up to US$1.5
million, referred to as the Parmac Liquidity Facility, against which Parmac has drawn the maximum amount of funds available to
meet its working capital needs. The unsecured Liquidity Facility has a maturity date of October 30, 2017. Interest is charged
at 10.0% per annum on the outstanding balance until the loan is repaid. The foregoing summary of the Parmac Liquidity
Facility is qualified in its entirety by the terms of the Facility, a copy of which is filed as an Exhibit hereto.





Deferred
Trade Obligations (unsecured):As of October 20, 2016, Parmac had outstanding A$0.2 million of significantly overdue trade
accounts payable. These deferred payables are being paid down on an informal deferred payment arrangement. Our direct trade creditors
with deferred payment balances are cooperating to defer payments until we can arrange other financing or generate sufficient operating
cash flows to pay the outstanding balances. However, there is no assurance that their cooperation will continue and we could be
faced, without notice, with immediate payment obligations that we cannot meet. In aggregate, Parmac maintained a positive working
capital balance as of October 20, 2016 after giving effect to the Parmac Liquidity Facility.



Finance
Leases (secured):We have obligations under various financing leases for equipment and motor vehicles aggregating A$0.2 million
as of October 20 2016. 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, 2016 A$0.1 million of the financing leases were recorded as current obligations and the remaining A$0.1 million finance
lease balance was classified as non-current.



Redeemable
Preference Shares (unsecured):On effectiveness of the Reorganization Plans, Parmac issued 2,200,000 US$1.00 non-voting, redeemable
preference shares (“RPS”). The Parmac RPS are convertible into our parent company Ordinary Shares in whole or in part
at any time after June 30, 2015 at a price of US$3.028 per share and are restricted to the extent that such conversion would result
in any holder having more than 20% of the outstanding ordinary shares in the Company. During our 2016 fiscal year, we negotiated
an amendment to the terms of the RPS whereby the following rights attached to the RPS were removed: the right to receive an annual
dividend of 4% per annum payable on December 31 each year; the right of the holder of the RPS to, at its discretion, force redemption
through the sale of Parmac if the RPS have not been converted or redeemed by December 31, 2017. The RPS were classified as a liability
on the Statement of Financial Position at June 30, 2015 on the basis that there could be an obligation for Parmac to deliver either
cash or another financial asset to the holder at some point in the future. At June 30, 2016 the RPS, following the amendment to
their terms, have been reclassified to equity in the Statement of Financial Position as there is clearly no longer an obligation
for Parmac to deliver either cash or another financial asset to the holder at any point in the future. The face value of the Parmac
RPS at October 20, 2016 is US$2,200,000.



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 June 30, 2016,
the Company had drawn the maximum amount available under the GED Liquidity Facility. The Liquidity Facility is repayable within
10 days of a repayment demand. No demand for repayment has been made at the date of this report. The interest rate applicable
to funds drawn under the Liquidity Facility is 6.00 percent per annum calculated on any drawn amounts. The GED Liquidity Facility
is secured by a first lien on the assets of GED.



Deferred
Trade Obligations (unsecured):As of September 14, 2016, our GED subsidiary had past due balances with a number of large trade
creditors who were collectively owed US$0.3 million. We entered into deferred payment arrangements, referred to as Payment Plan
Agreements, with these trade creditors whereby GED committed to make periodic payments to these creditors to satisfy the indebtedness.
Interest ranging between 0% and 4% per annum is payable on the Payment Plan Agreements. As of October 20, 2016 the Payment Plan
Agreements balance had been reduced to US$0.3 million but GED was behind in meeting the periodic payment obligations thereunder
and has not been able to resume payments. Consequently, some creditors have been granted judgments for the past-due payment plan
amounts but are forbearing on collection actions. There can be no assurance that the affected creditors will continue to forbear
in the collections of amounts owed by GED.



BlueNRGY
LLC



Deferred
Trade Obligations (unsecured):As of October 20, 2016, our BlueNRGY LLC subsidiary had past due balances with a number of
trade creditors who were collectively owed US$0.3 million. We have entered into deferred payment arrangements with a number of
these creditors and are in discussions with the largest creditor to settle the balance owing through the issuance of our shares.





67







Chatham
Island Wind Limited (CIWL)



Redeemable
Preference Shares (unsecured):On execution of the Reorganization Plans, CIWL issued 1,400,000 RPS. The RPS are convertible
in into parent company Ordinary Shares whole or in part at any time after June 30, 2015 at a price of US$3.028 per share and are
restricted to the extent that such conversion would result in any holder having more than 20% of the outstanding ordinary shares
in the Company; provided however, if the CIWL contract with CIEL is terminated, the CIWL RPS cannot be converted. The CIWL RPS
receive an annual dividend of 4% per annum payable on December 31 each year. If dividends cannot be paid in cash, further RPS
will be issued to satisfy the dividend amount. RPS are redeemable by CIWL, in whole or in part, at our sole election. The holder
of the RPS may, at its discretion, force redemption through the sale of CIWL if the RPS have not been converted or redeemed by
December 31, 2017. The RPS are classified as a liability on the Statement of Financial Position as there could exist an obligation
for CIWL to deliver either cash or another financial asset to the holder at some point in the future. The face value of the CIWL
RPS at October 20, 2016 is US$1,200,000.



Draker
Corp



Term
loan – secured: As part of the Draker Transaction (refer Item 4.A under the heading “Recent Acquisitions”)
we assumed the Seller’s secured indebtedness to the Vermont Economic Development Authority (“VEDA”) amounting
to approximately US$0.2 million. The Term Loan is secured by all the assets of Draker. Interest is payable on this loan at 2%
per annum. The loan amortizes on a straight line basis and matures on November 7, 2018. An amount of A$77,000 (US$58,000) is classified
as a current liability with the balance of A$100,000 (US$73,000) classified as a non-current liability on the Statement of Financial
Position.



Working
Capital Facility - unsecured: In March 2016 Draker, secured a line of credit with an affiliate of our Managing Director (refer
to Item 7.B. under the heading “Related Party Transactions”), for up to US$1.5 million, referred to as the
Draker Liquidity Facility, against which Draker has drawn the maximum amount of funds available to meet its working capital needs.
The unsecured Liquidity Facility has a maturity date of October 30, 2017. Interest is charged at 10.0% per annum on the outstanding
balance until the loan is repaid. We have an obligation, that we intend to honor in due course, to secure this facility with a
second lien on all of the assets of Draker except statutory liens and liens under finance leases.The foregoing summary
of the Draker Liquidity Facility is qualified in its entirety by the terms of the Facility, a copy of which is filed as an Exhibit
hereto.





5.C.            
Research and Development



For
our fiscal years 2014-2016 we did not conduct research and development.



5.D.            
Trend Information



Other
than as disclosed elsewhere in this Report, we are not aware of any trends affecting our businesses. Refer to Item 4.B. under
the heading “Our Industry”.



5.E.
             Off-Balance Sheet Arrangements



Except
for amounts due under operating lease commitments disclosed below in Section F of this Item 5 we do not have any material off-balance
sheet commitments or arrangements.





68







5.F.	             Tabular
Disclosure of Contractual Obligations



As
of September 30, 2016 our contractual, obligations, excluding trade creditors, were as set forth below:



|                          |  | Payments Due By Period
|------------------------- |  | ----------------------
|(Amount in A$ 000)        |  | Total                 
|                          |  |                       
|Obligations under:        |  |                       
|Operating leases          |  |                       
|Financing leases          |  |                       
|Borrowings and interest * |  |                       
|                          |  |                       



*
Excludes Redeemable Preference Shares as at September 15, 2016 there is no cash obligation associated with them.



ITEM
6.      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



6.A.
            Directors and Senior Management



The
following table presents our directors, executive officers and key employees as of the date of this Report.



|Name                    |  | Age |    | Position
|----------------------- |  | --- | -- | --------
|Executive Officers      |  |     |    |         
|William Morro           |  |     | 62 |         
|Richard Pillinger       |  |     | 42 |         
|Emmanuel Cotrel         |  |     | 35 |         
|Peter Maros             |  |     | 29 |         
|Non-Executive Directors |  |     |    |         
|Carlo Botto             |  |     | 55 |         
|Yves-Regis Cotrel       |  |     | 63 |         
|Olivier Ferrari         |  |     | 55 |         





69







Executive
Officers



William
Morro. Mr. Morro was appointed to our Board in February 2014 and has served continuously in that capacity since then except
for a brief interruption during the VA process when the Administrator assumed all governance responsibilities. Mr. Morro was appointed
our Managing Director and Chairman on February 9, 2015. Mr. Morro is also a Managing Partner of the InterAmerican Group, a U.S.
investment and advisory firm focused primarily on middle-market businesses with cross-border operations in North America and/or
Latin America. He also currently serves as a member of the board of directors of ESOL B.V. and certain of its affiliates (together
“ESOL”) and on the boards of supervisors / directors of certain investee companies of ESOL, including two banks, JSC
“Capital Bank” of Georgia and InterMarket Bank of Zambia. Mr. Morro also serves as Chairman of the Board of CNC Development
Limited, a company with interests in the civil infrastructure sector in China, Prior to joining InterAmerican in 2001, Mr. Morro
headed private equity business units for BMO Group and Heller Financial and was a Principal and shareholder of the international
management consulting firm, Cresap, McCormick & Paget until shortly after its acquisition by Towers, Perrin. He holds an undergraduate
degree from Dartmouth College and a Masters degree from the Kellogg Graduate School of Management at Northwestern University.
Mr. Morro has three decades of senior executive and board experience with more than 20 companies, both public and private, in
which he has been a direct investor.



Richard
Pillinger. Mr. Pillinger is our Chief Financial Officer, having been appointed to this role in October 2011, and also
served as our Corporate Secretary since May 2010. Immediately prior to joining the Company, Mr. Pillinger held positions with
a number of WHSP affiliates, including portfolio Chief Financial Officer for Pitt Capital Partners Limited, BKI Investment Company
and Souls Private Equity Limited and Chief Executive Officer of Corporate and Administrative Services Pty Ltd. WHSP is currently
our second largest shareholder. Mr. Pillinger’s previous roles within other ASX listed companies include Group Finance Manager
and Commercial Manager for Volante Group Limited and Commander Communications Limited, respectively. Mr. Pillinger has significant
international business experience, having worked in accounting audit and advisory positions in London before relocating to Australia.
Mr. Pillinger is a Fellow of the Institute of Chartered Accountants England & Wales and has a Bachelor of Science Degree from
the University of Nottingham.



Emmanuel
Cotrel. Since January 27, 2015, Emmanuel Cotrel has been a Senior Vice President and responsible for strategy and corporate
development as well as serving as the senior executive officer of BlueNRGY LLC, our Monitoring and Performance Analytics business
until its operations were consolidated into those of Draker Corp. Mr. Cotrel founded BlueNRGY LLC in 2012 and prior to that he
was a co-founder and principal of an investment fund, L14 FCP SIF, affiliated with the Edmond de Rothschild Bank; the fund targeted
investments in or acquisition of renewable energy infrastructure projects across Europe, specifically wind and solar power generation
systems. Before co-founding BlueNRGY and L14, Mr. Cotrel was a co-founder of SeaMobile, Inc. (USA), currently an industry leader
in global maritime telecommunications where he was active in acquisitions and other development matters until 2006. Prior to his
involvement with SeaMobile, Mr. Cotrel worked in the International Private Banking division at HSBC Private Bank in New York.
He is an active member of the US-based Cotrel Spinal Research Foundation and the France-based Yves Cotrel Foundation affiliated
with the Institut de France. Mr. Cotrel graduated from IMIP MBA Institute (INSEEC business school in Paris, France) in 2004.



Peter
J. Maros. Since September 1, 2015, Mr. Maros has been a Senior Vice President and responsible for our Solar PV Design
and Installation business in North America. In this capacity he also serves as the senior executive officer of GED. Prior to joining
the Company, Mr. Maros was Executive Director of Shoals Technologies Group, a leading U.S. supplier of balance-of-system components
for solar PV systems. Before that he co-founded the renewables group for Future Energy Solutions, a leading global distributor
of electronics, including components for solar installations and served as the Renewable Energy Director. Previously he worked
in investment banking for Merrill Lynch. Mr. Maros is a graduate of the Kelly School of Business at Indiana University.



Directors



Carlo
Botto. Mr. Botto is a non-executive member of our Board. His affiliation with the Company began in 2011 when he served
as a consultant. In 2012, he was appointed Senior Vice President of Strategy & Development and continued in an executive role
until his resignation as an executive in 2014. In 2013, he was appointed as a Board member and has been a director continuously
since then, with a brief interruption during our VA process when the Administrator assumed all governance responsibilities. Mr.
Botto has extensive energy industry experience, having worked in various roles in the energy supply industry in Australia and
North America over 30 years. These roles have included senior executive positions responsible for wholesale energy trading, retail
marketing, corporate strategy, risk management and regulatory/corporate affairs. Immediately prior to joining the Company, Mr.
Botto was a senior executive with CLP (0002.HK) working in Melbourne, Australia from 2004 to 2010. Mr. Botto has a Bachelor of
Engineering (Electrical) from University of NSW and a Graduate Diploma in Engineering (Asset Management) from Monash University.





70







Yves-Regis
Cotrel. Yves-Regis Cotrel has been a non-executive member of the Board since January 27, 2015. He is the Founder and,
until his retirement in 2008, was President of Group Quietude, a real estate investment and operations firm with properties in
Europe. From 1976 through his retirement in 2000 to form Group Quietude, Mr. Cotrel held senior executive positions first with
the Sofamor Group, a world leader in manufacturing devices, equipment and biomaterials used in the treatment of spinal and cranial
disorders, and then with its successor companies through various business combinations. In this capacity he developed distribution
networks in more than 20 countries in Europe, the Middle East and Asia. Successor businesses to Sofamor Group included the Sofamor-Danek
Group, which was formed through business combination with Danek USA and then Medtronic (NYSE: MDT) which merged with Sofamor-
Danek Group in 1999. Mr. Cotrel holds a MSc in Management from IAE Lille and a Bachelor of Law degree from L’Ecole de Notariat
de Paris.



Olivier
Ferrari.Olivier Ferrari has been a non-executive member of the Board since May 10, 2016. He has a wide variety of experience
in asset, institutional, private, philanthropic and sustainable development management, and also in real estate and trusteeship.
In 1990, he founded CONINCO Explorers in finance SA, of which he is currently the CEO, a company specialised in consulting services
for institutional investors, asset valuation and responsible finance. He has set up several sustainable investment solutions including
ONE CREATION, a cooperative company delivering comprehensive support to listed and non-listed companies active in the CleanTech
industry, and the ONE Sustainable Fund-Global Environment, a global equity fund investing in listed companies with a positive
impact on the environment.



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, 2016.



|                                                                                      |  | Short-term Benefits |           | Post-employment benefits |  | Value of Share-based Payments |   |       
|------------------------------------------------------------------------------------- |  | ------------------- | --------- | ------------------------ |  | ----------------------------- | - | ------
|Amounts in A$                                                                         |  | Salary and Fees     |           | Other                    |  | Superannuation                |   | Shares
|Carlo Botto - Non-Executive Director 1                                                |  |                     | 94,017    |                          |  |                               | — |       
|William Morro - Executive Chairman and Managing Director 1                            |  |                     | 470,085   |                          |  |                               | — |       
|Yves-Regis Cotrel - Non-Executive Director 1                                          |  |                     | 94,017    |                          |  |                               | — |       
|Olivier Ferrari - Non-Executive Director 2                                            |  |                     | 15,670    |                          |  |                               | — |       
|John Donohue - Non-Executive Director 3                                               |  |                     | —         |                          |  |                               | — |       
|Emmanuel Cotrel - Senior Vice President Monitoring and Data Analytics Business 1      |  |                     | 335,775   |                          |  |                               | — |       
|Richard Pillinger - Chief Financial Officer                                           |  |                     | 250,000   |                          |  |                               | — |       
|Peter Maros - Senior Vice President & Managing Director of U.S. Renewable Solutions 4 |  |                     | 223,850   |                          |  |                               | — |       
|TOTAL                                                                                 |  |                     | 1,483,414 |                          |  |                               | — |       



1Salary amount includes accrued compensation that has been deferred and was not paid in our 2016 fiscal year.

2Appointed May 10, 2016

3Resigned July 31, 2015. Mr Donohue did not receive any directors’ fees for the period of his tenure.

4Appointed September 1, 2015



The
following table sets forth all of the compensation awarded to, earned by or paid to each individual who served as directors and
executive officers in the fiscal year ended June 30, 2015.



71







|                                                                                   |  | 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 (until
    November 14, 2015) (i)                |  |                     | 275,013   |                                   |  |                                    | —     |       
|Todd Barlow – Director (ii)                                                        |  |                     | —         |                                   |  |                                    | —     |       
|William Morro – Director; CEO from January 28,
    2015 (iii)                      |  |                     | 189,999   |                                   |  |                                    | —     |       
|Carlo Botto - Director (iv)                                                        |  |                     | 34,390    |                                   |  |                                    | —     |       
|Luisa Ingargiola - Director (xi)                                                   |  |                     | —         |                                   |  |                                    | —     |       
|John Chapple - Director (v)                                                        |  |                     | —         |                                   |  |                                    | —     |       
|John Donohue - Director (vi)                                                       |  |                     | —         |                                   |  |                                    | —     |       
|Yves-Regis Cotrel - Director (vii)                                                 |  |                     | 38,000    |                                   |  |                                    | —     |       
|Richard Pillinger - Chief Financial Officer                                        |  |                     | 246,975   |                                   |  |                                    | —     |       
|Emmanuel Cotrel - Senior Vice President - Data Analytics
    and Monitoring (viii) |  |                     | 147,878   |                                   |  |                                    | —     |       
|Patrick Lennon - Senior Vice President, Wind and Off
    Grid Solutions (ix)       |  |                     | 172,694   |                                   |  |                                    | 5,762 |       
|James Greer - CEO of International Operations (x)                                  |  |                     | 114,035   |                                   |  |                                    | —     |       
|Jeffrey Tischler - Chief Financial Officer (xii)                                   |  |                     | 20,402    |                                   |  |                                    | —     |       
|Donald Reed - CEO - Green Earth Developers                                         |  |                     | 292,813   |                                   |  |                                    | —     |       
|Total                                                                              |  |                     | 1,532,199 |                                   |  |                                    | 5,762 |       





|i.    |  | Voluntary leave of absence as of October 23, 2014, suspended
    as of November 14, 2015 and subsequently terminated as Managing Director by the Administrator; resigned as a director effective
    December 30, 2015.                                                                                                        
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii.   |  | Resigned effective July 18, 2014.                                                                                                                                                                                                                                                                                              
|iii.  |  | Stood down effective November 14, 2014 pursuant to the VA process; reinstated
    as a director effective January 27, 2015; appointed as Managing Director and Chairman of the Board effective February, 2015;
    salary amount includes accrued compensation that has been deferred and was not paid in our 2015 fiscal year.
|iv.   |  | Stood down effective November 14, 2015 pursuant to the VA process; reinstated
    as a director on January 27, 2015. Salary amount includes accrued compensation that has been deferred and was not paid in
    our 2015 fiscal year.                                                                                          
|v.    |  | Director February 2 to June 16, 2015. Mr. Chapple did not receive any
    Director fees for the period of his tenure.                                                                                                                                                                                                          
|vi.   |  | Director January 27 to July 31, 2015. Mr. Donohue did not receive any
    Director fees for the period of his tenure.                                                                                                                                                                                                          
|vii.  |  | Director since January 27, 2015. Salary amount includes accrued compensation
    that has been deferred and was not paid in our 2015 fiscal year.                                                                                                                                                                              
|viii. |  | Executive since January 27, 2015. Salary amount includes accrued compensation
    that has been deferred and was not paid in our 2015 fiscal year.                                                                                                                                                                             
|ix.   |  | Terminated January 27, 2015.                                                                                                                                                                                                                                                                                                   
|x.    |  | Terminated December 1, 2014.                                                                                                                                                                                                                                                                                                   
|xi.   |  | Appointed August 5, 2014, resigned October 23, 2014. Ms. Ingargiola did
    not receive any Director fees for the period of her tenure.                                                                                                                                                                                        
|xii.  |  | Appointed October 4, 2014, resigned November 12, 2014.                                                                                                                                                                                                                                                                         





72







Remuneration
Policy



All
key executives are eligible to receive a base salary, post-employment benefits (including superannuation), fringe benefits (including
provision of a motor vehicle or the payment of a car allowance where necessary) and performance incentives, including equity-linked
compensation. Performance incentives are generally only paid once predetermined key performance indicators have been met. Our
executives and members of our Board based in Australia receive a superannuation guarantee contribution required by the government,
which is currently 9.25% of base salary, and do not receive any other retirement benefits. Some individuals, however, have chosen
to allocate part of their annual compensation to increase payments towards superannuation.



The
employment terms and conditions for our executives and directors have historically been formalized in contracts of employment
or service contracts. This has not typically been the case subsequent to the effectiveness of our Reorganization Plans, however,
we expect to put in place formalized agreements with our key managers following reconstitution of our Board Compensation Committee.
In those cases, where employment agreements are applicable, termination payments are not payable upon resignation or under the
circumstances of unsatisfactory performance.



The
remuneration of directors and key executives is determined by the Compensation Committee or the full Board. It is our objective
to review and adjust executive compensation and performance incentives on an annual basis, however, this was not achieved during
our 2015 fiscal year or subsequently following the effectiveness of our Reorganization Plans. The Board’s policy is to remunerate
non-executive directors at market rates for time, commitment and responsibilities. All remuneration paid to key management personnel
is valued at the cost to the company and expensed.



Executive
Employment Arrangements / Service Agreements



The
following key executives have service agreements as follows:



William
Morrois employed by BlueNRGY Group Limited as a permanent, full-time employee. Mr. Morro was appointed as Managing Director
of the Company effective January 27, 2015 with a base salary of US$350,000 per annum. He has a notice period of 3 months. The
contract provides for bonus payments of up to 100% of base compensation, subject to meeting targets set by the board.



Richard
Pillingeris employed by BlueNRGY Group Limited as a permanent, full-time employee. Mr. Pillinger commenced his position with
us in October 2011, with a base salary of A$272,500, inclusive of superannuation. He has a notice period of 3 months. The contract
provides for a bonus upon meeting defined performance objectives mutually established by the executive and the Managing Director.



Emmanuel
Cotrelis employed by BlueNRGY LLC as a permanent, full-time employee pursuant to an employment agreement that commenced June
14, 2014. Under his agreement, Mr. Cotrel is an at-will employee, however, if employment is terminated without cause, Mr. Cotrel
would be entitled to six months of severance at his base salary. Base salary under the contract is US$250,000 subject to a 6-month
severance, which severance is increased to 12 months if the employer requires compliance with non-compete provisions of the contract
which extend for a 12-month period. The contract provides for bonus payments of up to 100% of base compensation, subject to meeting
targets set by the board.



Peter
Marosis employed by BlueNRGY Group Limited as a permanent, full-time employee pursuant to an employment agreement that commenced
September 1, 2015. Under his agreement, Mr. Maros is an at-will employee. Base salary under the contract is US$200,000 The contract
provides for bonus payments of up to 100% of base compensation, subject to meeting targets set by the board.



Employee
Equity Plan



On
May 8, 2014, the Board adopted the 2014 Equity Plan that will serve as our primary employee share incentive plan. We have reserved
400,000 ordinary shares for issuance under the 2014 Equity Plan. The number of ordinary shares reserved under the 2014 Equity
Plan is subject to adjustment in the event of a share split, share dividend or other change in our capitalization. Any other increase
in the number of ordinary shares reserved under the 2014 Equity Plan must be approved by the Board and shareholders. If an outstanding
award for any reason expires or is terminated or cancelled without having been exercised or settled in full, or if the ordinary
shares acquired pursuant to an award that are subject to forfeiture are forfeited without cost by the company, the ordinary shares
allocable to the terminated portion of such awards or such forfeited ordinary shares shall again be available for issuance under
the 2014 Equity Plan.



As
long as we are a publicly held corporation within the meaning of Section 162(m) of the Code, no individual may be granted awards
under our 2014 Equity Plan of more than 50,000 of our ordinary shares in any full fiscal year of the Company and for our fiscal
year ending June 2014, no individual may be granted awards having a value of more than $200,000 at the time of grant.



The
2014 Equity Plan will be administered by the Compensation Committee of the Board. The Compensation Committee will have full power
to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination
of awards, and to determine the specific terms and conditions of each award, subject to the provisions of the 2014 Equity Plan.



The
following types of awards may be granted under the 2014 Equity Plan:



Share
Options.A share option is a right to acquire our ordinary shares. The Compensation Committee may grant non-qualified share
options or “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”). Incentive stock options only may be granted to our employees. If a share option intended to qualify
as an incentive stock option does not so qualify it will be treated as a non-qualified share option.



73







The
Compensation Committee will determine the terms of each share option. The exercise price of each share option may not be less
than the fair market value of our ordinary shares on the date of grant. The term of each share option will be fixed by the Compensation
Committee and may not exceed 10 years from the date of grant. Share options may vest and become exercisable upon continued service
to the company or upon the achievement of certain performance criteria. The Compensation Committee will determine when each option
may be exercised and other conditions applicable to the share option.



Share
Appreciation Rights.A share appreciation right (SAR) is an award based upon a specified number of our ordinary shares that
entitles the participant to receive a payment equal to the excess of the fair market value of our ordinary shares when the SAR
is exercised over the exercise price of the SAR. The exercise price for each SAR will be determined by the Compensation Committee
but may not be less than the fair market value of our ordinary shares on the date of grant. SARs may vest and become exercisable
upon continued service to the company or upon the achievement of certain performance criteria. The Compensation Committee will
determine when each SAR may be exercised, any other conditions applicable to it, and whether it will be settled in cash or our
ordinary shares.



Restricted
Share Awards.A restricted share award entitles the participant to subscribe for our ordinary shares, upon payment of no less
than their nominal value, but the ordinary shares are subject to restrictions, which may include restrictions on transfer or forfeiture
provisions. The Compensation Committee will determine whether such restrictions will lapse upon continued service to the company
or upon the achievement of certain performance factors, and any other conditions applicable to the restricted shares.



Restricted
Share Units.A restricted share unit represents the right to acquire one ordinary share on a specified date, subject to such
conditions and restrictions as the Compensation Committee may determine, including continued service to the company or service
with us through a specified vesting period or the attainment of certain performance criteria.



Performance
Awards.Performance awards may be granted in the form of performance shares or performance units. A performance award is an
award of a cash payment or an award denominated in our ordinary shares that is subject to the achievement of certain performance
criteria. Our Compensation Committee will determine the performance criteria and any other conditions applicable to the award,
and whether the award will be settled in cash or in our ordinary shares. For participants in the United States, the performance
awards are intended to qualify as “performance-based remuneration” under Section 162(m) of the Code.



Other
Share Awards. In addition to the awards described above, the Compensation Committee may carry out the purpose of the 2014
Equity Plan by awarding share-based awards as it determines to be in the best interests of the company and subject to such other
terms and conditions as it deems necessary and appropriate.



Awards
lapse upon the participant ceasing to be employed or engaged by us, with the exception that share options and share appreciation
rights, to the extent vested and exercisable, may be exercised during a limited period of time after the participant leaves.



Awards
granted under our 2014 Equity Plan may not be transferred in any manner other than by will or by the laws of descent and distribution,
or as determined by our Compensation Committee.



The
Compensation Committee may award dividend equivalent rights in respect of awards made under the 2014 Equity Plan, other than share
options and share appreciation rights, but rights granted in respect of an award that is subject to vesting conditions will be
subject to those vesting conditions.



Our
Compensation Committee may not, without shareholder approval, re-price our outstanding share options or share appreciation rights.



In
the event of a change in control of the Company, the outstanding awards may be treated as described below. For share options and
share appreciation rights, the Compensation Committee may provide in any award agreement or, in the event of a change in control,
may take such actions as it deems appropriate to provide for the acceleration of the vesting and exercisability of the share option
or share appreciation rights in connection with the change in control. In addition, the surviving, continuing, successor, or purchasing
corporation, as the case may be (the “Acquiring Corporation”), may, without the consent of the participant, either
assume the company’s rights and obligations under the outstanding share options and share appreciation rights and substitute
for the outstanding share options and share appreciation rights substantially equivalent share options or share appreciation rights
for the Acquiring Corporation’s shares. Any share options or share appreciation rights which are neither assumed or substituted
for by the Acquiring Corporation in connection with the change in control nor exercised as of the date of the change in control
shall terminate as of the date of the change in control.



With
regard to awards other than share options and share appreciation rights, the Compensation Committee may provide in any award agreement
or, in the event of a change in control, may take such actions as it deems appropriate to provide for the acceleration or waiver
of any applicable vesting condition, restriction period or performance criteria applicable to the award held by participant, whose
service to the Company has not terminated prior to the change in control, effective immediately prior to the consummation of the
change in control; provided, however, that such acceleration or waiver shall not occur to the extent such award is assumed or
substituted with a substantially equivalent award by the Acquiring Corporation in connection with the change in control.



Our
Board may suspend, amend or terminate the 2014 Equity Plan and our Compensation Committee may amend or cancel outstanding awards
for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an
award without the participant’s consent. Certain amendments to the 2014 Equity Plan may require the approval of our shareholders.



We
anticipate that our 2014 Equity Plan will terminate ten years from the date our shareholders approve our 2014 Plan, unless earlier
terminated by our Board as described above.



6.C.            
Board Practices



Independence



The
Company defines director independence in accordance with the NASDAQ Listing Rules. The NASDAQ Listing Rules in turn allow the
Company, as a foreign private issuer, to follow its home country practice in lieu of the requirements of the NASDAQ Listing Rules.



In
Australia there are no mandatory corporate governance structures and practices that must be observed by any company. The ASX Corporate
Governance Council (the “Council”) publishes the Corporate Governance Principles and Recommendations (the “Guidelines”)
for those companies listed on the ASX. The Guidelines contain recommendations of eight core principles which are intended to be
a reference point for companies in respect of corporate governance structures and practices. While it is not mandatory to follow
the recommendations, companies listed on the ASX are required to disclose to shareholders in their annual report the extent to
which the company has followed the recommendations and, if the recommendations have not been followed, the reasons for not following
them.



74







As
the Company is not listed on the ASX, this Report does not contain the corporate governance statement required by the Guidelines
disclosing the extent to which the Company has followed each recommendation set by the Council. Rather, this Report only contains
references to the recommendations the Company considered when setting its corporate governance policies.



Under
the Guidelines, if an executive has been an executive of a Company within the last three years, it is a factor that indicates
such person is not independent. However, the Guidelines also give the Board express latitude to assess the relationship of each
Board member to the Company and to make a determination about whether such Board member is independent, most notably in respect
of audit committee service.



Mr.
Botto was an employee of the Company during 2013 and 2014 and, as a consequence, the Board deemed it necessary to make a determination
about Mr. Botto’s independence. In doing so, the Board has assessed Mr. Botto’s relationship with the Company and
determined him to be independent, having considered that:



| | ● | Executive management in place during Mr. Botto’s tenure as an employee is no longer associated with the Company.                                                                                                             
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                              
| | ● | Much of Mr. Botto’s activity was related to the Company’s Wind Development business, which has been discontinued.                                                                                                            
| |   |                                                                                                                                                                                                                              
| | ● | Mr. Botto’s role during 2013 and 2014 was not full time and was a functional one involving objective assessment of industry and competitive dynamics; he had no association with preparation of Company financial statements.
| |   |                                                                                                                                                                                                                              
| | ● | Historical and contractual ties between the Company and material vendors that originated during Mr. Botto’s executive tenure were terminated as a result of the VA.                                                          
| |   |                                                                                                                                                                                                                              
| | ● | Mr. Botto has no identifiable vested interests in Company affairs that would affect his independence.                                                                                                                        



Audit
Committee



On
February 9, 2015, Mr. Donohue and Mr. Botto were appointed to the Audit Committee, Mr. Morro resigned as a member of the Audit
Committee, and Mr. Donohue was appointed as the Audit Committee Chairman. However, due to Mr. Donohue’s resignation from
the Board on July 31, 2015, Mr. Botto is the only member of the Audit Committee as of the date of this Report.



Compensation
Committee



On
February 9, 2015, Mr. Donohue were appointed to the Compensation Committee and Mr. Morro resigned as a member of the Compensation
Committee. However, Mr. Donohue resigned from the Board on July 31, 2015. Until replacement members of the Committee can be appointed,
matters previously delegated to the Compensation Committee are being considered by the full Board.



6.D.            
Employees



As
of October 20, 2016, we employed approximately 88 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 October 20, 2016 per division is:



|                                     |  | Number of employees
|------------------------------------ |  | -------------------
|                                     |  | as of June 30,     
|Business Segment                     |  | 2016               
|                                     |  |                    
|Head office                          |  |                    
|Solar PV                             |  |                    
|Parmac                               |  |                    
|Monitoring & Performance Analytics * |  |                    
|Large-scale wind                     |  |                    
|CapTech                              |  |                    
|Total                                |  |                    



*
Includes O&M Services



Of
our 88 employees as of October 20, 2016, 52 were located in Australia and 36 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 25 employees of Parmac, our employees are not represented by labor unions or covered by collective bargaining
agreements



75







6.E.             
Share Ownership



Beneficial
Ownership (including Executive 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 October 20, 2016
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 |           | Percentage (2)
|Washington H. Soul Pattinson & Company Limited (3)                                                                                                                                          |  |        |           |               
|ESOL B.V. (4)                                                                                                                                                                               |  |        | 1,028,674 |               
|Alpha Capital Anstalt (5)                                                                                                                                                                   |  |        | 528,403   |               
|                                                                                                                                                                                            |  |        | 455,999   |               
|Directors and Executive Officers                                                                                                                                                            |  |        |           |               
|Mr. Carlo Botto (6)                                                                                                                                                                         |  |        | 19,691    |               
|Mr. William Morro (7)                                                                                                                                                                       |  |        | 355,825   |               
|Mr. Yves-Regis Cotrel (8)(9)                                                                                                                                                                |  |        | 806,980   |               
|Mr. Richard Pillinger                                                                                                                                                                       |  |        | 62,500    |               
|Mr. Emmanuel Cotrel (8)                                                                                                                                                                     |  |        | 445,987   |               
|                                                                                                                                                                                            |  |        |           |               
|Executive officer (as defined by Rule 3b-7 of the Securities and Exchange Act of 1934) and directors as a group (5 persons, including the executive officer and directors named above) (10) |  |        | 1,559,133 |               



| | (1)  | Unless otherwise indicated, the address for each of the shareholders is c/o BlueNRGY Group Limited, 32 Martin Place, 11th Floor Sydney, NSW 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)  | The
applicable percentage of ownership for each beneficial owner is based on 5,956,453 ordinary shares outstanding as of October
20, 2016. 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. Excludes non-voting preference and subsidiary preference shares owned by
WHSP and affiliates that are convertible into our ordinary shares.                                                                                                                                                                                                                                                                                                                                                                                                
| | (4)  | Address of the shareholder is c/o Zala Group LLC (U.S. Agent), 110 E. Broward Blvd Suite 1900, Fort Lauderdale, FL 33301; number of shares includes all shares owned by G. Armenta, an affiliate of shareholder. Excludes non-voting preference shares and subsidiary preference shares owned by ESOL. that are convertible into our ordinary shares.                                                                                                                                                                                                                                                   
| | (5)  | Address of the shareholder is Pradefant 7, 9490 Furstentums, Faduz, Lichtenstein                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (6)  | Includes all shares owned by Mr. Botto’s spouse, the beneficial ownership of which is disclaimed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (7)  | Includes shares owned by WHI, Inc Retirement Savings Plan Trust, of which Mr. Morro is the beneficial owner but excludes indebtedness that is convertible into our ordinary shares.                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (8)  | Includes all shares owned by Ryames Investment Company LLC (131,850 ordinary shares). Ryames Investment Company LLC is an affiliate of both Mr. Emmanuel Cotrel and Mr. Yves-Regis Cotrel.                                                                                                                                                                                                                                                                                                                                                                                                              
| | (9)  | Includes shares owned by Mr. Yves-Regis Cotrel’s spouse, the beneficial ownership of which is disclaimed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (10) | 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



Six
shareholders known to us owned beneficially more than 5% of our ordinary shares as of October 20, 2016. See Item 6.E under the
heading “Beneficial Ownership (including Executive Management and Directors)”.



As
of October 20, 2016, we estimate that 36.4% of our ordinary shares were held in the United States by 88 holders of record, and
63.6% of our ordinary shares were held in various foreign jurisdictions by 2,559 holders of record. None of the holders of our
ordinary shares has different rights from other shareholders.



7.B.            
Related Party Transactions



Other
than direct payments of compensation and reimbursement of out-of-pocket expenses incurred in the ordinary course and in accordance
with our policies, during our 2016 fiscal year and subsequently through the date of this Report, other than as disclosed below,
we have not entered into any transactions or loans between us and any (a) enterprises that directly or indirectly through one
or more intermediaries, control or are controlled by, or are under common control with us; (b) associates; (c) individuals owning,
directly or indirectly, an interest in our voting power that give them significant influence over us, and close members of any
such individual’s family; (d) our key management personnel and directors and close members of such individuals’ families;
or (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described
in (c) or (d) or over which such person is able to exercise significant influence. The value of the consideration ascribed to
these transactions, including the exchange value for our ordinary shares at the time the transactions occurred was at the amounts
agreed to by parties and approved by our Board. We believe that all of these transactions were conducted on terms substantially
equivalent to, or no less favorable to the Company, than those that would have been established for similar transactions with
non-affiliated parties.





76







During
the period from July 1, 2016 through October 20,2016:



|● | Between
July 1, 2016 and the date of this report, affiliates of our Managing Director, Mr. Morro, have made cash advances to us in the
aggregate amount of US$517,000 to pay certain of our operations expenses. The amounts advanced have not been repaid as of the
date of this Report and are included in the amounts payable under the MD Affiliate Note described in Item 8.B. under the
heading “(b) Financing”.                                                                                                                                                                               
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|● | Affiliates of William Morro, our Managing Director, acted as escrow agent, without compensation, for the collection of equity offering participations totalling US$1,113,000 in connection with purchases of our equity securities by investors who are not affiliates of Mr. Morro.                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|● | Between July 1, 2016 and the date of this Report, Mr. Morro has incurred expenses for travel and made disbursements for operating expenses incurred on our behalf. In aggregate, we have accrued an aggregate of A$42,000 for such expenses incurred by Mr. Morro thus far during our 2017 fiscal year. Through the date of this Report, we have reimbursed A$Nil to Mr. Morro for such expenses and expect to reimburse the remainder as soon as practicable, subject to completion of our internal review procedures. Amounts actually reimbursed to Mr. Morro may differ from the amounts accrued.



During
the fiscal year ended June 30, 2016:



|● | Affiliates
of our Managing Director, Mr. Morro, have made cash advances to us in the aggregate amount of US$1,265,000 to pay certain of our
operations expenses. The amounts advanced have not been repaid as of the date of this Report and were issued under the
MD Affiliate Note described in Item 8.B. under the heading “(b) Financing”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|● | In
March 2016 two of our subsidiaries, Parmac and Draker Corp, secured individual lines of credit with an affiliate of Mr Morro for
up to US$1.5 million each (US$3.0 million in aggregate). The amounts advanced have not been repaid as of the date of this Report
and are included in the amounts payable described in Item 5.B. under the heading “Indebtedness: Working
Capital Facility - unsecured”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  | On
November 30, 2015, our Managing Director, Mr. Morro, agreed to accept, and our Board unanimously approved, the issuance of our
ordinary shares, at price per share of $3.03 (after giving effect to our 1-for-80 share consolidation effected in December 2015),
in exchange for the following amounts accrued by us: (i) $148,656 , representing 100% of the compensation payable to him by the
Company from the effective date of our Reorganization Plans through June 30, 2015 plus (ii) $43,750, representing 50% of the compensation
payable to him by the Company from July 1, 2015 through September 30, 2015. Our commitments to pay the remainder of Mr. Morro’s
unpaid compensation have been documented in a separate agreement, the MD Deferred Compensation Agreement, effective November 30,
2015. Pursuant to the MD Deferred Compensation Agreement, until his deferred compensation is paid, Mr. Morro has also been granted
the right to exchange any or all of such amounts for our ordinary shares at a price per share of $3.03 (after giving effect to
our 1-for-80 share consolidation effected in December 2015). A tax-gross-up applies to compensation paid in the form of our ordinary
shares. The foregoing summary of the MD Deferred Compensation Agreement is qualified in its entirety by the terms of the agreement,
a copy of which is filed as an Exhibit hereto.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|● | Affiliates of William Morro, our Managing Director, acted as escrow agent, without compensation, for the collection of equity offering participations totalling $3,000,000 in connection with purchases of our equity securities by investors who are not affiliates of Mr. Morro.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|● | Mr. Morro has incurred expenses for travel and made disbursements for operating expenses incurred on our behalf. In aggregate, we have recorded an aggregate of A$279,761 for such expenses incurred by Mr. Morro during our 2016 fiscal year. During our 2016 fiscal year, we have reimbursed A$Nil to Mr. Morro for such expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|● | On
November 30, 2015, our Senior Vice President Emmanuel Cotrel, agreed to accept, and our Board unanimously approved, the issuance
of our ordinary shares, at price per share of $3.03 (after giving effect to our 1-for-80 share consolidation effected in December
2015), in exchange for $244,000, representing 100% of the compensation payable to him by BlueNRGY through May 31, 2015. His remaining
compensation for calendar year 2015 has been deferred and, unless previously paid by the Company may be exchanged by Mr. Cotrel
for our ordinary shares at a price per share of $3.03 (after giving effect to our 1-for-80 share consolidation effected in December
2015). Our commitments to pay the remainder of Mr. Cotrel’s unpaid compensation and his right to exchange such amount for
our ordinary shares is documented in an agreement, the EC Deferred Compensation Agreement, effective November 30, 2015. The
foregoing summary of the EC Deferred Compensation Agreement is qualified in its entirety by the terms of the agreement, a copy
of which is filed as an Exhibit hereto.                                                                                                                                                                                                                                                                                            





77







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 International Financial Reporting
Standards as issued by the International Accounting Standards Board.



See
our audited financial statements for the fiscal years ended June 30, 2016 and June 30, 2015 included under Item 18 of this annual
report.



Legal
Proceedings



In
December 2014, a class action securities suit, the First Texas Lawsuit, was filed in a federal court in the Eastern District of
Texas against the Company and various current and past officers and directors, namely Mr. William Morro, Mr. Carlo Botto, Mr.
Richard Pillinger, Mr. Todd Barlow, Mr. Gerard McGowan and Mr. James Greer, as well as various third parties. The lawsuit makes
claims related to alleged misstatements in the Company’s securities filings prior to our entry into VA in November 2014.
The lawsuit was subsequently amended to include as a defendant CBD Energy USA Limited, one of our U.S. subsidiaries. Mr. Morro,
formerly a non-executive independent director currently serves as Chairman of the Company’s Board and its Managing Director
(the Australian entity equivalent of a CEO); Mr. Botto continues as a non-executive member of the Board; and Mr. Pillinger is
the Company’s CFO. The other individuals named as parties to the lawsuit are no longer associated with the Company. This
lawsuit is still pending with respect to the former officers and directors and our U.S. subsidiary and we believe that those parties
intend to defend themselves vigorously. The DOCA had the effect of extinguishing the direct claims against the Company in this
action, however, the possibility remains that the plaintiffs will endeavor to press their claims in jurisdictions outside Australia.
It is impossible to estimate the outcome or the costs to us of such an action if it were to occur.



In
December 2014, a different lawsuit was filed in New York State Supreme Court by one of the holders of Series B Preferred Shares
against the Company and Messrs. Morro, Botto, and McGowan. This action was withdrawn without prejudice in April 2015, but prior
thereto Mr. Morro and Mr. Botto entered into a settlement with respect only to themselves in their capacity as directors that
precludes the plaintiff reasserting the suit against them except in the case that plaintiff is itself sued in connection with
losses suffered on the investment. The suit can be reasserted again at any time against Mr. McGowan or other competent officers
or directors or against us. Although the DOCA had the effect of extinguishing the claims against us in this action, the possibility
remains that the plaintiffs could endeavor to press their claims in jurisdictions outside Australia. It is impossible to estimate
the outcome or cost to us of such an action were it to occur.



In
October 2016, a second class action securities suit, the Second Texas Lawsuit, was filed in a federal court in the Eastern District
of Texas on behalf of a different plaintiff from that bringing the First Texas Lawsuit, alleging violations of different provisions
of the securities laws, but related to the same alleged misstatements of the Company shortly prior to our entry into VA in November
2014. The Second Texas Lawsuit has been brought against the Company and its subsidiary CBD Energy USA Limited, and various current
and past officers and directors, namely Mr. William Morro, Mr. Carlo Botto, Mr. Richard Pillinger, Mr. Todd Barlow and Mr. James
Greer, as well as various third parties. This lawsuit is still pending with respect to the former officers and directors and our
U.S. subsidiary and we believe that those parties intend to defend themselves vigorously. The DOCA had the effect of extinguishing
the direct claims against the Company in this action, however, the possibility remains that the plaintiffs will endeavor to press
their claims against the Company 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.



The
Chatham Island project is not currently operating due to a dispute with the counterparty to the power purchase agreement, Chatham
Islands Electricity Limited (“CIEL”) as a result of the placement of BlueNRGY Group Limited into voluntary administration
in November 2014. CIEL is seeking to terminate its power purchase agreement with BlueNRGY Group Limited’s subsidiary, Chatham
Islands Wind Ltd (“CIWL”), and acquire the assets in accordance with contractual rights that it alleges have been
triggered in the agreements between CIEL and CIWL. Under the terms of the agreements, the purchase price of the assets may possibly
be interpreted to be negative, which could result in an amount being payable by CIWL to CIEL. However, any such amounts would
be non-recourse to our parent company and CIWL has no assets other than those of the Chatham Islands wind project. The outcome
of the dispute cannot be determined at this time, and a liability has not been recognised in our financial statements in relation
to the dispute.



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, 2016 on the dates indicated:



(a)
Transactions



The
Company subscribed to €3.25 million of preferred shares (‘Preferred Shares’) of Inaccess Holdings Ltd (‘IHL’)
on July 7, 2016. IHL is a UK company that provides hardware and software systems for monitoring and controlling the performance
of distributed renewable energy and telecom facilities worldwide. As a result of our election not to exercise a withdrawal right
that expired on September 15, 2016, we are committed to purchase all of the remaining equity of Inaccess that we do not own in
two tranches scheduled to close in January and July 2017. The foregoing summary of the Inaccess Transaction is qualified in its
entirety by the subscription and share purchase agreements related thereto that are filed as Exhibits to this report on Form 20-F.



(b)
Financing



During
our reorganization process and subsequent to the effectiveness of the Reorganization Plans, affiliates of William Morro, our Managing
Director, have made cash advances to us to fund our operations (refer to Item 7.B. under the heading “Related Party Transactions”).
Effective November 30, 2015, with the unanimous approval of our Board, we entered into an agreement, referred to as the 2015 MD
Affiliate Note, that set forth the terms for such advances and, subject to further Board approval, future advances from Mr. Morro
and his affiliates. The MD Affiliate Note established an outside repayment date for the funds advanced of July 30, 2016, sets
the rate of interest at 15% per annum from the date of any advance through the repayment date, provides for the Company to repay
any or all of the outstanding principal at any time and, until repaid by the Company, grants our Managing Director the right to
exchange any or all of the outstanding amounts payable under the note for our ordinary shares at a price per share of $0.03785
($3.03 after giving effect to the 1-for-80 share consolidation that was consummated in December 2015), subject to adjustment for
share splits and consolidations. This MD Affiliate Note was subsequently replaced by another Board-approved note, referred to
as the 2016 MD Affiliate Note issued on June 30, 2016. The terms of the 2016 MD Affiliate Note differ from those of the 2015 MD
Affiliate Note only in that the maturity date is set at October 30, 2017 and the advances are capped at $2.5 million. The foregoing
summary descriptions of the MD Affiliate Notes are qualified in their entirety by the terms thereof; a copy of each such note
is filed with this Report as an Exhibit. Between July 1, 2016 and the date of this report, affiliates of our Managing Director,
Mr. Morro, have made cash advances to us in the aggregate amount of US$517,000 to pay certain of our operations expenses. The
amounts advanced have not been repaid as of the date of this Report and are included in the amounts payable under the MD Affiliate
Note.



78







(c)
Other



Not
applicable



(d)
Issuance and Repurchases of Ordinary Shares and Other Equity-Linked Securities



As
of June 30, 2016 we had outstanding 5,956,453 ordinary shares. Subsequent thereto, through the date of this Report, we issued
no additional ordinary shares.



As
of the date of this Report, we had 5,956,453 ordinary shares outstanding.

In
addition to the issued and outstanding ordinary shares our Board has approved the issuance of 104,323 additional shares as follows
and expects to issue them upon receipt of final documentation from the parties involved:



| | i.  | the
                                         exchange of approximately $124,000 of accrued liabilities for ordinary shares at an exchange
                                         price equal to $3.03 per Company ordinary share;     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                         
| | ii. | 63,399
                                         ordinary shares to be issued to 79 of our employees, some of which are expected to be
                                         issued under our 2014 Equity Plan subject to vesting; and



(e)
Entry into Other Material Definitive Agreements



Not
applicable



(f)
Board and Executive Changes



Not
applicable





79







ITEM
9.       THE OFFER AND LISTING



9.A.            	Offer
and Listing Details Australian Securities Exchange



Our
ordinary shares traded on the ASX under the symbol CBD from 1989 through January 31, 2014. We were, however, suspended from trading
on ASX on October 8, 1998. In calendar year 1999 we had nominal non-cash assets and we had nominal operations. We resumed trading
on ASX on April 18, 2000.The following table sets forth, for the periods indicated, the high and low market quotations for our
ordinary shares as quoted on the ASX.



|                     |  | Company
    Ordinary Share Closing
|-------------------- |  | ----------------------------------
|                     |  | Prices A$                         
|                     |  | High                              
|Fiscal
    Year      |  |                                   
|2010                 |  |                                   
|2011                 |  |                                   
|2012                 |  |                                   
|2013                 |  |                                   
|2014                 |  |                                   
|                     |  |                                   
|Fiscal
    Year 2013 |  |                                   
|First
    Quarter    |  |                                   
|Second
    Quarter   |  |                                   
|Third
    Quarter    |  |                                   
|Fourth
    Quarter   |  |                                   
|Fiscal
    Year 2014 |  |                                   
|First
    Quarter    |  |                                   
|Second
    Quarter   |  |                                   
|Third
    Quarter    |  |                                   





OTC
Markets



As
further described below under Item 9.C. “Markets”, our ordinary shares traded on the OTC Markets from February
10, 2014 until June 13, 2014 under the ticker symbol CBDNF and from September 9, 2015 through the date of this Report under the
ticker symbol CBDEF. The following table sets forth, for the periods indicated, the high and low market quotations for our ordinary
shares as quoted on the OTC Markets.



|CBD Ordinary Share Closing Prices US$
|-------------------------------------
|                                     
|Fiscal Year 2014                     
|Third Quarter                        
|Fourth Quarter                       
|                                     
|Fiscal Year 2016                     
|First Quarter                        
|Second Quarter                       
|Third Quarter                        
|April                                
|May                                  
|June                                 
|                                     
|Month (Fiscal Year 2017)             
|July                                 
|August                               
|September                            
|Period to October 20, 2016           





80







The
NASDAQ Capital Market



Our
ordinary shares began trading on The NASDAQ Capital Market on June 13, 2014. Trading was suspended on November 13, 2014 following
commencement of the VA process. As further described below under Item 9.C “Markets”, our shares were delisted
from the NASDAQ Capital Market effective August 3, 2015. The following table sets forth, for the periods indicated, the high and
low market closing price for our ordinary shares as quoted on The NASDAQ Capital Market.



|                      |  | CBD Ordinary Share Closing Prices
|--------------------- |  | ---------------------------------
|                      |  | US$                              
|                      |  | High                             
|Fiscal Year 2014      |  |                                  
|Fourth Quarter        |  |                                  
|                      |  |                                  
|Fiscal Year 2015      |  |                                  
|First Quarter         |  |                                  
|Second Quarter        |  |                                  
|Third Quarter         |  |                                  
|                      |  |                                  
|Month (2014 and 2015) |  |                                  
|December – August     |  |                                  





81







9.B.            
Plan of Distribution



Not
applicable.



9.C.
            Markets



Our
ordinary shares were listed on the Australian Stock Exchange, or ASX, from 1989 through January 31, 2014, when we voluntarily
delisted them in connection with our U.S. listing. Our ordinary shares traded on the OTC Markets from February 10, 2014 until
June 13, 2014 under the ticker symbol CBDNF, and began trading on The NASDAQ Capital Market on June 13, 2014 but trading was suspended
on November 13, 2014 following commencement of the VA process. Due to concerns of The NASDAQ about whether we met and continue
to meet the listing requirements, our shares were delisted from the NASDAQ Capital Market with effect from August 3, 2015. On
September 9, 2015 our ordinary shares resumed trading in the over-the-counter market (OTC Markets) under the ticker CBDEF. We
have an application pending with the NASDAQ Capital Market to relist our shares on that exchange and we are endeavoring to complete
the steps necessary to demonstrate that we have regained compliance with the applicable NASDAQ listing requirements. However,
there can be no assurance that our ordinary shares will be approved to trade on The NASDAQ Capital Market.



9.D.            
Selling Shareholders



Not
applicable.



9.E.             
Dilution



Not
applicable.



9.F.             
Expense of the Issue



Not
applicable.



ITEM
10.    ADDITIONAL INFORMATION



10.A.          
Share Capital



Not
applicable.



10.B.          
Memorandum and Articles of Association



Information
relating to our Constitution is incorporated by reference to the Registration Statement on Form F-1 (File No. 333-194780), as
filed with the SEC on March 25, 2014.



10.C.          
Material Contracts



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. None of these contracts are individually material.



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;           





82







| | ● | corporations
                                         whose directors are controlled by the person, or who control a person; and
| | - | --------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                 
| | ● | associations
                                         between trustees and substantial beneficiaries of trust estates.          



In
addition, if a foreign person acquires shares in a company having total assets of A$248 million or more (or A$1,078 million or
more in case of U.S. investors) and, as a result of that acquisition, the total holdings of all foreign persons and their associates
will exceed 40% in aggregate, seeking approval for the transaction would be advisable. It is not an offence to complete such a
transaction, however if such a transaction proceeded unapproved, the Treasurer would retain residual transaction blocking and
divestment rights if he forms the view that such a transaction is against the “national interest.” Effectively this
means that if the approval was not obtained, the Treasurer may make an order requiring the acquirer to dispose of the shares it
has acquired within a specified period of time. The same rule applies if the total holdings of all foreign persons and their associates
already exceeds 40% and a foreign person (or its associate) acquires any further shares, including in the course of trading in
the secondary market of the ordinary shares. At present, we do not have total assets of A$248 million or more. At this time, our
total assets do not exceed any of the above thresholds and therefore no approval would be required from the Australian Treasurer.
Nonetheless, should our total assets exceed the threshold in the future, we will need to be mindful of the number of ordinary
shares that can be made available, and monitor the 40% aggregate shareholding threshold for foreign persons (together with their
associates) to ensure that it will not be exceeded without an application to the Australian Treasurer’s for approval having
been contemplated and submitted if considered necessary.



Each
foreign person seeking to acquire holdings in excess of the above caps (including their associates, as the case may be) would
need to complete an application form setting out the proposal and relevant particulars of the acquisition/shareholding. The Australian
Treasurer then has 30 days to consider the application and make a decision. However, the Australian Treasurer may extend the period
by up to a further 90 days by publishing an interim order. As for the risk associated with seeking approval, the Policy provides
that the Australian Treasurer may reject an application if it is contrary to the national interest.



If
the level of foreign ownership exceeds 40% at any time, we would be considered a foreign person under the Foreign Takeovers Act.
In such event, we would be required to obtain the approval of the Australian Treasurer for the Company, together with our associates,
to acquire (i) more than 15% of an Australian company or business with assets totalling over A$248 million; or (ii) any direct
or indirect ownership in Australian residential real estate and certain non- residential real estate.



The
percentage of foreign ownership in the Company would also be included in determining the foreign ownership of any Australian company
or business in which it may choose to invest. Because we have no current plans for any such acquisition and do not own any property,
any such approvals required to be obtained by us as a foreign person under the Foreign Takeovers Act will not affect our current
or future ownership or lease of property in Australia.



Subject
to certain exceptions under the Corporations Act, acquisitions of interests in voting shares of the Company will be prohibited
where, as a result of the acquisition, the acquirer’s or someone else’s voting power (as defined in the Corporations
Act) in the Company increases to more than 20.0% or from a starting point that is above 20.0% and below 90.0%. The definition
of voting power in the Corporations Act is broad, and includes control by persons or their associates over voting or disposal
of voting shares. There are a number of exceptions to the prohibition, the most important of which permit: (i) acquisitions under
a formal takeover bid made in accordance with the Corporations Act in which all shareholders can participate; (ii) acquisitions
resulting from a court-approved scheme of arrangement; (iii) acquisitions made with specified shareholder approvals (where no
votes are cast in favor by the parties to the transaction or their associates); and (iv) acquisitions of no more than 3.0% of
voting power (as defined in the Corporations Act) every six months. Australian law requires all holders of a class of shares to
be treated equally under a takeover bid and prescribes various aspects of the conduct of a takeover bid, including timing and
disclosure requirements.





83







In
addition, on application by a person, the Australian Takeovers Panel may declare that unacceptable circumstances exist in relation
to the affairs of the Company. Such a declaration may be made where it appears to the Panel that, among other things, circumstances
are unacceptable having regard to the effect the circumstances have had, are having, will have or are likely to have on the control,
or potential control, of the Company or the acquisition, or proposed acquisition, by a person of a substantial interest in the
Company. A declaration can be made whether or not the circumstances constitute a contravention of the Corporations Act. If a declaration
is made, the Panel may make a wide range of remedial orders.



Our
Constitution does not contain any additional limitations on a non-resident’s right to hold or vote our securities.



Australian
law requires the transfer of shares in the Company to be made in writing if the company’s shares are not quoted on the Australian
Securities Exchange. Under current stamp duty legislation no stamp duty will be payable in Australia on the transfer of ordinary
shares.



10.E.          
Taxation



The
following is a discussion of the material Australian and U.S. federal income tax consequences of an investment in our ordinary
shares based upon laws and relevant interpretations thereof in effect as of the date of this Report, all of which are subject
to change. This discussion does not address all possible tax consequences relating to an investment in our ordinary shares, such
as the tax consequences under state, local and other tax laws. To the extent that the discussion is based on tax legislation that
has not been subject to judicial or administrative interpretation, the views expressed in the discussion might not be accepted
by the tax authorities in question or by court. The discussion is not intended, and should not be construed, as legal or professional
tax advice and does not exhaust all possible tax considerations.



Holders
of our ordinary shares should consult their own tax advisors as to the United States, Australian or other tax consequences of
the purchase, ownership and disposition of ordinary shares, including, in particular, the effect of any foreign, state or local
taxes.



Australian
Tax Considerations



In
this section we discuss the material Australian tax considerations that apply to non-Australian tax residents with respect to
the acquisition, ownership and disposal of the absolute beneficial ownership of ordinary shares. This discussion is based upon
existing Australian tax law as of the date of this Report, which is subject to change, possibly retrospectively. This discussion
does not address all aspects of Australian income tax law that may be important to particular investors in light of their individual
investment circumstances, such as shares held by investors subject to special tax rules (for example, financial institutions,
insurance companies or tax exempt organizations). In addition, this summary does not discuss any foreign or state tax considerations,
other than stamp duty. Prospective investors are urged to consult their tax advisors regarding the Australian and foreign income
and other tax considerations of the purchase, ownership and disposition of shares.



Taxation
of Dividends



Australia
operates a dividend imputation system under which dividends may be declared to be “franked” to the extent of tax paid
on company profits. Fully franked dividends are not subject to dividend withholding tax. Dividends payable to non-Australian resident
shareholders that are not operating from an Australian permanent establishment (“Foreign Shareholders”) will be subject
to dividend withholding tax, to the extent the dividends are not foreign sourced and declared to be conduit foreign income (“CFI”)
and are unfranked. Dividend withholding tax will be imposed at 30%, unless a shareholder is a resident of a country with which
Australia has a double taxation agreement and qualifies for the benefits of the treaty. Under the provisions of the current Double
Taxation Convention between Australia and the United States, the Australian tax withheld on unfranked dividends that are not CFI
paid by us to which a resident of the United States is beneficially entitled is limited to 15%.



If
a company that is a Foreign Shareholder owns a 10% or more interest, the Australian tax withheld on dividends paid by us to which
a resident of the United States is beneficially entitled is limited to 5%. In limited circumstances the rate of withholding can
be reduced to nil.





84







Tax
on Sales or other Dispositions of Shares - Capital Gains Tax



Foreign
Shareholders will not be subject to Australian capital gains tax on the gain made on a sale or other disposal of our shares, unless
they, together with associates, hold 10% or more of our issued capital, at the time of disposal or for 12 months of the last 2
years.



Foreign
Shareholders who, together with associates, own a 10% or more interest would be subject to Australian capital gains tax if more
than 50% of our direct or indirect assets determined by reference to market value, consists of Australian land, leasehold interests
or Australian mining, quarrying or prospecting rights. Double Taxation Convention between the United States and Australia is unlikely
to limit the amount of this taxable gain. Australian capital gains tax applies to net capital gains at a taxpayer’s marginal
tax rate. Net capital gains are calculated after reduction of capital losses, which may only be offset against capital gains.



Tax
on Sales or other Dispositions of Shares - Shareholders Holding Shares on Revenue Account



Some
Foreign Shareholders may hold shares on revenue rather than on capital account, for example, share traders. These shareholders
may have the gains made on the sale or other disposal of the shares included in their assessable income under the ordinary income
provisions of the income tax law, if the gains are sourced in Australia.



Foreign
Shareholders assessable under these ordinary income provisions in respect of gains made on shares held on revenue account would
be assessed for such gains at the Australian tax rates for non-Australian residents, which start at a marginal rate of 32.5%.
For Foreign Shareholders that are corporations, the tax rate would be 30%. Some relief from Australian income tax may be available
to such non-Australian resident shareholders under the Double Taxation Convention between the United States and Australia.



To
the extent an amount would be included in a Foreign Shareholder’s assessable income under both the capital gains tax provisions
and the ordinary income provisions, the capital gain amount would generally be reduced, so that the shareholder would not be subject
to double tax on any part of the income gain or capital gain.



Dual
Residency



If
a shareholder were a resident of both Australia and the United States under those countries’ domestic taxation laws, that
shareholder may be subject to tax as an Australian resident. If, however, the shareholder is determined to be a U.S. resident
for the purposes of the Double Taxation Convention between the United States and Australia, the Australian tax applicable would
be limited by the Double Taxation Convention. Shareholders should obtain specialist taxation advice in these circumstances.



Stamp
Duty



No
transfer duty is payable by Australian residents or foreign residents on the trading of shares that are quoted on the NASDAQ or
OTCBB Markets.



Australian
Death Duty



Australia
does not have estate or death duties. As a general matter, no capital gains tax liability is realized upon the inheritance of
a deceased person’s shares. The disposal of inherited shares by beneficiaries, may, however, give rise to a capital gains
tax liability if the gain falls within the scope of Australia’s jurisdiction to tax (as discussed above).



Goods
and Services Tax



The
issue or transfer of shares will not incur Australian goods and services tax.





85







United
States Federal Income Tax Considerations



The
following is a discussion of the material U.S. federal income tax considerations applicable to an investment in ordinary shares
by a U.S. holder, as defined below, that will hold the ordinary shares as capital assets within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the “Code”). This summary is based upon existing U.S. federal tax law,
which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the
Internal Revenue Service (the “IRS”) with respect to any U.S. federal income tax consequences described below, and
there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address the tax
consequences to any particular holder nor any tax considerations that may apply to holders subject to special tax rules, such
as banks, insurance companies, individual retirement and other tax-deferred accounts, regulated investment companies, individuals
who are former U.S. citizens or former long-term U.S. residents, dealers in securities or currencies, tax-exempt entities, persons
subject to the alternative minimum tax, persons that hold ordinary shares as a position in a straddle or as part of a hedging,
constructive sale or conversion transaction for U.S. federal income tax purposes, persons that have a functional currency other
than the U.S. dollar, persons that own (directly, indirectly or constructively) 10% or more of our equity or persons that are
not U.S. holders.



In
addition, this discussion does not address any state, local or non-U.S. tax considerations (other than the discussion below relating
to certain withholding rules and the United States — Australian income tax treaty). Each U.S. holder is urged to consult
its tax advisor regarding the U.S. federal, state, local, and non-U.S. income and other tax considerations of an investment in
our ordinary shares.



In
this section, a “U.S. holder” means a beneficial owner of ordinary shares that is, for U.S. federal income tax purposes:



| | ● | an individual who is a citizen or resident of the United States;                                                                                                                                                                                                                                                           
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                            
| | ● | a corporation (or other entity treated as a corporation) created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia;                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                            
| | ● | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                            
| | ● | a trust (i) the administration of which is subject to the primary supervision of a court in the United States and for which one or more U.S. persons have the authority to control all substantial decisions or (ii) that has an election in effect under applicable income tax regulations to be treated as a U.S. person.



As
used in this section, a “non-U.S. holder” is a beneficial owner of ordinary shares that is not a U.S. holder or an
entity or arrangement treated as a partnership for U.S. federal income tax purposes.



If
an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds ordinary shares, the U.S. federal
income tax treatment of a partner generally will depend on the status of the partner and the activities of the partnership. Partners
of partnerships that will hold ordinary shares should consult their tax advisors.



You
are urged to consult your own tax advisor with respect to the U.S. federal, as well as state, local and non-U.S., tax consequences
to you of acquiring, owning and disposing of ordinary shares in light of your particular circumstances, including the possible
effects of changes in U.S. federal and other tax laws.



Dividends



Subject
to the passive foreign investment company rules, discussed below, U.S. holders will include as dividend income the U.S. dollar
value of the gross amount of any distributions of cash or property (without deduction for any withholding tax), other than certain
pro rata distributions of ordinary shares, with respect to ordinary shares to the extent the distributions are made from our current
or accumulated earnings and profits, as determined for U.S. federal income tax purposes. A U.S. holder will include the dividend
income at the time of receipt. To the extent, if any, that the amount of any distribution by us exceeds our current and accumulated
earnings and profits, as so determined, the excess will be treated first as a tax-free return of the U.S. holder’s tax basis
in the ordinary shares and thereafter as capital gain. Notwithstanding the foregoing, we do not intend to maintain calculations
of earnings and profits, as determined for U.S. federal income tax purposes. Consequently, any distributions generally will be
reported as dividend income for U.S. information reporting purposes. See “Backup Withholding Tax and Information Reporting”
below. Dividends paid by us will not be eligible for the dividends-received deduction generally allowed to U.S. corporate shareholders.





86







Subject
to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual, trust
or estate with respect to the ordinary shares will be subject to taxation at a maximum rate of 20% if the dividends are “qualified
dividends.” Dividends paid on ordinary shares will be treated as qualified dividends if either (i) we are eligible for the
benefits of a comprehensive income tax treaty with the United States that the IRS has approved for the purposes of the qualified
dividend rules, (ii) the dividends are, with respect to ordinary shares, readily tradable on a U.S. securities market, provided
that we are not, in the year prior to the year in which the dividend was paid, and are not, in the year which the dividend is
paid, a PFIC and (iii) certain holding period requirements are met. The Agreement between the Government of the United States
of America and the Government of Australia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income (the “Treaty”) has been approved for the purposes of the qualified dividend rules, and we expect
to qualify for benefits under the Treaty. Our ordinary shares currently trade irregularly in the U.S. over-the-counter market
and thus may not meet condition (ii) described above allowing dividends we pay to be deemed “qualified dividends”.
Although our NASDAQ listing application is currently pending until we meet the NASDAQ Capital Market’s initial listing
requirements, there is no assurance that our application will be approved. Provided that the listing is approved, U.S. Treasury
Department guidance indicates that the ordinary shares will be readily tradable on an established securities market in the United
States. Thus, we believe that dividends we pay on ordinary shares will meet conditions (i) and (ii), described above. Accordingly,
dividends we pay generally should be eligible for the reduced income tax rate. However, the determination of whether a dividend
qualifies for the preferential tax rates must be made at the time the dividend is paid. U.S. holders should consult their own
tax advisers.



Includible
distributions paid in Australian dollars, including any Australian withholding taxes, will be included in the gross income of
a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of actual or constructive
receipt, regardless of whether the Australian dollars are converted into U.S. dollars at that time. If Australian dollars are
converted into U.S. dollars on the date of actual or constructive receipt, the tax basis of the U.S. holder in those Australian
dollars will be equal to their U.S. dollar value on that date and, as a result, a U.S. holder generally should not be required
to recognize any foreign exchange gain or loss.



If
Australian dollars so received are not converted into U.S. dollars on the date of receipt, the U.S. holder will have a basis
in the Australian dollars equal to theirU.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.”



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.



87







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:



| | ● | the excess distribution or gain will be allocated ratably over the U.S. holder’s holding period for the ordinary shares;                                                                                                                                                                                             
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                      
| | ● | the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were classified as a PFIC, will be treated as ordinary income; and                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                      
| | ● | the amount allocated to each other year, other than a pre-PFIC year, will be subject to income tax at the highest rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year (other than a pre-PFIC year).



The
tax liability for amounts allocated to years prior to the year of disposition or excess distribution cannot be offset by any net
operating loss, and gains (but not losses) realized on the transfer of the ordinary shares cannot be treated as capital gains,
even if the ordinary shares are held as capital assets. In addition, non- corporate U.S. holders will not be eligible for reduced
rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in
the preceding taxable year.



If
we are a PFIC for any taxable year during which any of our non-U.S. subsidiaries is also a PFIC (i.e., a lower-tier PFIC), a U.S.
holder of ordinary shares during such year would be treated as owning a proportionate amount (by value) of the shares of the lower-tier
PFIC and would be subject to the rules described above on certain distributions by a lower-tier PFIC and a disposition of shares
of a lower-tier PFIC even though such U.S. holder would not receive the proceeds of those distributions or dispositions. You should
consult your tax advisors regarding the tax consequences if the PFIC rules apply to any of our subsidiaries.



If
a U.S. holder owns ordinary shares during any year in which we are a PFIC and the U.S. holder recognizes gain on a disposition
of our ordinary shares or receives distributions with respect to our ordinary shares, the U.S. holder generally will be required
to file an IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund)
with respect to the company, generally with the U.S. holder’s federal income tax return for that year. Additionally, recently
enacted legislation creates an additional annual filing requirement for U.S. persons who are shareholders of a PFIC. However,
pursuant to recently issued guidance, this additional filing obligation is suspended until the IRS releases the relevant final
form. If the Company were a PFIC for a given taxable year, then you should consult your tax advisor concerning your annual filing
requirements.



A
U.S. holder may avoid some of the adverse tax consequences of owning shares in a PFIC by making a “qualified electing fund”
election. The availability of this election with respect to our ordinary shares requires that we provide information to shareholders
making the election. We do not intend to provide you with the information you would need to make or maintain a qualified electing
fund election and you will, therefore, not be able to make such an election with respect to your ordinary shares.



As
an alternative to the foregoing rules, a U.S. holder of “marketable stock” in a PFIC may make a mark-to-market election
with respect to our ordinary shares, provided that the listing of the ordinary shares on applicable exchange is approved and that
the ordinary shares are regularly traded. We anticipate that our ordinary shares should qualify as being regularly traded, but
no assurances may be given in this regard. If a U.S. Holder makes a valid mark-to-market election for the ordinary shares, the
electing U.S. holder will include in income each taxable year that we are a PFIC, an amount equal to the excess, if any, of the
fair market value of the ordinary shares as of the close of the holder’s taxable year over the adjusted basis in such ordinary
shares. The U.S. holder is allowed a deduction for the excess, if any, of the adjusted basis of the ordinary shares over their
fair market value as of the close of the holder’s taxable year. Deductions are allowable, however, only to the extent of
any net mark-to-market gains on the ordinary shares included in the U.S. holder’s income for prior taxable years. Amounts
included in the U.S. holder’s income under a mark-to-market election, as well as gain on the actual sale or other disposition
of the ordinary shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any
mark-to-market loss on the ordinary shares, as well as to any loss realized on the actual sale or disposition of the ordinary
shares, to the extent the amount of such loss does not exceed the net mark-to-market gains previously included for such ordinary
shares. The tax basis in the ordinary shares will be adjusted to reflect any such income or loss amounts. A mark-to-market election
will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ordinary shares
are no longer regularly traded on an applicable exchange or the IRS consents to the revocation of the election.





88







Because,
as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. holder may continue
to be subject to the general PFIC rules described above with respect to such U.S. holder’s indirect interest in any investments
held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.



U.S.
holders are urged to contact their own tax advisors regarding the determination of whether we are a PFIC and the tax consequences
of such status.



Medicare
Tax



An
additional 3.8% tax is imposed on a portion or all of the net investment income of certain individuals with a modified adjusted
gross income of over US$200,000 (or US$250,000 in the case of joint filers or US$125,000 in the case of married individuals filing
separately) and on the undistributed net investment income of certain estates and trusts. For these purposes, “net investment
income” generally includes interest, dividends (including dividends paid with respect to our ordinary shares), annuities,
royalties, rents, net gain attributable to the disposition of property not held in a trade or business (including net gain from
the sale, exchange or other taxable disposition of an ordinary share) and certain other income, reduced by any deductions properly
allocable to such income or net gain. U.S. holders are urged to consult their tax advisors regarding the applicability of this
tax to their income and gains in respect of an investment in the ordinary shares.



Backup
Withholding Tax and Information Reporting Requirements



Dividend
payments with respect to ordinary shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject
to information reporting to the IRS and possible U.S. backup withholding at a current rate of 28%. Backup withholding will not
apply, however, to a U.S. holder who furnishes a correct taxpayer identification number and makes any other required certification
or who is otherwise exempt from backup withholding and establishes such exempt status. Backup withholding is not an additional
tax. Amounts withheld as backup withholding may be credited against a U.S. holder’s U.S. federal income tax liability. A
U.S. holder may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim for
refund with the IRS in a timely manner and furnishing any required information. U.S. holders are urged to contact their own tax
advisors as to their qualification for an exemption from backup withholding tax and the procedure for obtaining this exemption.



Foreign
asset reporting



Certain
U.S. holders who are individuals are required to report information relating to an interest in our ordinary shares, subject to
certain exceptions (including an exception for shares held in accounts maintained by financial institutions) by filing IRS Form
8938 (Statement of Specified Foreign Financial Assets) with their federal income tax return. U.S. holders are urged to consult
their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition
of our ordinary shares.



The
discussion above is not intended to constitute a complete analysis of all tax considerations applicable to an investment in ordinary
shares. You should consult with your own tax advisor concerning the tax consequences to you in your particular situation.



10.F.
          Dividends and Paying Agents



Not
applicable.



10.G.
         Statement by Experts



Not
applicable.





89







10.H.
         Documents on Display



Publicly
filed documents concerning the Company which are referred to in this Annual Report may be inspected and copied at the public reference
facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of these materials can also be obtained
from the Public Reference Room at the SEC’s principal office, 100 F Street, N.E., Washington D.C. 20549, after payment of
fees at prescribed rates.



The
SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding
registrants that make electronic filings through its Electronic Data Gathering, Analysis, and Retrieval or EDGAR, system. We have
made all our filings with SEC using the EDGAR system.



For
further information on the Public Reference Room, please call the SEC at 1-800-SEC-0330. Our SEC filings, including the Annual
Report, are also available to you on the SEC’s website at http://www.sec.gov.



Information
may also be found on the Investor Relations section of our website at http://bluenrgy.com/ir/filings.html



10.I.           
Subsidiary Information



Not
applicable.



PART
II



ITEM
11.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



We
are exposed to various market risks, including foreign currency fluctuations, changes in interest rates, equity and credit risk.
The main risks to which we are exposed are discussed below. Refer to Note 22 to the audited financial statements in Item 18 for
more detailed analysis of the potential financial impact of these risks.



Market
risk



Our
activities expose us primarily to the financial risks of changes in foreign currency exchange rates and interest rates and fluctuations
in the value of equity securities as described below.



Foreign
currency risk management



Foreign
currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes
in foreign exchange rates. Our exposure to the risk of changes in foreign exchange rates relates primarily to our operating activities,
borrowings, and financial assets.



Our
parent company and a number of our subsidiaries use the Australian dollar as their functional currency because the majority of
their revenues and expenses are denominated in Australian dollars. Accordingly, our reporting currency is also the Australian
dollar. We did, however, earn revenue and incur expenses in other currencies and there is thus a risk that currency fluctuations
could have an adverse effect on the value of our cash flows.



Our
foreign currency risk arises from the measurement of purchased components, debt, preferred stock, and other monetary assets and
liabilities denominated in foreign currencies converted to Australian dollars, with the resulting gain or loss recorded as “Other
income” or “Other expenses” and the impact of fluctuations in exchange rates on the reported amounts of our
revenues and expenses which are contracted in foreign currencies. In the future this exposure may be reduced as the Company strives
to develop and sell assets and project in the same currency in which it borrows and/or purchases inventory and components for
those assets and projects.





90







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 Company, Draker, 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, CIWL Draker and IHL Holding subsidiaries, the Subsidiary Preferred, is
denominated in U.S. dollars.



We
do not apply hedge accounting. At June 30, 2016 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.



At
June 30, 2016 and 2015 all of our borrowings are fixed rate (subject to penalty rates which may be applied under default events).



We
regularly analyze our interest rate exposure. Within this analysis consideration is given to potential renewals of existing positions,
alternative financing, and the mix of fixed and variable interest rates.



At
June 30, 2016 we had no significant interest bearing assets other than cash and cash equivalents, therefore our income and operating
cash flows are substantially independent of changes in market interest rates.



Liquidity
and capital risk management



Our
objective is to maintain a balance between continuity of funding and flexibility through the use of variety of equity and debt
instruments.



As
discussed in Item 5.B. under the heading “Liquidity and Capital Resources”, there is a material uncertainty
that may cast significant doubt on whether we will be able to continue as a going concern and therefore whether it will realize
our assets and settle our liabilities and commitments in the normal course of business and at the amounts stated in the financial
report.



ITEM
12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



A.
Debt Securities



Not
required in annual report



B.
Warrants and Rights



Not
required in annual report



C.
Other Securities



Not
required in annual report



D.
American Depositary Shares



Not
applicable.





91







ITEM
13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



Other
than past-due creditor obligations payable by GED to its creditors under payment plans, we have no defaults or delinquencies that
have not been cured.



ITEM
14.   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS



Private
Placements of Unregistered Securities After Emergence From VA



On
or subsequent to January 27, 2015 after emerging from VA we have:



| | ● | issued
1,080,759 ordinary shares in a series of private placement for US$3.03 per share (after giving effect to the 1-for-80 share consolidation
effected in December 2015) pursuant to a securities purchase agreement filed with our Form 6-K/A on January 29, 2015. Net proceeds
of US$3.3 million from the private placements were used to pay US$1.0 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.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | converted
the promissory note issued to Wind Farm Financing Pty Ltd. in the amount of $900,000 (the “WFF Note”) as part of the
reorganization plans into 297,226 ordinary shares at the Offering Price in accordance with its terms as provided 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.                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Issued
144,125 ordinary shares for US$3.03 in exchange for unpaid Executive Compensation as described above in Item 7.B “Related
Party Transactions”. An additional 9,241 shares have been issued to suppliers in lieu of cash for services received.                                                                                                                                                                                                                                                                                                                    
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | converted 2,484 Series B Preferred Shares in accordance with the amended terms of the Series B Shares and issued 643,110 ordinary
shares to the converting shareholders                                                                                                                                                                                                                                                                                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | issued Subsidiary Preferred Shares having
                               a face value of US$6.5 million and a conversion price of US$3.03 in conjunction with the Draker
                               and Inaccess transactions (refer to Item 4.A. under the heading “Recent Acquisitions”).                                                                                                                                                                                                                                                                          



Share
Issuances and Modifications Under Our Reorganization Plans



In
accordance with and upon effectiveness of the DOCAs:



| | ● | we
                                         issued additional ordinary shares to the Deed Fund, our secured creditor, WHSP and to
                                         shareholders and designees of BlueNRGY LLC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ● | our
                                         CIWL and Parmac subsidiaries issued convertible preferred shares to WHSP with face values
                                         respectively of US$1.4 million and US$2.2 million, collectively referred to as the Subsidiary
                                         Preferred. The CIWL 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$3.03 per share (after
                                         giving effect to the 1-for-80 share consolidation effected in December 2015) per share.
                                         The Parmac Subsidiary Preferred was restructured during the 2016 financial year which
                                         removed the obligation to accrue a dividend of 4% per annum on the face value, however,
                                         it remains convertible at any time into our ordinary shares at US$3.03 per share (after
                                         giving effect to the 1-for-80 share consolidation effected in December 2015) 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 as provided 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



Use
of Proceeds



Registered
Securities Offering Effective June 12, 2014



Details
of the Offering



The
registration statement on Form F-1 (File No. 333-194780) for the offering was declared effective by the SEC on June 12, 2014.We
sold 1,810,000 ordinary shares, at an offering price of US$320.00 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.





92







Private
Placement of Series B Preferred Shares And Conversion of Series B Preferred Shares



As
disclosed in our filings on Form 6-K on July 30, 2014 and August 20, 2014, In a series of private placement offerings in July
and August 2014, we issued US$4.5 million face value of our Series B Convertible Preferred Shares, referred to as Series B Preferred.
US$2.0 million of the proceeds from the private placement offerings was used to redeem $2.0 million face value of our Series A
convertible preferred shares (all of our then outstanding Series A preferred shares). The Series B Preferred accrued a dividend
at an annual rate of 8% of face value and had an initial conversion price of US$4.00 per share and imposed restrictions on our
ability to issue equity or equity-linked securities below a price of US$2.00 per share. In the private placement of Series B Preferred
that occurred in August 2014, the conversion price was subsequently reduced to US$3.00 per share for all Series B Preferred, including
those Series B Preferred Shares previously issued. In conjunction with the issuance of Series B Preferred we issued 150,000 ordinary
shares as a placement fee and warrants for 416,667 ordinary shares with an exercise price of $3.2916 per share. This summary of
terms of the private placement offerings and Series B Preferred and warrants is qualified in its entirety by the securities purchase
agreement and related exhibits filed with the referenced forms 6-K. Net proceeds from the sale of Series B Preferred was used
for working capital, to pay interest on our debt and to fund our losses.



As
disclosed in a Form 6-K filed on November 12, 2015, certain holders of our Series B Preferred shares elected to convert 2,484
Series B Preferred Shares plus dividends accrued thereon into our ordinary shares at the stated conversion price of US$4.01 per
ordinary share. In satisfaction of the foregoing Series B Preferred Share conversions we have issued 643,110 ordinary shares.
600 Series B Preferred Shares remained outstanding as of this Report.



ITEM
15.   CONTROLS AND PROCEDURES



Evaluation
of Disclosure Controls and Procedures



Our
management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the
period covered by this Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as
of June 30, 2016.



Management’s
Annual Report on Internal Control Over Financial Reporting



Management
of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company,
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with IFRS as issued by the IASB. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit the preparation of financial statements in accordance with IFRS as issued by the IASB and
that receipts and expenditures of the company are being made only in accordance with authorizations of our Board; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s
assets that could have a material effect on the financial statements



A
control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. In particular, the design of a control system must be considered relative to their costs. Additionally,
the design of a control system is based in part upon certain assumptions about the likelihood of future events, and there can
be no assurance that any design will succeed in achieving its stated objectives under all potential future conditions. Due to
its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements to the financial
statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



Management
assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2016 based on the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) Internal Control-Integrated
Framework. Based on this assessment, management concluded that the Company’s internal control over financial reporting was
not effective as of June 30, 2016 under the 2013 Framework due to the following material weaknesses:



| | ● | Secretarial and corporate records filed with ASIC are not consistently up to date with the effect that we could fail to be remain in compliance with the Corporations Act.                                             
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                        
| | ● | Interim closings of account records are not consistently completed in a time frame that would allow adverse unforeseen financial consequences of business operations to be detected and managed.                       
| |   |                                                                                                                                                                                                                        
| | ● | Annual budgets have not been established by our Board and consequently our internal reporting does not include a comparison against approved plans that can be used to identify and remediate performance deficiencies.



This
Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control
over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting
firm pursuant to amendments made by the enactment of the Dodd-Frank bill that permit the Company to provide only management’s
annual report on internal control over financial reporting in this Annual Report.



Changes
in Internal Control Over Financial Reporting



There
was no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934, as amended) identified in connection with the evaluation of our internal control over financial reporting
performed during the fiscal year ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.





93







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 2017 fiscal
year that are approved by our Board.



ITEM
16A. AUDIT COMMITTEE FINANCIAL EXPERT



The
composition of our Audit Committee currently and for fiscal years June 30, 2016 and 2015 were: June



June
2016 and Currently: Mr. Carlo Botto



June
2015: Mr. Carlo Botto* June 2015 – Mr. John Donohue *



(*)
denotes designated Audit Committee Financial Expert. Each Audit Committee Financial Expert has been an independent director.



ITEM
16B. CODE OF ETHICS



We
have adopted a code of conduct and ethics for employees, officers and directors, which fully complies with the requirements of
NASDAQ Rule 5610 and the requirements of Section 406(c) of the Sarbanes-Oxley Act applicable to chief executive officers, principal
financial officers, and principal accounting officers or controllers or persons performing similar functions.



Our
Code of Conduct and Ethics was filed as an as exhibit to our FY2014 Annual Report.



ITEM
16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES



The
auditor of BlueNRGY Group Limited is HLB Mann Judd of Level 19, 207 Kent St, Sydney NSW 2000, Australia.



Remuneration
of Auditors



|                                                               |  | Consolidated
|-------------------------------------------------------------- |  | ------------
|                                                               |  | 2016        
|                                                               |  | $’000       
|Amounts paid or payable to HLB Mann Judd                       |  |             
|- an audit or review of the financial statements of the entity |  |             
|- non audit services (tax compliance)                          |  |             
|                                                               |  |             
|Amounts paid or payable to a network firm of HLB Mann
    Judd |  |             
|- an audit of foreign subsidiary financial statements          |  |             





94







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



Not
applicable.



ITEM
16G. CORPORATE GOVERNANCE



Implications
of Being an Emerging Growth Company



Pursuant
to JOBS Act, we are classified as an “Emerging Growth Company.” Under the JOBS Act, Emerging Growth Companies are
exempt from certain reporting requirements, including the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley
Act. Under this exemption, our auditor will not be required to attest to and report on management’s assessment of our internal
controls over financial reporting during a five-year transition period.



Pursuant
to the JOBS Act, we will remain an Emerging Growth Company until the earliest of:



| | ● | the last day of our fiscal year following the fifth anniversary of the date of our initial public offering of ordinary shares;                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | the last day of our fiscal year in which we have annual gross revenue of USD$1.0 billion or more;                                                                                                                                                                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | the date on which we have, during the previous three-year period, issued more than USD$1.0 billion in non-convertible debt; and                                                                                                                                                                                                                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ● | the date on which we are deemed to be a “large accelerated filer,” which will occur at such time as we (a) have an aggregate worldwide market value of ordinary shares held by non-affiliates of USD$700.0 million or more as of the last business day of our most recently completed second fiscal quarter, (b) have been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months, and (c) have filed at least one annual report pursuant to the Exchange Act.



95







Implications
of Being a Foreign Private Issuer



We
are also considered a “foreign private issuer.” In our capacity as a foreign private issuer, we are exempt from certain
rules under the Exchange Act, that impose certain disclosure obligations and procedural requirements for proxy solicitations under
Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting
and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act
with respect to their purchases and sales of our ordinary shares. Moreover, we are not required to file periodic reports and financial
statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.



In
addition, as a “foreign private issuer”, we follow certain home-country corporate governance practices and intend
to continue to do so in lieu of certain NASDAQ requirements, even if we are successful in regaining our NASDAQ listing. The exception
to the election to follow Australian practices is those rules which are required to be followed pursuant to the provisions of
Listing Rule 5615(a)(3). That is, the Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule
5640), an audit committee that satisfies Rule 5605(c)(3) (audit committee responsibilities and authorities), and the audit committee’s
members meet the independence requirement in Rule 5605(c)(2)(A)(ii) (the criteria for independence).



As
the Company is not listed on the ASX, this Report does not contain the corporate governance statement required by the Guidelines
disclosing the extent to which the Company has followed each recommendation set by the Council. Rather, this Report only contains
references to the recommendations the Company considered when setting its corporate governance policies.



The
following practices are not prohibited under any Australian laws (including ASX listing rules).



(1)	Audit
Committee Composition (Rule 5605)(c)(2)(A):The Company’s Audit Committee is comprised of one director, Mr. Botto, who
is an independent non-executive director. The Guidelines include recommendations that companies should have at least three members,
members should be non-executive directors and a majority of the audit committee should be independent directors and chaired by
an independent director. Due to the small size of the Board the audit committee will consists of two directors once we appoint
another independent non-executive to the Board.



(2)	Independent
Director Oversight of Director Nominations (Rule 5605(e)(1)):There is no requirement under Australian laws or ASX listing
rules which requires director nominees to be selected to the board or recommended for election by a majority of independent directors
or a nominations committee comprised solely of independent directors.



(3)	Nominations
Charter or Board Resolution (Rule 5605(e)(2)):The Company does not have a Nominations Committee. The Guidelines includes
a recommendation that companies should establish a nomination committee. Given the small size of the Company and the Board, the
directors consider that establishing a committee would contribute little to the effective management of the company.



(4)	Independent
Director Oversight of Executive Officer Compensation (Rule 5605(d)):On February 9, 2015, Mr. Chapple and Mr. Donohue were
appointed to the Compensation Committee and Mr. Morro resigned as a member of the Compensation Committee. However, Mr. Chapple
resigned from the Board on June 16, 2015 and Mr. Donohue resigned from the Board on July 31, 2015. Until replacement members of
the Committee can be appointed, matters previously delegated to the Compensation Committee are being considered by the full Board.
The Guidelines include Recommendations that a compensation committees should have at least three members, members should be non-executive
directors and a majority of the committee should be independent directors and chaired by an independent director. Due to the small
size of the Board, the compensation committee, once reconstituted, will consist of two independent non-executive directors.



(5)	Executive
Sessions (Rule 5605(b)(2)):There is no requirement under Australian laws or ASX listing rules which require the Company to
schedule meetings at which only the independent directors are present.



(6)	Quorum
(Rule 5620(c)):There is no requirement under Australian laws or ASX listing rules which require the Company to have a quorum
of a particular number of outstanding ordinary shareholders, rather, each company is able to determine its own quorum requirements.
The current quorum for the Company is two shareholders entitled to vote. This is consistent with typical Australian business practices.





96







(7)	Shareholder
Approval (Rule 5635)The Company’s practices with regard to the requirements of Listing Rule 5635(a),(b) and (d) are
not prohibited by Australian law applicable to the Company as a public company not listed on the ASX, except that under the Australian
Corporations Act2001 (Cth) there is a restriction on a single person being issued shares which would result in a person’s
voting power in a company increasing from 20% or below to more than 20% or from a starting point above 20% and below 90%. The
concept of voting power takes account of shares owned or controlled by a person and its associates (in summary, associates includes
body corporates controlled by a person, persons with whom a person is acting in concert with in respect of the company issuing
the stock or persons with whom a person has a relevant agreement with for the purpose of controlling the conduct of the company’s
affairs.



ITEM
16H. MINE SAFETY DISCLOSURE



Not
applicable.



PART
III



ITEM 17.    FINANCIAL STATEMENTS



See
“Item 18 – Financial Statements”



ITEM
18.    FINANCIAL STATEMENTS



The
following financial statements are filed as part of this Annual Report, together with the report of the independent registered
public accounting firm:



| | ● | Report
                                         of Independent Registered Public Accounting Firm
| | - | ------------------------------------------------------------------------------------------------
| | ● | Consolidated
                                         statement of comprehensive income         
| | ● | Consolidated
                                         statement of financial position           
| | ● | Consolidated
                                         statement of changes in equity            
| | ● | Consolidated
                                         statement of cash flows                   
| | ● | Notes
                                         to the financial statements                      





97











BlueNRGY
Group Limited



(A.C.N. 010 966 793)



Annual Financial Report



for the year ended 30 June 2016













Table of contents





|Report of independent registered accounting firm | F-1
|------------------------------------------------ | ---
|                                                 |    
|Consolidated statement of comprehensive income   | F-2
|                                                 |    
|Consolidated statement of financial position     | F-3
|                                                 |    
|Consolidated statement of changes in equity      | F-4
|                                                 |    
|Consolidated statement of cash flows             | F-6
|                                                 |    
|Notes to the financial statements                | F-7

















Report of Independent Registered Accounting Firm



To the Board of Directors and shareholders
of BlueNRGY Group Limited



We have audited the accompanying consolidated
statements of financial position of BlueNRGY Group Limited (‘the Company’) and its controlled entities (collectively
‘the Group’) as at 30 June 2016 and 2015, and the related consolidated statements of comprehensive income, changes
in equity and cash flows each of the three years in the period ended 30 June 2016. 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 2016 and 2015 and the consolidated results of their operations and their consolidated cash flows for each of the three
years in the period ended 30 June 2016 in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board.



The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, 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 continues
to receive support from existing lenders, raises additional funds, and monetises long-term assets to fund the business. 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



October 28,
2016









F-1









Statement of comprehensive income



|                                                                                                                     |  |      |    | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | ------------
|For the year ended June 30                                                                                           |  | Note |    | 2016 $’000  
|                                                                                                                     |  |      |    |             
|Revenues from continuing operations                                                                                  |  |      | 5  |             
|Other income                                                                                                         |  |      | 5  |             
|Cost of raw materials, consumables used, and contractors                                                             |  |      |    |             
|Employee benefit expenses                                                                                            |  |      | 6  |             
|Amortisation and depreciation                                                                                        |  |      | 6  |             
|Impairment of asset                                                                                                  |  |      | 6  |             
|Other expenses                                                                                                       |  |      | 6  |             
|Net finance (costs)/income                                                                                           |  |      | 6  |             
|Loss from continuing operations before income tax                                                                    |  |      |    |             
|Income tax expense                                                                                                   |  |      | 7  |             
|Loss from continuing operations                                                                                      |  |      |    |             
|                                                                                                                     |  |      |    |             
|Profit/(loss) from discontinued operations                                                                           |  |      | 13 |             
|                                                                                                                     |  |      |    |             
|Net (loss)/profit for the period                                                                                     |  |      |    |             
|                                                                                                                     |  |      |    |             
|Other comprehensive income                                                                                           |  |      |    |             
|Items that may be reclassified to profit or loss                                                                     |  |      |    |             
|Changes in the fair value of available-for-sale financial assets                                                     |  |      |    |             
|Exchange differences on translation of foreign operations                                                            |  |      |    |             
|Other comprehensive loss for the period, net of tax of $ Nil (2015:$ Nil)                                            |  |      |    |             
|Total comprehensive profit/(loss) for the period                                                                     |  |      |    |             
|                                                                                                                     |  |      |    |             
|(Loss)/profit attributable to:                                                                                       |  |      |    |             
|Owners of the Parent                                                                                                 |  |      |    |             
|Non-controlling interests                                                                                            |  |      |    |             
|                                                                                                                     |  |      |    |             
|                                                                                                                     |  |      |    |             
|Total comprehensive profit/(loss) attributable to:                                                                   |  |      |    |             
|Owners of the Parent                                                                                                 |  |      |    |             
|Non-controlling interests                                                                                            |  |      |    |             
|                                                                                                                     |  |      |    |             
|                                                                                                                     |  |      |    |             
|                                                                                                                     |  |      |    |             
|Earnings per share for profit from continuing operations attributable to the ordinary equity holders of the company: |  |      |    |             
|Basic loss per share                                                                                                 |  |      | 8  |             
|Diluted loss per share                                                                                               |  |      | 8  |             
|Earnings per share for profit attributable to the ordinary equity holders of the company:                            |  |      |    |             
|Basic earnings/(loss) per share                                                                                      |  |      | 8  |             
|Diluted earnings/(loss) per share                                                                                    |  |      | 8  |             



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





F-2









Statement of financial position



|                                                      |  |      |    | Consolidated
|----------------------------------------------------- |  | ---- | -- | ------------
|As at June 30                                         |  | Note |    | 2016 $’000  
|ASSETS                                                |  |      |    |             
|Current Assets                                        |  |      |    |             
|Cash and cash equivalents                             |  |      | 9  |             
|Trade and other receivables                           |  |      | 10 |             
|Inventories                                           |  |      | 11 |             
|Other current assets                                  |  |      | 12 |             
|Total Current Assets                                  |  |      |    |             
|                                                      |  |      |    |             
|Non-Current Assets                                    |  |      |    |             
|Plant and equipment                                   |  |      | 14 |             
|Goodwill and intangible assets                        |  |      | 15 |             
|Other non-current assets                              |  |      | 12 |             
|Total Non-Current Assets                              |  |      |    |             
|TOTAL ASSETS                                          |  |      |    |             
|                                                      |  |      |    |             
|LIABILITIES                                           |  |      |    |             
|Current Liabilities                                   |  |      |    |             
|Trade and other payables                              |  |      | 16 |             
|Interest-bearing loans and borrowings                 |  |      | 17 |             
|Provisions                                            |  |      | 18 |             
|Total Current Liabilities                             |  |      |    |             
|                                                      |  |      |    |             
|Non-Current Liabilities                               |  |      |    |             
|Interest-bearing loans and borrowings                 |  |      | 17 |             
|Provisions                                            |  |      | 18 |             
|Total Non-Current Liabilities                         |  |      |    |             
|TOTAL LIABILITIES                                     |  |      |    |             
|NET ASSETS                                            |  |      |    |             
|                                                      |  |      |    |             
|EQUITY                                                |  |      |    |             
|Contributed equity                                    |  |      | 19 |             
|Accumulated losses                                    |  |      |    |             
|Reserves                                              |  |      | 20 |             
|Total
    equity attributable to owners of the Parent |  |      |    |             
|Non-controlling
    interests                         |  |      | 19 |             
|TOTAL EQUITY                                          |  |      |    |             



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





F-3









Statement of changes in equity





|For the year ended June 30                                                                 |  | Ordinary shares   $’000 |         | Preference shares   $’000 |  | Convertible   Notes   $’000 |        | Share options reserve   $’000 |  | Translation reserve   $’000 |      | Accumulated   losses   $’000 |  | Non-
    controlling
    interests1
    $’000 |        | Total  $’000
|------------------------------------------------------------------------------------------ |  | ----------------------- | ------- | ------------------------- |  | --------------------------- | ------ | ----------------------------- |  | --------------------------- | ---- | ---------------------------- |  | --------------------------------------------- | ------ | ------------
|                                                                                           |  |                         |         |                           |  |                             |        |                               |  |                             |      |                              |  |                                               |        |             
|At July 1, 2015                                                                            |  |                         | 144,338 |                           |  |                             | 781    |                               |  |                             | —    |                              |  |                                               | 2,104  |             
|Loss for period                                                                            |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Other comprehensive income                                                                 |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Total comprehensive income for the year                                                    |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|                                                                                           |  |                         |         |                           |  |                             |        |                               |  |                             |      |                              |  |                                               |        |             
|Transactions with owners in their capacity as owners:                                      |  |                         |         |                           |  |                             |        |                               |  |                             |      |                              |  |                                               |        |             
|Shares issued                                                                              |  |                         | 3,450   |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               |        |             
|Reclassification
                                         from interest bearing borrowings |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Share issue costs                                                                          |  |                         | (7      | )                         |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Share options issued                                                                       |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | 29     |             
|Release of foreign currency translation reserve on dissolved subsidiary                    |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Reclassified expired options                                                               |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | (562   | )           
|Balance at June 30, 2016                                                                   |  |                         | 147,781 |                           |  |                             | 781    |                               |  |                             | —    |                              |  |                                               | 1,571  |             
|                                                                                           |  |                         |         |                           |  |                             |        |                               |  |                             |      |                              |  |                                               |        |             
|At July 1, 2014                                                                            |  |                         | 120,323 |                           |  |                             | 4,643  |                               |  |                             | 574  |                              |  |                                               | 3,336  |             
|Profit/(loss) for period                                                                   |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Other comprehensive income                                                                 |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Total comprehensive income for the year                                                    |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|                                                                                           |  |                         |         |                           |  |                             |        |                               |  |                             |      |                              |  |                                               |        |             
|Transactions with owners in their capacity as owners:                                      |  |                         |         |                           |  |                             |        |                               |  |                             | —    |                              |  |                                               |        |             
|Shares issued                                                                              |  |                         | 18,025  |                           |  |                             | 2,775  |                               |  |                             | —    |                              |  |                                               | —      |             
|Share issue costs                                                                          |  |                         | (444    | )                         |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Unissued shares                                                                            |  |                         | 1,133   |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | —      |             
|Preference shares converted                                                                |  |                         | 5,301   |                           |  |                             | (5,301 | )                             |  |                             | —    |                              |  |                                               | —      |             
|Forfeited on Administration                                                                |  |                         | —       |                           |  |                             | (1,593 | )                             |  |                             | —    |                              |  |                                               | —      |             
|Cancellation of convertible note                                                           |  |                         | —       |                           |  |                             | —      |                               |  |                             | (574 | )                            |  |                                               | —      |             
|Reclassified expired options                                                               |  |                         | —       |                           |  |                             | —      |                               |  |                             | —    |                              |  |                                               | (1,232 | )           
|Dividends reinvested                                                                       |  |                         | —       |                           |  |                             | 257    |                               |  |                             | —    |                              |  |                                               | —      |             
|Balance at June 30, 2015                                                                   |  |                         | 144,338 |                           |  |                             | 781    |                               |  |                             | —    |                              |  |                                               | 2,104  |             



1 Non-controlling interests are Subsidiary Preferred
Shares. Refer Note 19.



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





F-4









Statement of changes in equity





|For the year ended June 30                            |  | Ordinary shares   $’000 |         | Preference shares   $’000 |  | Convertible   Notes   $’000 |       | Share options reserve   $’000 |  | Available-for-sale reserve   $’000 |     | Translation reserve   $’000 |  | Accumulated   losses   $’000 |       | Total  $’000
|----------------------------------------------------- |  | ----------------------- | ------- | ------------------------- |  | --------------------------- | ----- | ----------------------------- |  | ---------------------------------- | --- | --------------------------- |  | ---------------------------- | ----- | ------------
|                                                      |  |                         |         |                           |  |                             |       |                               |  |                                    |     |                             |  |                              |       |             
|At July 1, 2013                                       |  |                         | 109,046 |                           |  |                             | —     |                               |  |                                    | 574 |                             |  |                              | 3,189 |             
|Profit/(loss) for period                              |  |                         | —       |                           |  |                             | —     |                               |  |                                    | —   |                             |  |                              | —     |             
|Other comprehensive income                            |  |                         | —       |                           |  |                             | —     |                               |  |                                    | —   |                             |  |                              | —     |             
|Total comprehensive income for the year               |  |                         | —       |                           |  |                             | —     |                               |  |                                    | —   |                             |  |                              | —     |             
|                                                      |  |                         |         |                           |  |                             |       |                               |  |                                    |     |                             |  |                              |       |             
|Transactions with owners in their capacity as owners: |  |                         |         |                           |  |                             |       |                               |  |                                    |     |                             |  |                              |       |             
|Shares issued                                         |  |                         | 12,597  |                           |  |                             | 4,643 |                               |  |                                    | —   |                             |  |                              | —     |             
|Share issue costs                                     |  |                         | (1,320  | )                         |  |                             | —     |                               |  |                                    | —   |                             |  |                              | —     |             
|Share-based payments for convertible notes            |  |                         | —       |                           |  |                             | —     |                               |  |                                    | —   |                             |  |                              | 147   |             
|Balance at June 30, 2014                              |  |                         | 120,323 |                           |  |                             | 4,643 |                               |  |                                    | 574 |                             |  |                              | 3,336 |             



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





F-5









Statement of cash flows





|                                                                      |  |      |   | Consolidated
|--------------------------------------------------------------------- |  | ---- | - | ------------
|For the year ended June 30                                            |  | Note |   | 2016 $’000  
|Cash flow from operating activities                                   |  |      |   |             
|Receipts from customers (inclusive of GST)                            |  |      |   |             
|Payments to suppliers and employees (inclusive of GST)                |  |      |   |             
|Finance costs                                                         |  |      |   |             
|Interest received                                                     |  |      |   |             
|Net cash flows used in operating activities                           |  |      | 9 |             
|                                                                      |  |      |   |             
|Cash flow from investing activities                                   |  |      |   |             
|Proceeds from sale of property, plant and equipment                   |  |      |   |             
|Purchase of property, plant and equipment                             |  |      |   |             
|Cash forfeited during reorganisation                                  |  |      |   |             
|Proceeds from sale of investments                                     |  |      |   |             
|Payment for the purchase of controlled entities, net of cash acquired |  |      |   |             
|Net cash flows (used in)/provided
    from investing activities       |  |      |   |             
|                                                                      |  |      |   |             
|Cash flow from financing activities                                   |  |      |   |             
|Proceeds from issue of ordinary shares (net of issue costs)           |  |      |   |             
|Proceeds from issue of preference shares                              |  |      |   |             
|Proceeds from issue of convertible notes                              |  |      |   |             
|Convertible note issue costs                                          |  |      |   |             
|Proceeds from borrowings                                              |  |      |   |             
|Repayment of borrowings                                               |  |      |   |             
|Payment of finance lease liabilities                                  |  |      |   |             
|Net cash flows provided from financing
    activities                 |  |      |   |             
|                                                                      |  |      |   |             
|Net (decrease)/increase in cash and cash equivalents                  |  |      |   |             
|Cash and cash equivalents at beginning of period                      |  |      |   |             
|Cash and cash equivalents at end of period                            |  |      | 9 |             



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





F-6









Notes to the financial statements





|Note |                                                             
|---- | ------------------------------------------------------------
|1    | Corporate information                                       
|2    | Summary of significant accounting policies                  
|3    | Significant accounting judgements, estimates and assumptions
|4    | Operating segments                                          
|5    | Revenues from continuing operations and other income        
|6    | Expenses                                                    
|7    | Income tax                                                  
|8    | Earnings per share                                          
|9    | Notes to the statement of cash flows                        
|10   | Trade and other receivables                                 
|11   | Inventories                                                 
|12   | Other assets                                                
|13   | Discontinued operations                                     
|14   | Plant and equipment                                         
|15   | Goodwill and intangible assets                              
|16   | Trade and other payables                                    
|17   | Interest-bearing loans and borrowings                       
|18   | Provisions                                                  
|19   | Contributed equity                                          
|20   | Reserves                                                    
|21   | Business combinations                                       
|22   | Financial risk management objectives and policies           
|23   | Related party
disclosures                                   
|24   | Key management personnel                                    
|25   | Share-based payments                                        
|26   | Commitments                                                 
|27   | Contingent liabilities                                      
|28   | Events after the balance sheet date                         
|29   | Parent entity information                                   
|30   | Auditors’ remuneration                                      
|31   | Asset holding arrangement                                   





F-7









Notes to the financial statements





| | 1. | Corporate information
| | -- | ---------------------



The consolidated financial statements of BlueNRGY
Group Limited (“BlueNRGY”, “the Parent” or “the Company”) (formerly CBD Energy Limited) for
the year ended June 30, 2016 were authorised for issue in accordance with a resolution of the Directors on October 28,
2016. The Directors have the power to amend and reissue the financial statements.



BlueNRGY is a company limited by shares, incorporated
in Australia, whose shares are publicly listed on the OTC Pink Current marketplace.



| | 2. | Summary of significant accounting policies
| | -- | ------------------------------------------



The principal accounting policies adopted in
the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to
all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of BlueNRGY
and its subsidiaries. BlueNRGY and its subsidiaries together are referred to in this financial report as the ‘Group’
or the ‘Consolidated Entity’.



| | (a) | Basis of preparation
| | --- | --------------------



The financial report is a general purpose financial
report, which has been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the
Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, modified by the
revaluation of available for sale financial assets, financial assets at fair value through profit or loss and liabilities (including
derivative instruments). BlueNRGY is a for-profit entity for the purpose of preparing the financial statements.



Compliance with Australian Accounting Standards
ensures that the financial statements and notes also comply with International Financial Reporting Standards.



The financial report is presented in Australian
dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated.



Going concern

The financial statements have been prepared
on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement
of liabilities in the ordinary course of business. The Group’s current assets exceeded its current liabilities by $3.4
million as of June 30, 2016, however $4.8 million of assets classified as current at June 30, 2016 were invested in non-current
financial assets subsequent to the financial year end. Key financial data for the Group for the years ended June 30, 2016 and
2015 is disclosed below:



|Consolidated                                                     |  | Year ended June 30, 2016   $’000 |        | Year ended June 30, 2015   $’000
|---------------------------------------------------------------- |  | -------------------------------- | ------ | --------------------------------
|                                                                 |  |                                  |        |                                 
|Cash at bank and in hand less overdraft                          |  |                                  | 285    |                                 
|Net (loss)/profit for the year                                   |  |                                  | (9,275 | )                               
|Net cash inflow/(outflow) from operating activities for the year |  |                                  | (7,842 | )                               
|Net current assets/(liabilities)                                 |  |                                  | 3,381  |                                 



The Group has made operating losses during the financial year ended
June 30, 2016 and had net operating cash outflows for the same period. It remains 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. The lenders of over 90% of the Group’s borrowings are either affiliates of members of the Board
of Directors or significant shareholders in the Company and the Directors expect that their financial support will continue
to be provided.





F-8







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (a) | Basis of preparation (continued)
| | --- | --------------------------------





Going concern (continued)

The Group’s ability to continue as a
going concern and to achieve its future business objectives depends on its ability to accomplish some or all of the following:



|l | Attain profitability: Not all subsidiaries are contributing cash flow to cover corporate
costs and the Group is not operating profitably overall. However, the Company is continually reviewing cost structures
in its operating subsidiaries and making the appropriate changes to maximise their cash flow and profitability. New business opportunities
are carefully assessed with a view to ensuring their potential to contribute to profits without undue consumption of working capital.
Specifically, during the financial year ended June 30, 2016 the number of employees in the Solar PV business units and corporate
units has been reduced to lower costs and better match the current scope of Group activities. In addition, the Company has completed
corporate acquisitions which gives the Group a platform to achieve profitability in its Monitoring & Performance Analytics
division within the next 12 months.                                                                       
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|l | Raise new debt and/or equity capital: During the twelve months ended June 30, 2016 the Company
has been successful in raising funds through the issuance of ordinary shares under Share Purchase Agreements. A total of US$2,000,000
(A$2,766,000) of cash has been raised from the issuance of 660,507 ordinary shares at US$3.028 per share. Additionally, a further
US$437,000 (A$599,000) of liabilities for fees and salaries due to executives of the company were extinguished through the issuance
of 144,125 ordinary shares in the company. Subsidiary preference shares (refer to Note 19 below for more detail) with a face value
of US$6,500,000 (A$8,763,000) were issued during the financial year ended June 30, 2016 to fund the Draker acquisition and investment
in the Inaccess Group of companies (refer to Notes 21 and 28). Proceeds from borrowings during the financial year ended June 30,
2016 across the group were A$5,832,000. Refer to Note 17 for more detail on borrowings.



The Group’s management and Board have
determined that there is a risk that its ongoing funding requirements may not be successfully met through the foregoing initiatives
and that some of its initiatives may not be successful. However, as previously mentioned, the Group has achieved some operating
and financing objectives and its management and Board believe that it has a reasonable prospect of achieving others; consequently,
the Board has no intention to liquidate the Group or cease trading.



The Directors have a responsibility to prepare
the financial statements in accordance with Accounting Standards, which require entities to prepare financial statements
on a going concern basis unless the Directors intend to liquidate the entity, cease trading or have no realistic alternative but
to do so. No adjustments have been made to the financial statements relating to the recoverability and classification of the asset
carrying amounts or classification of liabilities that might be necessary should the Group not continue as a going concern.



| | (b) | Critical accounting estimates
| | --- | -----------------------------



The preparation of financial statements requires
the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying
the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in Note 3.



| | (c) | Changes in accounting policies and new standards and interpretations not yet adopted
| | --- | ------------------------------------------------------------------------------------



The Group has adopted new and amended Australian
Accounting Standards and AASB Interpretations as of 1 July 2015. There has been no material impact on the financial statements
of the Group from these new and amended Standards and Interpretations.



F-9







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (c) | Changes in accounting policies and new standards and interpretations not yet adopted (continued)
| | --- | ------------------------------------------------------------------------------------------------





A number of new standards, amendments to standards
and interpretations are effective for annual periods beginning after 1 July 2016, 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, AASB 15 Revenue from Contracts with Customers, and AASB 16 Leases, which
become mandatory for the Group’s 2019, 2019 and 2020 consolidated financial statements respectively and could change the
classification and measurement of financial instruments, revenue recognition and lease recognition. The Group does not plan to
adopt these standards early and the extent of the impact has not been determined.



| | (d) | Basis of consolidation
| | --- | ----------------------



The consolidated financial statements comprise
the financial statements of BlueNRGY Group Limited and its subsidiaries as outlined in Note 23.



Subsidiaries are all those entities controlled
by the Group i.e. where the Group is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether the Group controls another entity.



The financial statements of the subsidiaries
are prepared for the same reporting period as the Company, using consistent accounting policies. In preparing the consolidated
financial statements, all intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group
transactions have been eliminated in full.



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 Note 2(e)).



A change in the ownership interest of a subsidiary
that does not result in a loss of control is accounted for as an equity transaction.



| | (e) | Business combinations
| | --- | ---------------------



Business combinations are accounted for using
the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition
date fair value, and the amount of any non-controlling interest in the acquiree. Acquisition costs incurred are expensed and included
in administrative expenses.



When the Group acquires a business, it assesses
the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual
terms, economic conditions, the Group’s operating or accounting policies and other pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved
in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured
at fair value as at the acquisition date through profit or loss.



Any contingent consideration to be transferred
by the acquirer is recognised at fair value at the acquisition date. Contingent consideration is accounted for as a provision in
accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and subsequent changes to the fair value
of the contingent consideration is recognised in profit or loss. If the contingent consideration is classified as equity, it will
not be re-measured. Subsequent settlement is accounted for within equity.



All transaction costs incurred in relation
to a business combination are expensed to profit or loss.



| | (f) | Operating segments
| | --- | ------------------



Operating segments are reported in a manner
that is consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker
has been identified as the Board of Directors who ultimately make strategic decisions. Refer to Note 4 for details of segments
in which the Group operates.





F-10







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (g) | Foreign currency translation
| | --- | ----------------------------



Items included in the financial statements
of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial statements are presented in Australian dollars which is BlueNRGY
Group Limited’s functional and presentation currency.



Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.



All exchange differences in the consolidated
financial statements are taken to profit or loss except when they are deferred in equity when they are attributable to part of
the net investment in a foreign operation.



Non-monetary items that are measured at fair
value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation
differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss.



| | (h) | Revenue recognition
| | --- | -------------------



Revenue is recognised to the extent that it
is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the
payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually
defined terms of payment and excluding taxes or duty. The Group assesses its revenue arrangements against specific criteria to
determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue
arrangements. The specific recognition criteria described below must also be met before revenue is recognised:



Domestic and commercial solar installation
fees

Installation fees are recognised once installation
is completed. Domestic and commercial solar installation revenues are derived from solar PV system sales to third parties. Part
of the consideration the Group receives in respect of a solar installation is generally in the form of a Small-scale Technology
Certificates (‘STCs’) that our customers assign to the Group. STCs assigned to the Group are initially measured as
an inventory asset at cost. When STCs are ultimately sold by the Group, incremental revenue might arise, being the difference between
the cost at which the STCs were recorded and the final price at which STCs have been traded by the Group. This incremental revenue
is reported as other income. Similarly, when STCs are sold at less than cost, the loss is reported within the cost of raw materials
in profit or loss, as it represents, in effect, a write down of the STCs inventory balance to its net realisable value.



Subscription revenues

Subscription revenue is recognised over the
life of the contract in line with when the significant risk and rewards of ownership have been transferred to the customer, recovery
of the consideration is probable and the amount of revenue can be measured reliably. The timing of the transfer of risks and rewards
varies depending on the individual terms of the subscription agreement.



Sale of products, materials and parts

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



Services

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



Construction contracts

Contract revenue and expenses are recognised
in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. Under this
method, contract revenue is matched with the contract costs incurred in reaching the stage of completion.



F-11







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (h) | Revenue recognition (continued)
| | --- | -------------------------------





Construction contracts (continued)

When it is probable that a loss will arise
from a construction contract, the excess of expected total costs over expected total revenue is recognised immediately in profit
or loss. Where the outcome cannot be measured reliably, revenue is recognised only to the extent that related expenditure is recoverable.
The stage of completion of a contract is measured by reference to the recoverable costs incurred to date as a percentage of estimated
total costs for the contract.



Project revenue

Revenue from commercial and utility scale solar
projects and wind development projects is recognised when the risks and rewards have been transferred, which can vary depending
on the specifics of each arrangement that the Group has with its customers, and when revenue can be reliably measured.



Interest income

Interest income is recognised using the effective
interest method.



Other revenues

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



| | (i) | Income tax and other taxes
| | --- | --------------------------



The income tax expense or revenue for the period
is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted
by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.



Current tax assets and liabilities for the
current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on
the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date.



Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.



Deferred income tax liabilities are recognised
for all taxable temporary differences except:



|l | 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                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                  
|l | 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:



|l | 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                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                      
|l | 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.



F-12







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (i) | Income tax and other taxes (continued)
| | --- | --------------------------------------



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 offset current tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity and the same taxation authority.



Tax benefits acquired as part of a business
combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information
about facts and circumstances changed. The adjustment would either be treated as a reduction of goodwill (as long as it does not
exceed goodwill) if it was incurred during the measurement period or in profit or loss.



Tax consolidation legislation

BlueNRGY Group Limited and its wholly owned
Australian controlled entities implemented the tax consolidation legislation as of 1 July 2003.



In addition to its own current and deferred
tax amounts, BlueNRGY Group Limited also recognises the current tax liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed from controlled entities in the tax-consolidated group in line with Note
3.



Other taxes

Revenues, expenses and assets are recognised
net of the amount of GST (or foreign equivalent) except:



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



| | (j) | Impairment of assets
| | --- | --------------------



Goodwill
and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows
from other assets or groups of assets (‘cash generating units’). Non-financial
assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each
reporting period.



F-13







Notes to the financial statements





| | 2. | Summary of significant
                                         accounting policies (continued)
| | -- | -----------------------------------------------------------------------------------------------



| | (k) | Cash and cash equivalents
| | --- | -------------------------



Cash and cash equivalents in the statement
of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.



For the purposes of the statement of cash
flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Bank
overdrafts are included within interest-bearing loans and borrowings in current liabilities in the statement of financial position.



| | (l) | Trade and other receivables
| | --- | ---------------------------



Trade receivables are recognised initially
at original invoiced amounts, less an allowance for any uncollectible amounts. Settlement terms for trade receivables vary between
the business units and are generally in line with standard industry practice within each industry. They are presented as current
assets unless collection is not expected for more than 12 months after the reporting date.



Collectability of trade receivables is reviewed
on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified by reducing the carrying
amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency
in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment
allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. Cash
flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.



The amount of any impairment loss is recognised
in profit or loss as a separate expense category. When a trade receivable for which an impairment allowance had been recognised
becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts
previously written off are credited against other expenses in profit or loss.



| | (m) | Inventories
| | --- | -----------



Raw materials and stores

Inventories, which mainly comprise solar panels,
monitoring equipment and inverters, 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.



Small-scale Technology Certificates (‘STCs’)

As indicated in Note 2(h), STCs are initially
recognised at cost following the installation of a solar panel and the assignment of the STCs to the Group. STCs are subsequently
measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course
of business less the estimated costs necessary to make the sale.



Project work in progress

Project work in progress comprises commercial
solar scale projects and is valued at the lower of cost and net realisable value. Cost comprises staff salary costs and direct
expenses including direct material costs and contractor costs together with an appropriate proportion of overheads. Net realisable
value is based on estimated selling prices less further costs expected to be incurred to completion.



Construction contracts work in progress

Construction work in progress is valued at
cost, plus profit recognised to date, less provision for anticipated future losses and progress billings made under the contract.
Cost includes both variable and fixed costs relating to specific contracts, and those costs that are attributable to the contract
activity in general and that can be allocated on a reasonable basis.





F-14







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (n) | 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 10 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.



| | (o) | 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.





F-15







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (p) | 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 15.



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.



The amortisation period and the amortisation
method for an intangible asset with a finite useful life are reviewed at least once each reporting period. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for prospectively
by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense
on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of
the intangible asset.



Development Costs

Research costs and costs that do not meet the
definition of development costs for the purpose of Accounting Standards are expensed as incurred. An intangible asset arising from
development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing
the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the
asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the
ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial
recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated
amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit
from the related project.





F-16







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (p) | Goodwill and other intangibles (continued)
| | --- | ------------------------------------------



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.



| | (q) | Pensions and other post-employment benefits
| | --- | -------------------------------------------



The company contributes on behalf of employees
at the required statutory rates as per geographic legislature.



| | (r) | 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.



| | (s) | 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.



| | (t) | Provisions and employee benefits
| | --- | --------------------------------



Provisions are recognised when the Group has
a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.



Employee entitlements - wages, salaries,
and annual leave

Liabilities for wages and salaries, including
non-monetary benefits and annual leave expected to be wholly settled within 12 months of the reporting date, are recognised in
respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities
are settled.



Employee entitlements - long service leave

The liability for long service leave is recognised
and measured as the present value of expected future payments to be made in respect of services provided by employees up to the
reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience
of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date
on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash
outflows.



| | (u) | 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.



F-17







Notes to the financial statements





| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (u) | Share-based payment transactions (continued)
| | --- | --------------------------------------------



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 8).



| | (v) | 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.



| | (w) | 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:



|l | the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                              
|l | the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.



| | (x) | Parent entity financial information
| | --- | -----------------------------------



The financial information for the parent entity,
BlueNRGY Group Limited, disclosed in Note 29 has been prepared on the same basis as the consolidated financial statements, except
as set out below.



Investments in subsidiaries

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



Tax consolidation legislation

BlueNRGY Group Limited and its wholly owned
Australian controlled entities have implemented the tax consolidation legislation.





F-18







Notes to the financial statements



| | 2. | Summary of significant accounting policies (continued)
| | -- | ------------------------------------------------------



| | (y) | Rounding of amounts
| | --- | -------------------



The Group is of a kind referred to in ASIC
Corporations (Rounding in financial/Directors’ reports) Instrument 2016/191 and in accordance with that instrument amounts
in the consolidated financial report and Directors’ report have been rounded off to the nearest thousand dollars, unless
otherwise stated.



| | 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.



Critical accounting estimates and assumptions



Recovery of deferred tax assets

During the year ended June 30, 2016, pursuant
to AASB 112 Income Taxes, the Company assessed 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 were not recognised at that date.



Impairment of goodwill and other intangibles

The Group determines whether goodwill and other
intangiblesare impaired at least on an annual basis. This requires an estimation of the recoverable amount of the cash-generating
unit(s) to which the goodwill or other intangible assets are allocated. The assumptions used in this estimation of recoverable
amount and the carrying amount of goodwill and other intangibles including a sensitivity analysis are shown in Note 15.



Project work in progress

Project work in progress is capitalised in
accordance with the accounting policy in Note 2(m). Initial capitalisation of costs is based on management’s judgment that
technological and economic 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, 2016 the carrying amount of capitalised project work in progress was $Nil (2015: $110,000).



Share-based payment transactions

The Group measures the cost of equity-settled
transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The
fair value is determined using a Black-Scholes or Binominal model, with the assumptions detailed in Note 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.



Contingent consideration

Under the terms of the Membership Interest
Purchase Agreement between the Group and its subsidiary, BlueNRGY LLC, the Group was obligated to create a management incentive
pool of ordinary shares and, subject to vesting conditions, issue all such shares to the named parties. Identified within this
pool of ordinary shares were 50,142 shares ($191,000) unallocated staff incentive shares to be issued to beneficiaries as directed
by parties to the Agreement.





F-19







Notes to the financial statements



| | 4. | Operating segments
| | -- | ------------------



The Group has identified its operating segments
based on the internal reports that are reviewed and used by the Board of Directors (the chief operating decision makers) in assessing
performance and in determining the allocation of resources.



The consolidated entity’s operating companies
are organised and managed separately according to the nature of the products and services they provide, with each segment offering
different products and serving different markets.



The principal activities of segments within
the consolidated entity were:



|l | 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 small to medium enterprise applications. International products and services are generally focused on utility-scale solar generation system projects.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|l | 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.                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|l | Monitoring & Performance Analytics provide an integrated, device-agnostic energy monitoring solution to maximize profitability for any solar PV installation. An all-in-one monitoring portal, users are provided with the most comprehensive suite of tools to remotely configure and track energy production.                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|l | RAPS/Technology Solutionsincludes operating remote area power systems (‘RAPS’). The Chatham Island wind project is included in the RAPS segment.                                                                                                                                                                                                                                                                                                                               
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|l | Corporateprovides administrative and other services required to support the BlueNRGY group.
This includes the Corporate Executive Team including Finance, Human Resources and Legal services.                                                                                                                                                                                                                                                                                  



Primary reporting – business segments



|2016                                                                |  | Solar PV
$’000 |        | Parmac
$’000 |  | Monitoring & Performance Analytics
$’000 |        | RAPS
$’000 |  | Corporate
$’000 |        | Consoli-dated
$’000
|------------------------------------------------------------------- |  | -------------- | ------ | ------------ |  | ---------------------------------------- | ------ | ---------- |  | --------------- | ------ | -------------------
|Revenues
    from continuing operations                             |  |                | 17,270 |              |  |                                          | 12,177 |            |  |                 | 2,599  |                    
|Other income                                                        |  |                | 4      |              |  |                                          | —      |            |  |                 | 10     |                    
|Total income from
    continuing operations                         |  |                | 17,274 |              |  |                                          | 12,177 |            |  |                 | 2,609  |                    
|                                                                    |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Segment net operating
    loss before tax from continuing operation |  |                | (505   | )            |  |                                          | (813   | )          |  |                 | (4,153 | )                  
|Unallocated non-operating
    income and costs                      |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Loss before
    tax from continuing operations                      |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Income tax expense                                                  |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Net loss after
    tax from continuing operations                   |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Net loss after
    tax                                              |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|                                                                    |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Depreciation and
    amortisation                                   |  |                | (22    | )            |  |                                          | (119   | )          |  |                 | (182   | )                  
|                                                                    |  |                |        |              |  |                                          |        |            |  |                 |        |                    
|Total Assets                                                        |  |                | 6,702  |              |  |                                          | 4,619  |            |  |                 | 13,435 |                    
|Total Liabilities                                                   |  |                | 3,121  |              |  |                                          | 5,800  |            |  |                 | 4,682  |                    



F-20







Notes to the financial statements





Primary reporting – business segments (continued)



|2015                                                                      |  | Solar PV
$’000 |         | Parmac
$’000 |  | Monitoring & Performance Analytics
$’000 |        | RAPS
$’000 |  | Corporate
$’000 |       | Consolidated
    $’000
|------------------------------------------------------------------------- |  | -------------- | ------- | ------------ |  | ---------------------------------------- | ------ | ---------- |  | --------------- | ----- | ----------------------
|Revenues from continuing operations                                       |  |                | 3,062   |              |  |                                          | 12,242 |            |  |                 | 167   |                       
|Other income                                                              |  |                | 2,062   |              |  |                                          | (865   | )          |  |                 | (10   | )                     
|Total income from continuing operations                                   |  |                | 5,124   |              |  |                                          | 11,377 |            |  |                 | 157   |                       
|Total income from discontinued operations                                 |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Total income                                                              |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|                                                                          |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Segment net operating profit/(loss) before tax from continuing operations |  |                | (10,695 | )            |  |                                          | (227   | )          |  |                 | (760  | )                     
|Unallocated non-operating income and costs                                |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Loss before tax from continuing operations                                |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Income tax expense                                                        |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Net loss after tax from continuing operations                             |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Net profit from discontinued operations                                   |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Net profit after tax                                                      |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|                                                                          |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Depreciation and amortisation                                             |  |                | (46     | )            |  |                                          | (138   | )          |  |                 | (57   | )                     
|Impairment of asset                                                       |  |                | (6,200  | )            |  |                                          | —      |            |  |                 | —     |                       
|                                                                          |  |                |         |              |  |                                          |        |            |  |                 |       |                       
|Total Assets                                                              |  |                | 5,300   |              |  |                                          | 4,232  |            |  |                 | 8,322 |                       
|Total Liabilities                                                         |  |                | 1,771   |              |  |                                          | 5,739  |            |  |                 | 909   |                       



Secondary reporting – geographic segments



|                                                                 |  | Consolidated
|---------------------------------------------------------------- |  | ------------
|                                                                 |  | 2016 $’000  
|Revenues from continuing operations                              |  |             
|-	Australia                                                      |  |             
|-	United States                                                  |  |             
|-	Other                                                          |  |             
|                                                                 |  |             
|Segment net operating loss before tax from continuing operations |  |             
|-	Australia                                                      |  |             
|-	United States                                                  |  |             
|-	Other                                                          |  |             
|                                                                 |  |             
|Segment assets from continuing operations                        |  |             
|-	Australia                                                      |  |             
|-	United States                                                  |  |             
|-	Other                                                          |  |             
|                                                                 |  |             
|Segment liabilities from continuing operations                   |  |             
|-	Australia                                                      |  |             
|-	United States                                                  |  |             
|-	Other                                                          |  |             
|                                                                 |  |             





F-21







Notes to the financial statements



|5. | Revenues from continuing operations and other income
|-- | ----------------------------------------------------



|                                  |  | Consolidated
|--------------------------------- |  | ------------
|                                  |  | 2016 $’000  
|                                  |  |             
|Revenue from sales and services   |  |             
|                                  |  |             
|Other income                      |  |             
|Debt extinguishment 1             |  |             
|Other income                      |  |             
|Gain/(loss) on disposal of assets |  |             
|                                  |  |             



1 The Company and its subsidiary,
BlueNRGY Renewable Solutions Pty Ltd, realised gains on the extinguishment of debt and creditor claims on exiting voluntary administration
under the Australian Corporations Act 2001 following the execution of two deeds of company arrangement in January 2015.



| | 6. | Expenses
| | -- | --------



|                                            |  | Consolidated
|------------------------------------------- |  | ------------
|                                            |  | 2016 $’000  
|Employee benefits expense                   |  |             
|Salaries and wages                          |  |             
|Defined contribution superannuation expense |  |             
|Other employee benefits expense             |  |             
|                                            |  |             
|                                            |  |             
|Amortisation and depreciation               |  |             
|Depreciation – property, plant & equipment  |  |             
|Amortisation – development costs            |  |             
|                                            |  |             
|Impairment of assets                        |  |             
|Investment in wind projects 1               |  |             
|Investment in financial assets              |  |             
|Investment in Solar                         |  |             
|Other 2                                     |  |             
|                                            |  |             
|Other expenses                              |  |             
|Bad and doubtful debts                      |  |             
|Compliance and consultants                  |  |             
|Transaction fees – acquisitions             |  |             
|Insurance                                   |  |             
|Occupancy expenses                          |  |             
|Share option expenses                       |  |             
|Travel costs                                |  |             
|Other expenses                              |  |             
|                                            |  |             





F-22







Notes to the financial statements



| | 6. | Expenses (continued)
| | -- | --------------------



|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  | 2016
$’000  
|Net finance costs                                        |  |             
|Interest income                                          |  |             
|Interest expense                                         |  |             
|Dividends on Preference shares classified as liabilities |  |             
|Share option expenses                                    |  |             
|Foreign exchange loss/(gain)                             |  |             
|                                                         |  |             



1 The investment in the Taralga
Wind Farm was fully impaired to $Nil in 2014.

2 The investment in Andalay Solar,
a US listed company, has been written down to $Nil in 2015.



| | 7. | Income tax
| | -- | ----------



|                                                                                        |  | Consolidated
|--------------------------------------------------------------------------------------- |  | ------------
|                                                                                        |  | 2016 $’000  
|                                                                                        |  |             
|(a)	Income tax benefit/(expense)                                                        |  |             
|Current tax expense                                                                     |  |             
|Deferred tax benefit/(expense)                                                          |  |             
|Income tax benefit/(expense)                                                            |  |             
|                                                                                        |  |             
|Income tax expense is attributable to:                                                  |  |             
|Loss from continuing operations                                                         |  |             
|Profit/(loss) from discontinuing operations                                             |  |             
|                                                                                        |  |             
|                                                                                        |  |             
|(b)	Numerical reconciliation of income tax expense to prima facie tax payable           |  |             
|Loss before income tax from continuing operations                                       |  |             
|Profit/(loss) before income tax from discontinuing operations                           |  |             
|                                                                                        |  |             
|Tax at the Australian tax rate of 30%                                                   |  |             
|                                                                                        |  |             
|Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: |  |             
|Expenditure not allowable for income tax purposes                                       |  |             
|Tax benefit not recognised (now recognised)                                             |  |             
|Income tax expense                                                                      |  |             



The Group offsets tax assets and liabilities
if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax
assets and deferred tax liabilities relate to income taxes levied by the same tax authority.



| | (c) | Tax losses
| | --- | ----------



The Group generated revenue tax losses totalling
$9,234,000. Deferred tax assets relating to tax losses totalling $19,383,000
(2015: $16,613,000) 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 (2015: $4,867,000).





F-23







Notes to the financial statements



| | 7. | Income tax (continued)
| | -- | ----------------------



| | (d) | Unrecognised temporary differences
| | --- | ----------------------------------



The temporary differences not recognised at
June 30, 2016 and 2015 relate primarily to tax losses referred to in (c). There are no other material temporary differences.



| | (e) | Franking credits
| | --- | ----------------



At June 30, 2016 the Group has $834,000 of
available franking credits (2015: $834,000).



| | 8. | Earnings per share
| | -- | ------------------



The following reflects the income used in
the basic and diluted earnings per share computations. All calculations and disclosures reflect the 80:1 reverse stock split concluded
in December 2015.



|                                                                                                             |  | Consolidated
|------------------------------------------------------------------------------------------------------------ |  | ------------
|                                                                                                             |  | 2016 $’000  
|                                                                                                             |  |             
|(a) Earnings used in calculating earnings per share                                                          |  |             
|Net loss from continuing operations attributable to ordinary equity holders of the parent                    |  |             
|Net profit/(loss) from discontinued operations attributable to ordinary equity holders of the parent         |  |             
|Net profit/(loss) attributable to ordinary equity holders of the parent                                      |  |             
|                                                                                                             |  |             
|                                                                                                             |  |             
|(b) Weighted average number of shares                                                                        |  |             
|Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share   |  |             
|Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share |  |             
|                                                                                                             |  |             
|(c) Earnings per share                                                                                       |  |             
|Basic loss per share from continuing operations                                                              |  |             
|Basic earnings/(loss) per share from discontinued operations                                                 |  |             
|Basic (loss)/earnings per share                                                                              |  |             
|                                                                                                             |  |             
|Diluted loss per share from continuing operations                                                            |  |             
|Diluted earnings/(loss) per share from discontinued operations                                               |  |             
|Diluted (loss)/earnings per share                                                                            |  |             



Basic earnings per share amounts are calculated
by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year.



Diluted earnings per share amounts are calculated
by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.



All share options on issue at the reporting
dates were anti-dilutive and were excluded from the calculation of diluted earnings per share.



F-24







Notes to the financial statements



| | 9. | Notes to the statement of cash flows
| | -- | ------------------------------------



|                                                                    |  | Consolidated
|------------------------------------------------------------------- |  | ------------
|                                                                    |  | 2016 $’000  
|                                                                    |  |             
|Cash at bank and in hand                                            |  |             
|                                                                    |  |             
|(a) Reconciliation of net loss to net cash flow from operations     |  |             
|(Loss/)profit after tax                                             |  |             
|Adjustment for non-cash items:                                      |  |             
|Depreciation and amortisation                                       |  |             
|Impairment of intangibles                                           |  |             
|Impairment of financial assets and joint venture assets             |  |             
|Equity settled payments                                             |  |             
|Gain on debt extinguishment                                         |  |             
|Share-based payments expense                                        |  |             
|Capitalised interest expense                                        |  |             
|Non-cash items relating to convertible notes                        |  |             
|Loss on sale of property, plant and equipment and intangible assets |  |             
|Unrealised losses/(gains) on foreign exchange                       |  |             
|Bad debts written off and provision for impairment of receivable    |  |             
|Changes in assets and liabilities:                                  |  |             
|Trade and other receivables                                         |  |             
|Inventories                                                         |  |             
|Other current assets                                                |  |             
|Other non-current assets                                            |  |             
|Trade and other payables                                            |  |             
|Provisions                                                          |  |             
|Net cash used in operating activities                               |  |             
|                                                                    |  |             
|(b) Non-cash financing and investing activities                     |  |             
|Share-based payments                                                |  |             
|Equity settled – payables and borrowings                            |  |             
|Acquisition of plant and equipment by means of finance leases       |  |             



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



F-25







Notes to the financial statements



| | 10. | Trade and other receivables
| | --- | ---------------------------



|                    |  | Consolidated
|------------------- |  | ------------
|                    |  | 2016 $’000  
|Current             |  |             
|Trade receivables   |  |             
|Retentions          |  |             
|Other receivables 1 |  |             
|                    |  |             



1 Included in Other Receivables
is the amount of $6,641,000 which related to an unconditional subscription agreement for US$5 million to subscribe for Subsidiary
Preferred Shares received by the Company dated June 28, 2016. The cash proceeds from this subscription were received in full in
July 2016. Of these proceeds, $5,166,000 was used to fund an investment in the Inaccess Group of companies which included associated
transaction costs of $366,000 on July 7, 2016 (refer Note 28). The balance of the funds received were used to fund working capital
within the Group.



Past due but not impaired

As at June 30, 2016, trade receivables past
due but not considered impaired are: $1,720,000 (2015: $255,000). 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 $1,515,000 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: |  |             |       |                 |  |                  |   |                
|2016 Consolidated                                                            |  |             | 1,720 |                 |  |                  | — |                
|2015 Consolidated                                                            |  |             | 255   |                 |  |                  | — |                



| | 11. | Inventories
| | --- | -----------



|                         |  | Consolidated
|------------------------ |  | ------------
|                         |  | 2016
$’000  
|Raw materials and stores |  |             
|Work in progress         |  |             
|STCs                     |  |             
|                         |  |             



F-26







Notes to the financial statements



| | 12. | Other assets
| | --- | ------------



|              |  | Consolidated
|------------- |  | ------------
|              |  | 2016 $’000  
|Current       |  |             
|Prepayments 1 |  |             
|Deposits      |  |             
|Other         |  |             
|              |  |             
|              |  |             
|Non-current   |  |             
|Deposits      |  |             



1 Includes insurance and upfront manufacturing licence
fees.



| | 13. | Discontinued operations
| | --- | -----------------------



In December 2014, a number of subsidiaries
of the Company and their respective subsidiaries were voluntarily liquidated. These subsidiaries were classified as ‘discontinued
operations’ in the 2015 financial year. No operations are classified as discontinued in the 2016 financial year.



In August 2013, BlueNRGY’s 100% owned
subsidiary Capacitor Technologies Pty Ltd was disposed of for $1,788,000 resulting in a loss on sale of $8,000.



|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  | 2016 $’000  
|Current                                                  |  |             
|Revenue                                                  |  |             
|Other income 1                                           |  |             
|Expenses                                                 |  |             
|Profit/(loss) before income tax                          |  |             
|Income tax expense                                       |  |             
|Profit/(loss) after income tax of discontinued operation |  |             



1 Other income in 2015 comprises debt forgiveness and
extinguishment.





F-27







Notes to the financial statements



| | 14. | Plant and equipment
| | --- | -------------------



|                                             |  | Consolidated
|-------------------------------------------- |  | ------------
|                                             |  | 2016 $’000  
|Computer hardware & software                 |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total computer hardware & software           |  |             
|                                             |  |             
|Motor vehicles                               |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total motor vehicles                         |  |             
|                                             |  |             
|Plant and equipment                          |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total plant and equipment                    |  |             
|                                             |  |             
|Furniture, fittings & office equipment       |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total furniture, fittings & office equipment |  |             
|                                             |  |             
|Leased motor vehicles                        |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total leased motor vehicles                  |  |             
|                                             |  |             
|Leasehold improvements                       |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total leasehold improvements                 |  |             
|                                             |  |             
|Total property, plant and equipment          |  |             
|At cost                                      |  |             
|Accumulated depreciation                     |  |             
|Total property, plant and equipment          |  |             





F-28







Notes to the financial statements



| | 14. | Plant and equipment (continued)
| | --- | -------------------------------



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

|                                                                |  | Computer hardware & software   $’000 |      | Motor vehicles   $’000 |  | Plant & equipment   $’000 |     | Furniture, fittings & office equipment   $’000 |  | Leased motor vehicles   $’000 |       | Leasehold improve-ments   $’000 |  | Total $’000
|--------------------------------------------------------------- |  | ------------------------------------ | ---- | ---------------------- |  | ------------------------- | --- | ---------------------------------------------- |  | ----------------------------- | ----- | ------------------------------- |  | -----------
|Year Ended June 30, 2016                                        |  |                                      |      |                        |  |                           |     |                                                |  |                               |       |                                 |  |            
|At July 1, 2015 net of accumulated depreciation and impairment  |  |                                      | 150  |                        |  |                           | 93  |                                                |  |                               | 1,823 |                                 |  |            
|Foreign currency movement                                       |  |                                      | —    |                        |  |                           | 2   |                                                |  |                               | 2     |                                 |  |            
|Additions through Business Combination                          |  |                                      | 60   |                        |  |                           | —   |                                                |  |                               | 19    |                                 |  |            
|Additions                                                       |  |                                      | 12   |                        |  |                           | —   |                                                |  |                               | 11    |                                 |  |            
|Disposals                                                       |  |                                      | (1   | )                      |  |                           | —   |                                                |  |                               | (8    | )                               |  |            
|Depreciation charge for the year                                |  |                                      | (101 | )                      |  |                           | (27 | )                                              |  |                               | (133  | )                               |  |            
|At June 30, 2016 net of accumulated depreciation and impairment |  |                                      | 120  |                        |  |                           | 68  |                                                |  |                               | 1,714 |                                 |  |            
|                                                                |  |                                      |      |                        |  |                           |     |                                                |  |                               |       |                                 |  |            
|Year Ended June 30, 2015                                        |  |                                      |      |                        |  |                           |     |                                                |  |                               |       |                                 |  |            
|At July 1, 2014 net of accumulated depreciation and impairment  |  |                                      | 328  |                        |  |                           | 5   |                                                |  |                               | 1,912 |                                 |  |            
|Additions through Business Combination                          |  |                                      | 2    |                        |  |                           | 101 |                                                |  |                               | 18    |                                 |  |            
|Additions                                                       |  |                                      | 4    |                        |  |                           | 26  |                                                |  |                               | 29    |                                 |  |            
|Disposals                                                       |  |                                      | (90  | )                      |  |                           | (1  | )                                              |  |                               | (2    | )                               |  |            
|Transfers                                                       |  |                                      | —    |                        |  |                           | —   |                                                |  |                               | —     |                                 |  |            
|Depreciation charge for the year                                |  |                                      | (94  | )                      |  |                           | (38 | )                                              |  |                               | (134  | )                               |  |            
|At June 30, 2015 net of accumulated depreciation and impairment |  |                                      | 150  |                        |  |                           | 93  |                                                |  |                               | 1,823 |                                 |  |            





F-29







Notes to the financial statements



| | 15. | Goodwill and intangible assets
| | --- | ------------------------------



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

|                                                                |  | Development costs
$’000 |      | Goodwill
$’000 |  | Total
$’000
|--------------------------------------------------------------- |  | ----------------------- | ---- | -------------- |  | -----------
|Year ended June 30, 2016                                        |  |                         |      |                |  |            
|At July 1, 2015 net of impairment                               |  |                         | 212  |                |  |            
|Foreign currency movement                                       |  |                         | 10   |                |  |            
|Additions through Business Combination 1                        |  |                         | —    |                |  |            
|Amortisation                                                    |  |                         | (121 | )              |  |            
|At June 30, 2016 net of accumulated amortisation and impairment |  |                         | 101  |                |  |            
|                                                                |  |                         |      |                |  |            
|At June 30, 2016                                                |  |                         |      |                |  |            
|Cost (gross carrying amount)                                    |  |                         | 360  |                |  |            
|Accumulated amortisation and impairment                         |  |                         | (259 | )              |  |            
|Net carrying amount                                             |  |                         | 101  |                |  |            
|                                                                |  |                         |      |                |  |            
|Year ended June 30, 2015                                        |  |                         |      |                |  |            
|At July 1, 2014 net of impairment                               |  |                         | —    |                |  |            
|Additions through Business Combination 1                        |  |                         | 260  |                |  |            
|Impairment charge                                               |  |                         | —    |                |  |            
|Amortisation                                                    |  |                         | (48  | )              |  |            
|At June 30, 2015 net of accumulated amortisation and impairment |  |                         | 212  |                |  |            
|                                                                |  |                         |      |                |  |            
|At June 30, 2015                                                |  |                         |      |                |  |            
|Cost (gross carrying amount)                                    |  |                         | 350  |                |  |            
|Accumulated amortisation and impairment                         |  |                         | (138 | )              |  |            
|Net carrying amount                                             |  |                         | 212  |                |  |            



1Refer to Note 21 for the
details of business combinations.



Goodwill

Goodwill is allocated to the Group’s
cash-generating units (‘CGUs’) identified to the operating segments. A segment-level summary of the goodwill is presented
below:



|                                  |  | Consolidated
|--------------------------------- |  | ------------
|                                  |  | 2016 $’000  
|                                  |  |             
|Solar PV                          |  |             
|Monitoring &Performance Analytics |  |             
|Parmac                            |  |             
|                                  |  |             



The Group performs its impairment testing as
at 30 June each year or more frequently where there are indicators of impairment. In conducting this review of goodwill, the Group
has considered the results of two valuation approaches: 1) value-in-use calculations; and 2) the relationship between the Company’s
market capitalisation (based on the implied capitalisation from the most recent equity issues) and its book value.



At June 30, 2015, an impairment charge of $6,200,000
was recorded against the Solar PV CGU goodwill based on the value in use calculations performed. There is no impairment in 2016.





F-30







Notes to the financial statements



| | 15. | Goodwill and intangible assets (continued)
| | --- | ------------------------------------------



Key assumptions used in value in use calculations

The recoverable amount of the CGUs based on
a value in use calculation uses cash flow projections as at 30 June of the reporting period based on financial budgets.



The calculation of value-in-use relies upon
the following assumptions:

|                       |  | Monitoring & Performance Analytics |       | Solar |  | Parmac
|---------------------- |  | ---------------------------------- | ----- | ----- |  | ------
|                       |  |                                    |       |       |  |       
|Pre-tax discount rate  |  |                                    | 19.51 | %     |  |       
|Perpetuity growth rate |  |                                    | 5     | %     |  |       



The calculation of value in use is most sensitive
to the following assumptions:



|l | earnings before interest, tax, depreciation & amortisation (EBITDA);
|- | --------------------------------------------------------------------
|l | discount rates; and                                                 
|l | growth rate used to extrapolate cash flows beyond the budget period.



Earnings before interest, tax, depreciation
& amortisation (EBITDA) – EBITDA forecasts are based on projections for the forthcoming 2 year period, then extrapolated
for a further 3 years. The basis for these projections is the recent historical performance of the CGU’s adjusted for any
non-recurring revenue or cost items. This is then overlaid with the impact of changes to revenue streams, gross margins and cost
structures which have either now been put in place or are underway.



Discount rates - discount rates reflect
an estimate of the Group’s time value of money. This is the benchmark used by the Group to assess operating performance and
to evaluate future investment proposals. In determining appropriate discount rates, regard has been given to the weighted average
cost of capital of the entity as a whole. The business risks specific to each unit are reflected in their individual cash flow
estimates rather than the discount rate.



Growth rate estimates - these are based
on published industry research such as IbisWorld for Electricity Generation in the case of the Solar CGU and Industrial
Building Construction for Parmac and independent research publications for monitoring and performance analytics.



Sensitivity to changes in value-in-use
assumptions - The implications of the key assumptions on the carrying values are shown below:



|Input         |  | Sensitivity Applied                  |  | Monitoring & Performance Analytics   $’000 |      | Solar
$’000 |  | Parmac
$’000
|------------- |  | ------------------------------------ |  | ------------------------------------------ | ---- | ----------- |  | ------------
|              |  |                                      |  |                                            |      |             |  |             
|EBITDA        |  | 25% shortfall in EBITDA achievement  |  |                                            | (744 | )           |  |             
|Discount rate |  | 3% increase to discount rate applied |  |                                            | —    |             |  |             
|Growth rate   |  | Long term growth rate of 0%          |  |                                            | —    |             |  |             





F-31







Notes to the financial statements



| | 16. | Trade and other payables
| | --- | ------------------------



|                            |  | Consolidated
|--------------------------- |  | ------------
|                            |  | 2016 $’000  
|Current                     |  |             
|Trade payables              |  |             
|Deferred revenue            |  |             
|Accruals and other payables |  |             
|                            |  |             



Fair value

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



| | 17. | Interest-bearing loans and borrowings
| | --- | -------------------------------------



|                        |  |      |    | Consolidated
|----------------------- |  | ---- | -- | ------------
|                        |  | Note |    | 2016 $’000  
|Current - secured       |  |      |    |             
|Other loans 1           |  |      |    |             
|Finance leases          |  |      | 26 |             
|Current – unsecured     |  |      |    |             
|Other loans             |  |      |    |             
|                        |  |      |    |             
|Non-current – secured   |  |      |    |             
|Other loans 2           |  |      |    |             
|Finance leases          |  |      | 26 |             
|Preference shares 4     |  |      |    |             
|Non-current – unsecured |  |      |    |             
|Other loans 3           |  |      |    |             
|                        |  |      |    |             



CURRENT BORROWINGS



1 Other loans – secured

The other loans – secured balance as
at June 30, 2016 consists of two third-party loans, provided to subsidiaries within the Group. All of the obligations under these
secured agreements are non-recourse to the Group’s parent company.



An amount of $515,000 (US$383,000) is secured
by the borrower’s right, title and interest in and to all of the tangible and intangible property of Green Earth Developers
LLC. Interest is payable on this loan at the rate of 6% per annum. The loan is repayable on the tenth business day following receipt
of written notice from the lender of such a demand. As at the date of this report, no such demand had been received from the lender.



An amount of $177,000 (US$131,000) is secured
by the borrower’s right, title and interest to all its assets of Draker. Interest is payable on this loan at 2% per annum.
The loan amortises on a straight line basis and matures on November 7, 2018. An amount of $77,000 (US$58,000) is classified as
current with the balance of $100,000 (US$73,000) classified as non-current.





F-32







Notes to the financial statements



| | 17. | Interest-bearing loans and borrowings (continued)
| | --- | -------------------------------------------------



NON-CURRENT BORROWINGS



2 Other loans – secured

The other loans – secured balance as
at June 30, 2016 consists of three third-party loans, provided to the parent company and subsidiaries within the Group. Refer to
other loans – secured for details of the $100,000 loan.



An amount of $889,000 (US$662,000) is secured
by the borrower’s right, title and interest to all receivables of Parmac. Interest is currently payable on this loan
at 2% per month. The loan matures on October 30, 2017. The lender is an affiliate of Mr. William Morro.



An amount of $4,195,000 (US$3,124,000) is secured
by the borrower’s right, title and interest to all the assets of Parmac and Draker. Interest is currently payable on this
loan at 10% per annum. The loan matures on October 30, 2017.



3 Other loans – unsecured

The other loans – unsecured balance as
at June 30, 2016 consists of two third-party loans, provided to the parent company and subsidiaries within the Group.



An amount of $2,320,000 (US$1,727,000) is unsecured
and has a maturity date of October 30, 2017. The lender is an affiliate of Mr. William Morro. Interest is payable on this loan
at the rate of 15% per annum from the date of any advance through to the repayment date. The Company grants the lender the right
to exchange any or all of the outstanding amounts payable under the note for ordinary shares at a price per share of US$3.028,
subject to adjustment for share splits and consolidations.



An amount of $818,000 is unsecured
and has a maturity date of October 30, 2017. Interest is payable on this loan at the rate of 6% per annum. This loan was provided
by Washington H. Soul Pattinson & Co. Ltd. (‘WHSP’), a significant shareholder in the parent company.



4Preference Shares

On execution of the Deed of Company Arrangement
on December 24, 2014, two of the Group’s subsidiaries Parmac Air-Conditioning and Mechanical Services Pty Limited (‘Parmac’)
and Chatham Island Wind Limited (‘CIWL’) issued 3,600,000 US$1.00 non-voting, redeemable preference shares (‘RPS’).
The RPS are convertible  into Company ordinary shares in whole or in part at any time after June 30, 2015 at a price of US$3.028
per share and are restricted to the extent that such conversion would result in any holder having more than 20% of the outstanding
ordinary shares in the Company. At June 30, 2015 the Parmac and CIWL RPS were classified as a liability on the Statement of Financial
Position as there existed an obligation for the issuer to deliver either cash or another financial asset to the holder in the event
of a Mandated Sale.



The CIWL RPS will receive an annual dividend
of 4% per annum payable on December 31 each year. If dividends cannot be paid in cash, further RPS will be issued to satisfy the
dividend amount. Subsidiary Preference Shares are redeemable by the Company, in whole or in part, at the Company’s sole election.
The holder of the RPS may, at its discretion, force redemption through the sale of CIWL if the RPS have not been converted or redeemed
by December 31, 2017 (a ‘Mandated Sale’). The CIWL RPS are subject to a conversion restriction if the Chatham Island
Project contract with Chatham Islands Electricity Limited is terminated.



During the financial year ended June 30, 2016
the Parmac RPS were restructured to remove the annual dividend entitlement and to remove the forced redemption mechanism under
any circumstances. As a result of these amendments, the Parmac RPS have been reclassified to equity at June 30, 2016 (refer Note
19).



Fair values and risk exposures

The carrying amount of the Group’s current
and non-current borrowings approximates their fair values. 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-33







Notes to the financial statements



| | 18. | Provisions
| | --- | ----------



|                          |  | Consolidated  
|------------------------- |  | --------------
|                          |  | 2016
    $’000
|                          |  |               
|Current                   |  |               
|Employee
    entitlements |  |               
|                          |  |               
|Non-current               |  |               
|Employee
    entitlements |  |               



| | 19. | Contributed equity
| | --- | ------------------



|                                                |  | Consolidated
|----------------------------------------------- |  | ------------
|                                                |  | 2016 $’000  
|Owners of the Parent                            |  |             
|Ordinary share capital, issued and fully paid   |  |             
|Class B Preferred shares, issued and fully paid |  |             
|                                                |  |             
|Non-controlling interests                       |  |             
|                                                |  |             



On December 17, 2015 the Company effected
an 80:1 consolidation of its ordinary shares in accordance with the authorisation of shareholders granted at its Extraordinary
General Meeting held on March 12, 2015. All contributed equity, 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 consolidation.



|                                                   |  | 2016             |           | 2015 
|-------------------------------------------------- |  | ---------------- | --------- | -----
|                                                   |  | Number of shares |           | $’000
|Movement in ordinary shares                        |  |                  |           |      
|Balance at the beginning of the year               |  |                  | 5,142,580 |      
|Issue of shares under share purchase agreements    |  |                  | 660,507   |      
|Issue as consideration for business combinations   |  |                  | —         |      
|Reorganisation – shares issued                     |  |                  | —         |      
|Issue in exchange for debt or services             |  |                  | 153,366   |      
|Issue from conversion of Class A preferred shares  |  |                  | —         |      
|Issue from conversion of Class B preferred shares  |  |                  | —         |      
|Gain on consolidation of shares                    |  |                  | —         |      
|Reorganisation – shares not yet issued             |  |                  | —         |      
|Transaction costs                                  |  |                  | —         |      
|Balance at the end of the year                     |  |                  | 5,956,453 |      
|                                                   |  |                  |           |      
|Movement in Class A preferred shares on issue      |  |                  |           |      
|Balance at the beginning of the year               |  |                  | —         |      
|Conversion to ordinary shares                      |  |                  | —         |      
|Conversion to Class B preferred shares             |  |                  | —         |      
|Balance at the end of the year                     |  |                  | —         |      
|                                                   |  |                  |           |      
|Movement in Class B preferred shares on issue      |  |                  |           |      
|Balance at the beginning of the year               |  |                  | 600       |      
|Issue of Class B preferred shares                  |  |                  | —         |      
|Conversion from Class A preferred shares           |  |                  | —         |      
|Conversion to ordinary shares                      |  |                  | —         |      
|Dividends reinvested                               |  |                  | —         |      
|Forfeiture on Administration                       |  |                  | —         |      
|Balance at the end of the year                     |  |                  | 600       |      
|                                                   |  |                  |           |      
|Movements in Subsidiary Preference shares on issue |  |                  |           |      
|Balance at beginning of the year                   |  |                  | —         |      
|Issue of Subsidiary Preference shares              |  |                  | 6,500     |      
|Reclassification from interest bearing borrowings  |  |                  | 2,200     |      
|Balance at the end of the year                     |  |                  | 8,700     |      





F-34







Notes to the financial statements



| | 19. | Contributed equity (continued)
| | --- | ------------------------------



Terms and conditions of contributed equity

Ordinary shares
have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from
the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Covenants contained within
the Preferred Shares on issue prevent BlueNRGY Group Limited from making dividend payments without the prior approval of the Preference
Shareholders.



Ordinary shares entitle their
holder to one vote, either in person or by proxy, at a meeting of the Company.



Class B Preferred Shares

Class B Preferred Shares have a liquidation
preference over the Company’s Ordinary shares, are non-voting (except with respect to any Class B Preferred Stock matters)
and are convertible at any time into Ordinary shares, in whole or in part, at each holder’s option. The number of Ordinary
shares into which each Class B Preferred Share is convertible is determined by dividing the face value of each Class B Preferred
Share plus accrued but unpaid dividends by US$3.028 Class B Preferred Shares have a right to receive dividends on March
31, June 30, September 30 and December 31 each year at an annual rate calculated on the face value of 8% from the date of issuance
through January 31, 2015, after which date no dividends shall accrue. Dividends may be paid, at the Company’s option, in
cash or ordinary shares. The Class B Preferred Shares are redeemable by the Company, in whole or in part, at the Company’s
sole election.



Subsidiary Preferred Shares

Subsidiary Preferred Shares classified as equity
have been issued by three of the Company’s wholly owned subsidiaries: Parmac Air-Conditioning and Mechanical Services Pty
Limited (‘Parmac’), Draker Corporation (‘Draker Corp.’) and IHL Acquisition Co Pty Ltd (‘IHL’).
The Parmac Subsidiary Preferred Shares were restructured during the financial year ended June 30, 2016 to align their terms with
the Subsidiary Preferred Shares issued by Draker Corp. and IHL. Accordingly the Parmac Subsidiary Preferred Shares have been reclassified
from non-current liabilities (as categorised at June 30, 2015) to equity at June 30, 2016.



The Subsidiary Preferred shares are redeemable
solely at the Company’s option for cash at face value. The preference shares are convertible by the holder into BlueNRGY
Group Limited ordinary shares at US$3.028 at any time. No dividends accrue on the preference shares. There is no recourse
to the group’s parent company in relation to the Subsidiary Preferred Shares.





The Subsidiary Preferred Shares have no voting rights
other than the shares issued by Parmac which have voting rights in relation to matters affecting the terms of those preferred
shares.

Share options

Options over ordinary
shares: The following options to purchase fully paid ordinary shares in the Company were outstanding
at June 30:



|Year ended June 30, 2016
|------------------------
|Grant Date              
|                        
|31/05/12                
|12/12/12                
|12/12/12                
|30/12/12                
|13/02/13                
|18/06/14                
|31/12/15                
|Total                   





F-35







Notes to the financial statements



| | 19. | Contributed equity (continued)
| | --- | ------------------------------



Share options (continued)



|Year ended June 30, 2015
|------------------------
|Grant Date              
|                        
|01/11/11                
|28/05/12                
|31/05/12                
|12/12/12                
|12/12/12                
|30/12/12                
|13/02/13                
|18/06/14                
|Total                   



Capital management

When managing capital, management’s
objective is to ensure that the entity continues as a going concern as well as to maintain optimal returns to shareholders and
benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available
to the entity.



The Group’s debt and
capital includes ordinary share capital and financial liabilities, supported by financial assets.



Management adjusts the capital
structure to take advantage of favourable costs of capital or high returns on assets. As the market is constantly changing, management
may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or sell assets
to reduce debt.



| | 20. | Reserves
| | --- | --------



|                                                                               |  | Consolidated               
|------------------------------------------------------------------------------ |  | ---------------------------
|                                                                               |  | Share options reserve
$’000
|At July 1, 2015                                                                |  |                            
|Current year translation                                                       |  |                            
|Share based payments                                                           |  |                            
|Release of foreign currency translation reserve on dissolved subsidiary        |  |                            
|Transfer to accumulated losses on expiration of options                        |  |                            
|At June 30, 2016                                                               |  |                            
|                                                                               |  |                            
|At July 1, 2014                                                                |  |                            
|Current year translation                                                       |  |                            
|Transfer to retained profits/(accumulated losses) on
    expiration of options |  |                            
|At June 30, 2015                                                               |  |                            





F-36







Notes to the financial statements



| | 20. | Reserves (continued)
| | --- | --------------------



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. 495,377 options were granted during 2016 (2015: Nil). The reserve also records the re-pricing
of options previously issued.



Translation reserve

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



| | 21. | Business combinations
| | --- | ---------------------



Acquisition of Draker Corporation

On September 14, 2015, the Company formed a
new U.S. subsidiary that entered into a material definitive agreement pursuant to which it acquired, on September 16, 2015 (the
“Draker Transaction”), the monitoring platform, accounts receivable, inventory, plant and equipment and certain other
assets of Draker, Inc. and Draker Laboratories, Inc. (together “Sellers”), including the Draker name, trademark, and
all copyrights then owned by the Sellers. Immediately subsequent to the Draker Transaction, the Company’s acquisition subsidiary
changed its name to Draker Corporation and the names of the Sellers were changed to delete the Draker name.



Draker provides equipment and monitoring services
to measure the performance of PV Solar generation installations and is included in our Monitoring & Performance Analytics CGU.



Details of purchase consideration, net liability
acquired and goodwill at acquisition date are as follows



|Purchase consideration            |  | Total USD
$’000 |       | Total AUD
$’000
|--------------------------------- |  | --------------- | ----- | ---------------
|                                  |  |                 |       |                
|Total cash purchase consideration |  |                 | 2,158 |                



|Assets & liabilities acquired |  | Cost USD $’000 |     | Fair value
USD $’000 |  | Total AUD $’000
|----------------------------- |  | -------------- | --- | -------------------- |  | ---------------
|Trade receivables             |  |                | 565 |                      |  |                
|Inventories                   |  |                | 200 |                      |  |                
|Fixed assets                  |  |                | 84  |                      |  |                
|Total assets                  |  |                | 849 |                      |  |                
|                              |  |                |     |                      |  |                
|Supplier arrangement costs    |  |                | —   |                      |  |                
|Historical warranty           |  |                | —   |                      |  |                
|Customer servicing costs      |  |                | —   |                      |  |                
|System rectification costs    |  |                | —   |                      |  |                
|Loan assumed                  |  |                | 170 |                      |  |                
|Net assets / (liability)      |  |                | 679 |                      |  |                
|                              |  |                |     |                      |  |                
|Goodwill on acquisition       |  |                |     |                      |  |                





F-37







Notes to the financial statements



| | 21. | Business combinations (continued)
| | --- | ---------------------------------



Acquisition of BlueNRGY LLC

On January 27, 2015 the Company completed the
acquisition of 100% of shares issued by BlueNRGY LLC, a US based provider of performance monitoring, data analytics and operations
and maintenance services for renewable energy projects. BlueNRGY LLC forms part of the Monitoring and Performance Management CGU.



Details of purchase consideration, net liability
acquired and goodwill at acquisition date are as follows:



|Purchase consideration                      |  | Quantity |           | Price |  | Total USD   $’000 |       | Total AUD   $’000   
|------------------------------------------- |  | -------- | --------- | ----- |  | ----------------- | ----- | --------------------
|                                            |  |          |           |       |  |                   |       |                     
|Shares - restricted                         |  |          | 1,927,175 |       |  |                   | 3.028 |                     
|Total purchase consideration                |  |          |           |       |  |                   |       |                     
|                                            |  |          |           |       |  |                   |       |                     
|Assets & liabilities acquired               |  |          |           |       |  | Cost USD
$’000    |       | Fair value
USD
$’000
|Cash & cash equivalents                     |  |          |           |       |  |                   | 54    |                     
|Trade & other receivables                   |  |          |           |       |  |                   | 49    |                     
|Inventory                                   |  |          |           |       |  |                   | 20    |                     
|Development costs, patents and fixed assets |  |          |           |       |  |                   | 265   |                     
|Other receivables                           |  |          |           |       |  |                   | 5     |                     
|Total assets                                |  |          |           |       |  |                   | 393   |                     
|                                            |  |          |           |       |  |                   |       |                     
|Accounts payable                            |  |          |           |       |  |                   | 533   |                     
|Borrowings                                  |  |          |           |       |  |                   | 53    |                     
|Net liability                               |  |          |           |       |  |                   | (193  | )                   
|                                            |  |          |           |       |  |                   |       |                     
|Goodwill on acquisition                     |  |          |           |       |  |                   |       |                     
|Translation adjustment at balance date      |  |          |           |       |  |                   |       |                     
|Goodwill at balance date                    |  |          |           |       |  |                   |       |                     





F-38







Notes to the financial statements



| | 21. | Business combinations (continued)
| | --- | ---------------------------------



Acquisition of Green Earth Developers LLC

On July 7, 2014 the Company completed the acquisition
of 100% of shares issued by Green Earth Developers LLC (‘GED’) through a wholly owned US subsidiary CBD Acquisition
Holdings Inc. GED is US based and is recognised for delivering high-quality, turnkey renewable energy projects, with a focus on
large commercial and utility-scale solar projects. GED forms part of the Solar CGU.



Details of purchase consideration, net liability
acquired and goodwill at acquisition date are as follows:



|Purchase consideration                 |  | Quantity |         | Price |  | Total USD $’000 |       | Total AUD $’000     
|-------------------------------------- |  | -------- | ------- | ----- |  | --------------- | ----- | --------------------
|                                       |  |          |         |       |  |                 |       |                     
|Cash                                   |  |          |         |       |  |                 |       |                     
|Shares - restricted                    |  |          | 416,666 |       |  |                 | 3.35  |                     
|Total purchase consideration           |  |          |         |       |  |                 |       |                     
|                                       |  |          |         |       |  |                 |       |                     
|Assets & liabilities acquired          |  |          |         |       |  | Cost USD $’000  |       | Fair value
USD $’000
|Cash & cash equivalents                |  |          |         |       |  |                 | 255   |                     
|Trade & other receivables              |  |          |         |       |  |                 | 345   |                     
|Work in progress                       |  |          |         |       |  |                 | 374   |                     
|Fixed assets                           |  |          |         |       |  |                 | 79    |                     
|Other receivables                      |  |          |         |       |  |                 | 144   |                     
|Total assets                           |  |          |         |       |  |                 | 1,197 |                     
|                                       |  |          |         |       |  |                 |       |                     
|Accounts payable                       |  |          |         |       |  |                 | 1,499 |                     
|Net liability                          |  |          |         |       |  |                 | (302  | )                   
|                                       |  |          |         |       |  |                 |       |                     
|Goodwill on acquisition                |  |          |         |       |  |                 |       |                     
|Translation adjustment at balance date |  |          |         |       |  |                 |       |                     
|Goodwill at balance date               |  |          |         |       |  |                 |       |                     



| | 22. | Financial risk management objectives and policies
| | --- | -------------------------------------------------



The Group’s principal financial instruments
comprise receivables, payables, loans, convertible notes, finance leases, available-for-sale investments and cash and short-term
deposits.



Risk exposures and responses

The Group manages its exposure to key financial
risks in accordance with the Group’s financial risk management policy. The objective of the policy is to support the delivery
of the Group’s financial targets whilst protecting future financial security.



The main risks arising from the Group’s
financial instruments are interest rate risk, foreign currency risk, credit risk, price risk, and liquidity risk. Primary responsibility
for identification and control of financial risks rests with the Audit Committee under the authority of the Board. The Board reviews
and agrees policies for managing each of the risks identified below.





F-39







Notes to the financial statements



| | 22. | Financial risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------



| | (a) | Interest rate risk
| | --- | ------------------



The Group’s main interest rate risk arises
from borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk only if the borrowings are carried at fair value, which is not the Group’s
policy. There were no variable rate borrowings in 2016 (2015: Nil).



At reporting date, the Group had the following
net exposure to variable interest rate risk:

|                              |  | Consolidated  
|----------------------------- |  | --------------
|                              |  | 2016
    $’000
|                              |  |               
|Cash
    and cash equivalents |  |               



The Group’s policy is to manage its
finance costs using a mix of fixed and variable rate debt. At June 30, 2016, the Group had borrowings of $10,977,000 (2015:
$7,000,000). Where applicable, borrowings which attract interest do so at a fixed interest rate. The Group constantly analyses
its interest rate exposure. Within this analysis, consideration is given to potential renewals of existing positions, alternative
financing, and the mix of fixed and variable interest rates. The Group’s fixed rate borrowings comprising the other loans
and the convertible notes are carried at amortised cost.



Given the levels of cash holdings in both 2016
and 2015, a 1% movement in interest rates, with all other variables held constant, would have an immaterial impact.



| | (b) | Foreign currency risk
| | --- | ---------------------



Foreign currency risk is the risk that the
fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Group’s
exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities, borrowings,
and financial assets.



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



|                            |  | USD
$’000 |        | AUD
$’000 |  | Other
1$’000 |        | Total
$’000
|--------------------------- |  | --------- | ------ | --------- |  | ------------ | ------ | -----------
|2016                        |  |           |        |           |  |              |        |            
|Cash and cash equivalents   |  |           | 223    |           |  |              | 65     |            
|Trade and other receivables |  |           | 2,389  |           |  |              | 10,056 |            
|Trade and other payables    |  |           | (6,143 | )         |  |              | (2,835 | )          
|Borrowings                  |  |           | (9,934 | )         |  |              | (1,043 | )          
|                            |  |           |        |           |  |              |        |            
|2015                        |  |           |        |           |  |              |        |            
|Cash and cash equivalents   |  |           | 142    |           |  |              | 304    |            
|Trade and other receivables |  |           | 68     |           |  |              | 2,727  |            
|Trade and other payables    |  |           | (2,456 | )         |  |              | (3,007 | )          
|Borrowings                  |  |           | (6,767 | )         |  |              | (233   | )          



1 Other comprises of foreign currencies
GBP, EUR and NZD.





F-40







Notes to the financial statements



| | 22. | Financial risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------



Foreign currency sensitivity

The following tables demonstrate the sensitivity
to a reasonably possible change in the US dollar against the AUD exchange rate, with all other variables held constant. The impact
on the Group’s profit before tax is due to changes in the fair value of monetary assets and liabilities. The Group’s
exposure to foreign currency changes for all other currencies is not material.



|     |  |                |     | USD                              
|---- |  | -------------- | --- | ---------------------------------
|     |  | Change in rate |     | Effect on profit before tax
$’000
|2016 |  |                | +10 | %                                
|     |  |                | -10 | %                                
|     |  |                |     |                                  
|2015 |  |                | +10 | %                                
|     |  |                | -10 | %                                



The Group does not apply hedge accounting.
At June 30, 2016 and 2015, no forward contracts were in place.



| | (c) | Price risk
| | --- | ----------



The Group has no significant exposure to price
risk.



| | (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.





F-41







Notes to the financial statements



| | 22. | Financial risk management objectives and policies (continued)
| | --- | -------------------------------------------------------------



| | (e) | Liquidity risk
| | --- | --------------



The Group’s objective is to maintain
a balance between continuity of funding and flexibility through the use of a variety of equity and debt instruments.



The table below analyses the Group’s
financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows.



The remaining contractual maturities of the
Group’s financial liabilities are:

|                         |  | Less than 6 months $’000 |       | 6-12 months $’000 |  | Between 1-2 years $’000 |    | Between 2-5 years $’000 |  | Total contractual cash flows $’000 |        | Carrying amount of liability $’000
|------------------------ |  | ------------------------ | ----- | ----------------- |  | ----------------------- | -- | ----------------------- |  | ---------------------------------- | ------ | ----------------------------------
|2016                     |  |                          |       |                   |  |                         |    |                         |  |                                    |        |                                   
|Trade and other payables |  |                          | 9,164 |                   |  |                         | —  |                         |  |                                    | —      |                                   
|Borrowings               |  |                          | 592   |                   |  |                         | —  |                         |  |                                    | 10,161 |                                   
|Finance leases           |  |                          | 89    |                   |  |                         | 31 |                         |  |                                    | 90     |                                   
|                         |  |                          |       |                   |  |                         |    |                         |  |                                    |        |                                   
|2015                     |  |                          |       |                   |  |                         |    |                         |  |                                    |        |                                   
|Trade and other payables |  |                          | 5,551 |                   |  |                         | —  |                         |  |                                    | —      |                                   
|Borrowings               |  |                          | 6,767 |                   |  |                         | —  |                         |  |                                    | —      |                                   
|Finance leases           |  |                          | 45    |                   |  |                         | 49 |                         |  |                                    | 82     |                                   





Fair value

The methods for estimating fair value are outlined
in the relevant notes to the financial statements.



| | 23. | Related party disclosures
| | --- | -------------------------



| | (a) | Subsidiaries
| | --- | ------------



The consolidated financial statements include
the financial statements of BlueNRGY Group Limited and the material subsidiaries listed in the following table.



|                                                      |  |                          |  |                         |  |      |     | % Equity Interest
|----------------------------------------------------- |  | ------------------------ |  | ----------------------- |  | ---- | --- | -----------------
|Name                                                  |  | Country of Incorporation |  | Principal Activity      |  | 2016 |     | 2015             
|BlueNRGY Group Limited                                |  | Australia                |  | Holding company         |  |      | 100 |                  
|Parmac Air Conditioning & Mechanical Services Pty Ltd |  | Australia                |  | Energy efficiency       |  |      | 100 |                  
|BlueNRGY Renewable Solutions Pty Ltd                  |  | Australia                |  | Solar                   |  |      | 100 |                  
|BlueNRGY LLC 1                                        |  | USA                      |  | Performance analytics   |  |      | 100 |                  
|Green Earth Developers LLC 2                          |  | USA                      |  | Solar                   |  |      | 100 |                  
|Draker Corporation 3                                  |  | USA                      |  | Performance analytics   |  |      | 100 |                  
|Chatham Island Wind Ltd                               |  | New Zealand              |  | Special purpose vehicle |  |      | 100 |                  





1 acquired January 27, 2015

2 acquired July 1, 2014

3 formed September 14, 2015



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.





F-42







Notes to the financial statements



| | 23. | Related party disclosures (continued)
| | --- | -------------------------------------



| | (c) | Key management personnel
| | --- | ------------------------



Details relating to key management personnel, including transactions
with key management personnel and remuneration paid, are included in Note 24.



Note 31 discloses an off balance sheet transaction with an affiliate
of Mr. Morro.



| | (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
|---------------------------- |  | ------------
|                             |  | 2016 $      
|                             |  |             
|Short-term employee benefits |  |             
|Post-employment benefits     |  |             
|Total compensation           |  |             



| | (b) | 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
|------------ |  | ----------------- | --------- | ----------------------- |  | ---------------------- | ------- | ---------------- |  | ------------------
|2016         |  |                   |           |                         |  |                        |         |                  |  |                   
|Directors    |  |                   |           |                         |  |                        |         |                  |  |                   
|C. Botto     |  |                   | 19,691    |                         |  |                        | —       |                  |  |                   
|W. Morro     |  |                   | 292,282   |                         |  |                        | 63,543  |                  |  |                   
|Y. Cotrel    |  |                   | 612,806   |                         |  |                        | —       |                  |  |                   
|J. Donohue 1 |  |                   | 19,512    |                         |  |                        | —       |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|Executives   |  |                   |           |                         |  |                        |         |                  |  |                   
|E. Cotrel    |  |                   | 407,017   |                         |  |                        | 80,582  |                  |  |                   
|R. Pillinger |  |                   | 62,500    |                         |  |                        | —       |                  |  |                   
|Total        |  |                   | 1,413,808 |                         |  |                        | 144,125 |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|2015         |  |                   |           |                         |  |                        |         |                  |  |                   
|Directors    |  |                   |           |                         |  |                        |         |                  |  |                   
|G. McGowan 1 |  |                   | 3,443     |                         |  |                        | —       |                  |  |                   
|C. Botto     |  |                   | 187       |                         |  |                        | —       |                  |  |                   
|W. Morro     |  |                   | 381       |                         |  |                        | —       |                  |  |                   
|T. Barlow 1  |  |                   | 189       |                         |  |                        | —       |                  |  |                   
|Y. Cotrel    |  |                   | —         |                         |  |                        | —       |                  |  |                   
|J. Chapple 2 |  |                   | —         |                         |  |                        | —       |                  |  |                   
|J. Donohue 3 |  |                   | —         |                         |  |                        | —       |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|Executives   |  |                   |           |                         |  |                        |         |                  |  |                   
|J. Greer 1   |  |                   | 232       |                         |  |                        | —       |                  |  |                   
|E. Cotrel    |  |                   | —         |                         |  |                        | —       |                  |  |                   
|R. Pillinger |  |                   | —         |                         |  |                        | —       |                  |  |                   
|Total        |  |                   | 4,432     |                         |  |                        | —       |                  |  |                   





F-43







Notes to the financial statements



| | 24. | Key management personnel (continued)
| | --- | ------------------------------------



1 Changes for Messrs Donohue, McGowan,
Barlow and Greer relate to their respective resignations.

2Mr. Chapple was appointed and
resigned as a Director during the course of the year to June 30, 2015. At the time of his resignation, Mr. Chapple held 10,625
ordinary shares in BlueNRGY directly and an entity in which he has a beneficial interest held 198,152 ordinary shares.

3Excludes 96,536 ordinary shares
held by an entity in which Mr. Donohue has a beneficial interest.



| | (c) | Loans to key management personnel
| | --- | ---------------------------------



There were no loans to directors or key management
personnel during the year ended June 30, 2016 (2015: None).



| | (d) | Loans from key management personnel
| | --- | -----------------------------------



Related Parties

An entity related to Mr. William Morro
loaned a total of A$2,080,000 (US$1,549,000) to the Group (2015:A$370,000 (US$284,000)). The loan, unanimously approved by
the Company’s Board, matures on October 31, 2017 and may be repaid earlier at the Company’s sole discretion. The loan
is convertible into Ordinary Shares at a conversion price of US$3.028 per share and interest is payable at a rate of 15% per annum.
The loan may be assigned to another qualified party at the lender’s discretion. At June 30, 2016 interest of A$240,000
(US$178,000) had accrued, but not been paid, on the loan (2015:A$8,880 (US$6,814)).



| | (e) | Other transactions and balances with key management personnel and their related parties
| | --- | ---------------------------------------------------------------------------------------



During the financial year ended June 30, 2016,
the Group transacted with related entities of directors, other than in their capacity as director, as follows:



|l | In April 2015, one of the Group’s subsidiaries, Parmac, secured a line of credit with an affiliate of William Morro for up to US$0.5 million. As of June 30, 2016 and 30 June 2015, the facility was fully drawn. Refer Note 17.                                                                                                                                  
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                   
|l | In March 2016, two of the Group’s subsidiaries, Parmac and Draker Corp, secured individual
lines of credit with an affiliate of William Morro for up to US$1.5 million each (US$3 million in aggregate). As
of June 30, 2016, interest of A$166,000 (US$ 124,000) had accrued, but not been paid, on the loan and the facilities were fully drawn. Refer Note 172.
|  |                                                                                                                                                                                                                                                                                                                                                                   
|l | The following Directors and Executives exchanged accrued unpaid salary for ordinary shares under an Exchange Agreement as follows:                                                                                                                                                                                                                                



|Director            |  | Salary exchange
    A
    $ |  | Salary exchange US
$ |         | Exchange price per share US
$ |  | Number of ordinary shares issued
|------------------- |  | --------------------------- |  | -------------------- | ------- | ----------------------------- |  | --------------------------------
|Mr. William Morro   |  | 264,147                     |  |                      | 192,406 |                               |  |                                 
|Mr. Emmanuel Cotrel |  | 334,978                     |  |                      | 244,000 |                               |  |                                 



|l | Subsidiary Preferred Shares were issued, or contracted to be issued, by two of the Group’s
subsidiaries, Draker Corp and IHL Acquisition Co Pty Ltd, to an affiliate of William Morro with a total face value of US$6,500,000.
Refer Note 19 for the terms of the Subsidiary Preferred Shares.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the financial year ended June 30, 2015,
the Group transacted with related entities of directors, other than in their capacity as director, as follows:



|l | The following Directors, or their related entities, subscribed to purchase ordinary shares under
a Securities Purchase Agreement as follows:
|- | --------------------------------------------------------------------------------------------------------------------------------------------



|Director              |  | Subscription
    amount
    A
    $ |  | Subscription amount US
$ |         | Subscription price per share US
$ |  | Number of ordinary shares issued
|--------------------- |  | ----------------------------------- |  | ------------------------ | ------- | --------------------------------- |  | --------------------------------
|Mr. Yves-Regis Cotrel |  | 572,298                             |  |                          | 450,000 |                                   |  |                                 
|Mr. William Morro     |  | 752,599                             |  |                          | 600,000 |                                   |  |                                 





F-44







Notes to the financial statements



| | 24. | Key management personnel (continued)
| | --- | ------------------------------------



| | (e) | Other transactions and balances with key management personnel and their related parties (continued)
| | --- | ---------------------------------------------------------------------------------------------------



|l | The following Directors and Executives, or their related entities, who were shareholders in BlueNRGY
LLC at the time of its acquisition by the Company were issued ordinary shares under the Purchase Agreement as follows. This transaction
occurred before these individuals were appointed the Board of Directors or as Executives of the Company:
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Director                |  | Number of ordinary shares issued
|----------------------- |  | --------------------------------
|Mr. Yves-Regis Cotrel 1 |  |                                 
|Mr. Emmanuel Cotrel 2   |  |                                 
|Mr. Jack Donohue 3      |  |                                 





|1 | Included in the shares issued to Mr. Yves-Regis Cotrel were 99,575 shares issued in exchange for a loan of US$301,513 Mr. Cotrel had provided to BlueNRGY LLC prior to its acquisition by the Company. The exchange price was US$3.028 per share.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2 | Excludes 92,880 shares owned by Rymes Investment Company in which both Yves-Regis Cotrel and Emmanuel Cotrel share an ownership.                                                                                                                 
|3 | Includes allocation of 87,651 shares owned by Coastalview Partners in which Mr. Donohue holds a 25% interest                                                                                                                                     



|l | The share purchase agreement with BlueNRGY LLC included provisions whereby 300,625 ordinary shares
were allocated upon consummation of the acquisition to company executives, key employees and advisors and nominated directors (subsequently
confirmed) as a performance incentive. Those allocations are as follows:
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  | Number
    of ordinary shares issued
|------------------------- |  | ------------------------------------
|Director                  |  |                                     
|Mr.
    William Morro     |  |                                     
|Mr.
    Carlo Botto       |  |                                     
|Mr.
    John Chapple      |  |                                     
|Mr.
    Jack Donohue      |  |                                     
|Mr.
    Yves-Regis Cotrel |  |                                     
|                          |  |                                     
|KMP                       |  |                                     
|Mr.
    Emmanuel Cotrel   |  |                                     
|Mr.
    Richard Pillinger |  |                                     





|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|l | During the financial
                                         year ending June 30, 2015 TRW Holdings Pty Ltd, an entity in which Mr. Gerry McGowan
                                         had a direct interest, received payments for executive services provided by Mr.
                                         McGowan and for reimbursement of travel expenses and other operating disbursements incurred
                                         on behalf of the company. The total amount paid or payable to TRW Holdings Pty Ltd including
                                         GST for services other than the services of Mr. McGowan acting as Managing Director was
                                         $121,300. All the payments made in 2015 were made outside of the Company’s customary
                                         approval processes and were purported by Mr. McGowan to be for reimbursement of costs
                                         incurred on behalf of the company paid by TRW Holdings Pty Ltd. The Company has not been
                                         provided with adequate documentation by Mr. McGowan or TRW Holdings Pty Limited to determine
                                         whether or not these costs represent bona fide costs incurred on behalf of the Company.
                                         These payments were recognised as an expense in profit or loss for the year ended June
                                         30, 2014.





F-45







Notes to the financial statements



| | 25. | Share-based payments
| | --- | --------------------



| | (a) | Recognised share-based payment expenses
| | --- | ---------------------------------------



The expense relating to options is shown in
the table below:



|                                                                               |  | Consolidated
|------------------------------------------------------------------------------ |  | ------------
|                                                                               |  | 2016
$’000  
|                                                                               |  |             
|Expense
arising from equity-settled share-based payment financing transactions |  |             



| | (b) | Types of share-based payments
| | --- | -----------------------------



There were 495,377 unlisted options issued
during the year ended June 30, 2016 (2015: Nil). These relate to the warrants on Subsidiary preference shares.



| | (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:



|                                         |  | 2016 |         | 2016   |  | 2015 |        | 2015  
|---------------------------------------- |  | ---- | ------- | ------ |  | ---- | ------ | ------
|                                         |  | No.  |         | WAEP
$ |  | No.  |        | WAEP
$
|                                         |  |      |         |        |  |      |        |       
|Outstanding at the beginning of the year |  |      | 5,040   |        |  |      | 445.07 |       
|Granted during the year                  |  |      | 495,377 |        |  |      | 6.26   |       
|Expired during the year                  |  |      | —       |        |  |      | —      |       
|Outstanding at the end of the year       |  |      | 500,417 |        |  |      | 10.68  |       



| | (d) | Option pricing model
| | --- | --------------------



The fair value of the equity-settled share
options granted for the year ended June 30, 2016 were estimated as at the date of grant using a Black-Scholes model taking into
account the terms and conditions upon which the options were granted. The fair value was derived from the Black-Scholes model using
the closing share price of BlueNRGY Group Limited ordinary shares on grant date, Australian Government Long-term bond interest
rates as published by the Reserve Bank of Australia as a proxy for the risk-free interest rate, having regard for the bond maturity
that is most closely aligned to the period of time remaining until the options expiry date, and the option exercise prices and
quantities as noted above.



The model inputs for options granted during
the year ended June 30, 2016 included:

|Number of options granted                         |  |  | 495,377     
|------------------------------------------------- |  |  | ------------
|Consideration for options granted                 |  |  | A$Nil       
|Exercise price                                    |  |  | US$4.54     
|Grant date                                        |  |  | Dec 31, 2015
|Expiry date                                       |  |  | Dec 31, 2018
|Share price at grant date                         |  |  | US$3.03     
|Expected price volatility of the Company’s shares |  |  | 70%         
|Expected dividend yield                           |  |  | 0%          
|Risk-free interest rate                           |  |  | 1.95%       



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





F-46







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
|------------------------------------------- |  | ------------
|                                            |  | 2016 $’000  
|                                            |  |             
|Within one year                             |  |             
|After one year but not more than five years |  |             
|Total minimum lease payments                |  |             



Finance lease commitments - Group as lessee

The finance leases relate to the leasing of
motor vehicles. Future minimum lease payments under finance leases together with the present value of the net minimum lease payments
are as follows:



|                                            |  | Consolidated
|------------------------------------------- |  | ------------
|                                            |  | 2016 $’000  
|                                            |  |             
|Within one year                             |  |             
|After one year but not more than five years |  |             
|Total minimum lease payments                |  |             
|Less amounts representing finance charges   |  |             
|Present value of minimum lease payments     |  |             
|                                            |  |             
|Current liability                           |  |             
|Non-current liability                       |  |             
|Total                                       |  |             





F-47







Notes to the financial statements



| | 27. | Contingent liabilities
| | --- | ----------------------



Share purchase commitment

The Company has exercised a Share Purchase
Right to acquire the balance of equity interests of Inaccess Holdings Ltd. (“IHL”) that it doesn’t already own
in a two-step transaction (refer Note 28). Under the Share Purchase Right, the remaining shares will be acquired at
a price that would value 100% of the IHL equity in a range from €16.1 million (A$24.03 million) to €17.8 million (A$26.57
million). The Company is obligated to fund the first stage of the transaction in January 2017 and the second stage in July 2017.
Consideration will be paid in a combination of ordinary shares of the Company and/or cash.



Legal proceedings

In December 2014 a class action securities
suit was filed in a US federal court against the Company, various current and former officers and directors, the underwriters of
an equity raising conducted by the Group in 2014 and the previous auditors of the Group. In August 2015, the Complaint was amended
to include one of the Group’s continuing subsidiaries, CBD Energy (USA) Limited (‘USA Ltd’). The Complaint is
in relation to shares issued by the Group to the public in October 2014, and the lodgement and later withdrawal of the financial
reports for the years ended 30 June 2012 and 2013 signed by Directors on 2 November 2012 and 27 November 2013 respectively due
to errors identified by Directors and the previous auditors. A claim has not been quantified in the Complaint. The Complaint against
the parent entity was extinguished pursuant to the terms of the DOCA. USA Ltd and the relevant current and former Directors and
Officers of the parent entity are covered by an insurance policy for such claims, however, the policy includes a retained exposure
for USA Ltd of US$250,000 (A$337,000) and a maximum insured amount. Further legal costs and any retained exposure determined as
being payable in relation to the Complaint against USA Ltd may need to be funded in part or in whole by the Group. The outcome
of the potential action cannot be determined at this time, and a liability has not been recognised in these financial statements
in relation to the Complaint.



Chatham Island Dispute

The Chatham Island project is not currently
operating due to a dispute with the counterparty to the power purchase agreement, Chatham Island Electricity Limited (“CIEL”)
as a result of the placement of BlueNRGY Group Limited into voluntary administration in November 2014. CIEL is seeking to terminate
its power purchase agreement with BlueNRGY Group Limited’s subsidiary, Chatham Islands Wind Ltd (“CIWL”), and
acquire the assets in accordance with contractual rights in the agreements between CIEL and CIWL. Under the terms of the agreements,
the purchase price of the assets can be negative which could result in an amount being payable by CIWL to CIEL. The outcome of
the dispute cannot be determined at this time, and a liability has not been recognised in these financial statements in relation
to the dispute.





F-48







Notes to the financial statements



| | 28. | Events after the balance sheet date
| | --- | -----------------------------------



Transactions



The Company subscribed to €3.25 million
(A$4.8 million) of preferred shares (‘Preferred Shares’) of Inaccess Holdings Ltd (‘IHL’) on July 7, 2016.
IHL is a UK company that provides hardware and software systems for monitoring and controlling the performance of distributed renewable
energy and telecom facilities worldwide. At the time of the Preferred Share subscription, the Preferred Shares were convertible
into 20% of the IHL ordinary equity interests, although subsequent repurchases of its ordinary shares by IHL boosted this percentage
to approximately 23%. The rights and designations of the Preferred Shares make such shares senior to other classes of IHL equity,
provide for a preferential payout upon liquidation equal to the subscription price and entitle the holder thereof to a board seat.



On September 15, 2016 the Company exercised
a Share Purchase Right to acquire the balance of equity interests of IHL that it doesn’t already own in a two-step transaction.
Under the Share Purchase Right, the remaining shares will be acquired at a price that would value 100% of the IHL equity in a
range from €16.1 million (A$24.03 million) to €17.8 million (A$26.57 million). The Company is obligated to fund the
first stage of the transaction in January 2017 and the second stage in July 2017. Consideration will be paid in a combination
of ordinary shares of the Company and/or cash.



| | 29. | Parent entity information
| | --- | -------------------------



| | (a) | Summary financial information
| | --- | -----------------------------



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



|                                   |  | 2016 $’000 |          | 2015 $’000
|---------------------------------- |  | ---------- | -------- | ----------
|Current assets                     |  |            | 373      |           
|Total assets                       |  |            | 12,337   |           
|Current liabilities                |  |            | (2,152   | )         
|Total liabilities                  |  |            | (5,282   | )         
|Net assets                         |  |            | 7,055    |           
|                                   |  |            |          |           
|Issued capital                     |  |            | 148,562  |           
|Accumulated losses                 |  |            | (143,079 | )         
|Reserves                           |  |            | 1,572    |           
|Total shareholders’ equity         |  |            | 7,055    |           
|                                   |  |            |          |           
|(Loss)/profit of the parent entity |  |            | (4,200   | )         



| | (b) | Guarantees entered into by the parent entity
| | --- | --------------------------------------------

As
at June 30, 2016, the parent entity had no financial guarantees in place (2015: Nil).



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



As at June 30, 2016, the parent entity had
no contractual commitments for the acquisition of property, plant or equipment (2015: Nil).





F-49







Notes to the financial statements



| | 30. | Auditors’ remuneration
| | --- | ----------------------



The auditor of BlueNRGY Group Limited is HLB Mann Judd.



|                                                                   |  | Consolidated
|------------------------------------------------------------------ |  | ------------
|                                                                   |  | 2016
    $  
|Amounts
    paid or payable to HLB Mann Judd                       |  |             
|-
    an audit or review of the financial statements of the entity |  |             
|-
    non audit services (tax compliance)                          |  |             
|                                                                   |  |             
|Amounts
    paid or payable to a network firm of HLB Mann Judd     |  |             
|-
    an audit of the financial statements                         |  |             





| | 31. | Asset holding arrangement
| | --- | -------------------------



In April 2016, one of the
Group’s subsidiaries, Draker Corp. (‘Draker’), entered into an agreement with an affiliate of Mr. William
Morro (‘Affiliate’), whereby Draker formed a special purpose subsidiary (‘SPV’) to acquire and hold
certain assets on behalf of the Affiliate until directed by the Affiliate to resell or dispose of the assets. Under the terms
of the agreement, Draker has no control over the assets, nor does it have any legal or financial recourse from holding those
assets. At the date of this report, the SPV no longer holds these assets on behalf of the Affiliate and has no
liability to the Affiliate.





F-50











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.                                                                                                                                                            |  | 20-F                          |  | 1.3              
|4.1     |  | CBD Energy Limited
    2014 Equity Plan                                                                                                                                                                                            |  | F-1/A                         |  | 10.25            
|4.2     |  | Form of Securities
    Purchase Agreement, dated as of July 25, 2014                                                                                                                                                               |  | 6-K                           |  | 99.1             
|4.3     |  | Form of Warrant,
    dated as of July 25, 2014                                                                                                                                                                                     |  | 6-K                           |  | 99.2             
|4.4     |  | First Amendment to
    Securities Purchase Agreement, made as of August 19, 2014.                                                                                                                                                  |  | 6-K                           |  | 99.1             
|4.5     |  | Deed of Company Arrangement
    of CBD Energy Limited, dated December 24, 2014.                                                                                                                                                    |  | 6-K/A                         |  | 10.1             
|4.6     |  | Deed of Variation
    of the Deed of Company Arrangement of CBD Energy Limited, dated January 27, 2015.                                                                                                                            |  | 6-K/A                         |  | 10.2             
|4.7     |  | Deed of Company Arrangement
    of Westinghouse Solar Pty Limited, dated December 24, 2014.                                                                                                                                        |  | 6-K/A                         |  | 10.3             
|4.8     |  | Deed of Variation
    of the Deed of Company Arrangement of Westinghouse Solar Pty Limited, dated January 27, 2015.                                                                                                                |  | 6-K/A                         |  | 10.4             
|4.9     |  | Amended and Restated
    Membership Interest Purchase Agreement, dated January 27, 2015                                                                                                                                            |  | 6-K/A                         |  | 10.5             
|4.10    |  | Form of Subscription
    Agreement, dated January 27, 2015                                                                                                                                                                         |  | 6-K/A                         |  | 10.6             
|4.11    |  | Rights and Preferences
    of CBD Series B Preferred Shares as amended January 27, 2015                                                                                                                                            |  | 6-K/A                         |  | 10.7             
|4.12    |  | Acquisition Agreement
    dated September 16, 2015 between BlueD Acquisition Corporation (now known as Draker Corporation) and Draker, Inc. and Draker
    Laboratories, Inc.                                                      |  | 6-K                           |  | 4.1              
|4.13    |  | Form of Engineering,
    Procurement, and Construction Agreement between Panasonic Enterprise Solutions Company and Green Earth Developers                                                                                         |  | 20-F                          |  |                  
|4.14    |  | Exchange and Compensation
    Deferral Agreement with Emmanuel Cotrel, dated November 30, 2015.                                                                                                                                    |  | 20-F                          |  |                  
|4.15    |  | Exchange and Compensation
    Deferral Agreement with William Morro, dated November 30, 2015.                                                                                                                                      |  | 20-F                          |  |                  
|4.16    |  | Unsecured Convertible
    Promissory Note with WHI Retirement Savings Plan Trust and WHIRSP – Columbus LLC, dated November 30, 2015 (William Morro).                                                                               |  | 20-F                          |  |                  
|4.17    |  | Warrant held by ESOL,
    B.V. with Initial Exercise Date of December 31, 2015 (Draker Transaction).                                                                                                                               |  | 20-F                          |  |                  
|4.18    |  | Loan and Security
    Agreement between Draker Corporation and ESOL, B.V. dated February 6, 2016.                                                                                                                                  |  | 20-F                          |  |                  
|4.19    |  | Loan and Security
    Agreement between Parmac Airconditioning & Mechanical Services Pty Ltd and ESOL B.V. dated February 5, 2016.                                                                                                 |  | 20-F                          |  |                  
|4.20    |  | Form of Securities
    Purchase Agreement dated June 29, 2016.                                                                                                                                                                     |  | 20-F                          |  |                  
|4.21    |  | Unsecured Convertible
    Promissory Note with WHI Retirement Savings Plan Trust and WHIRSP – Columbus LLC, dated June 30, 2016 (William Morro)
    as Replacement of the November 30, 2015 Unsecured Convertible Promissory Note. |  | 20-F                          |  |                  
|4.22    |  | Form of Subscription
    Agreement, dated July 7, 2016 (Inaccess Holdings Ltd).                                                                                                                                                    |  | 20-F                          |  |                  
|4.23    |  | Form of Securities
    Purchase Agreement, dated July 7, 2016 (Inaccess Holdings Ltd).                                                                                                                                             |  | 20-F                          |  |                  
|8.1     |  | For a list of all
    of our subsidiaries, see Item 4.C., Organization Structure.                                                                                                                                                  |  | 20-F                          |  |                  
|11.1    |  | Code of Conduct and
    Ethics.                                                                                                                                                                                                    |  | 20-F                          |  | 11.1             
|12.1    |  | Certification of
    Principal Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                       |  | 20-F                          |  |                  
|12.2    |  | Certification of
    Principal Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                       |  | 20-F                          |  |                  
|13.1*   |  | Certification of
    Principal Executive Officer pursuant to 18 U. S. C. Section 1350.                                                                                                                                             |  | 20-F                          |  |                  
|13.2*   |  | Certification of
    Principal Financial Officer pursuant to 18 U. S. C. Section 1350.                                                                                                                                             |  | 20-F                          |  |                  





*
In accordance with SEC Release 33-8238, Exhibits 13.1 and 13.2 are being furnished and not filed.





98







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:
October 28, 2016



99