UNITED
STATES
SECURITIES AND EXCHANGE

COMMISSION



WASHINGTON,
D.C. 20549



FORM
20-F



(Mark
One)

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



or



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



For
the fiscal year ended June 30, 2017



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 32200 George StreetSydney NSW 2000Australia
|----------------------------------------------- |  | -------------------------------------------------
|(Jurisdiction of Incorporation or Organization) |  | (Address of Principal Executive Offices)         



Richard
Pillinger

Chief
Financial Officer

BlueNRGY
Group Limited

Level
32

200
George Street

Sydney
NSW 2000

Tel:
+61 (0)2 8277 4111

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, 2017, 6,033,161 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







Contents





|PART I |      |                                                       | 6 
|------ | ---- | ----------------------------------------------------- | --
|ITEM   | 1.   | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 6 
|ITEM   | 2.   | OFFER STATISTICS AND EXPECTED TIMETABLE               | 6 
|ITEM   | 3.   | KEY INFORMATION                                       | 6 
|       | 3.A. | Selected Financial Data                               | 6 
|       | 3.B. | Capitalization and Indebtedness                       | 8 
|       | 3.C. | Reason for the Offer and Use of Proceeds              | 8 
|       | 3.D. | Risk Factors                                          | 9 
|ITEM   | 4.   | INFORMATION ON THE COMPANY                            | 36
|       | 4.A. | History and Development of the Company                | 36
|       | 4.B. | Our Business                                          | 39
|       | 4.C. | Organization Structure                                | 63
|       | 4.D. | Property, Plants and Equipment                        | 63
|       | 4E.  | UNRESOLVED STAFF COMMENTS                             | 64
|ITEM   | 5.   | OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 64
|       | 5.A. | Operating Results                                     | 65
|       | 5.B. | Liquidity and Capital Resources                       | 79
|       | 5.C. | Research and Development                              | 85
|       | 5.D. | Trend Information                                     | 85
|       | 5.E. | Off-Balance Sheet Arrangements                        | 85
|       | 5.F. | Tabular Disclosure of Contractual Obligations         | 85
|ITEM   | 6.   | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 85
|       | 6.A. | Directors and Senior Management                       | 85
|       | 6.B. | Compensation                                          | 87
|       | 6.C. | Board Practices                                       | 91
|       | 6.D. | Employees                                             | 92
|       | 6.E. | Share Ownership                                       | 92
|ITEM   | 7.   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     | 94
|       | 7.A. | Major Shareholders                                    | 94
|       | 7.B. | Related Party Transactions                            | 94
|       | 7.C. | Interests of Experts and Counsel                      | 95





3







|ITEM     | 8.    | FINANCIAL INFORMATION                                                        | 95 
|-------- | ----- | ---------------------------------------------------------------------------- | ---
|         | 8.A.  | Consolidated Statements and Other Financial Information                      | 95 
|         | 8.B.  | Significant Changes                                                          | 96 
|ITEM     | 9.    | THE OFFER AND LISTING                                                        | 97 
|         | 9.A.  | Offer and Listing Details Australian Securities Exchange                     | 97 
|         | 9.B.  | Plan of Distribution                                                         | 99 
|         | 9.C.  | Markets                                                                      | 99 
|         | 9.D.  | Selling Shareholders                                                         | 99 
|         | 9.E.  | Dilution                                                                     | 99 
|         | 9.F.  | Expense of the Issue                                                         | 99 
|ITEM     | 10.   | ADDITIONAL INFORMATION                                                       | 99 
|         | 10.A. | Share Capital                                                                | 99 
|         | 10.B. | Memorandum and Articles of Association                                       | 99 
|         | 10.C. | Material Contracts                                                           | 100
|         | 10.D. | Exchange Controls                                                            | 103
|         | 10.E. | Taxation                                                                     | 105
|         | 10.F. | Dividends and Paying Agents                                                  | 111
|         | 10.G. | Statement by Experts                                                         | 111
|         | 10.H. | Documents on Display                                                         | 111
|         | 10.I. | Subsidiary Information                                                       | 111
|PART II  |       |                                                                              | 112
|ITEM     | 11.   | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 112
|ITEM     | 12.   | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 113
|ITEM     | 13.   | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 113
|ITEM     | 14.   | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 113
|ITEM     | 15.   | CONTROLS AND PROCEDURES                                                      | 115
|ITEM     | 16A.  | AUDIT COMMITTEE FINANCIAL EXPERT                                             | 117
|ITEM     | 16B.  | CODE OF ETHICS                                                               | 117
|ITEM     | 16C.  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                       | 117
|ITEM     | 16D.  | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   | 117
|ITEM     | 16E.  | PURCHASES OF SECURITIES BY THE ISSUER AND AFFILIATED PURCHASES               | 118
|ITEM     | 16F.  | CHANGES IN THE REGISTRANT’S CERTIFYING ACCOUNTANT                            | 118
|ITEM     | 16G.  | CORPORATE GOVERNANCE                                                         | 118
|ITEM     | 16H.  | MINE SAFETY DISCLOSURE                                                       | 119
|PART III |       |                                                                              | 120
|ITEM     | 17.   | FINANCIAL STATEMENTS                                                         | 120
|ITEM     | 18.   | FINANCIAL STATEMENTS                                                         | 120
|ITEM     | 19.   | EXHIBITS                                                                     | 121







4







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.





5







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, 2017, 2016 and 2015 and for the three years ended June 30,
2017, 2016 and 2015 and summary consolidated balance sheet data as of June 30, 2017 and 2016 and for the two years ended June
30, 2017 and 2016 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.





6







Consolidated
Statements of Operations Data:

|                                                                                                                     |  | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  | ------------
|For the year ended June 30                                                                                           |  | 2017        
|                                                                                                                     |  | $’000       
|                                                                                                                     |  |             
|Revenues from continuing operations                                                                                  |  |             
|Other income                                                                                                         |  |             
|Cost of raw materials, consumables used, and contractors                                                             |  |             
|Employee benefit expenses                                                                                            |  |             
|Amortisation and depreciation                                                                                        |  |             
|Impairment of asset                                                                                                  |  |             
|Share of net profit of associates                                                                                    |  |             
|Other expenses                                                                                                       |  |             
|Net finance income/(costs)                                                                                           |  |             
|Loss from continuing operations before income tax                                                                    |  |             
|Income tax benefit/(expense)                                                                                         |  |             
|                                                                                                                     |  |             
|Loss from continuing operations                                                                                      |  |             
|                                                                                                                     |  |             
|(Loss) / Profit from discontinued operations                                                                         |  |             
|                                                                                                                     |  |             
|Net (loss) / profit for the period                                                                                   |  |             
|                                                                                                                     |  |             
|Other comprehensive income                                                                                           |  |             
|Items that may be reclassified to profit or loss                                                                     |  |             
|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                                                                                    |  |             





7







Consolidated
Balance Sheet Data:



|                        |  | 2017 |        | 2016
|----------------------- |  | ---- | ------ | ----
|Amounts in A$(000)      |  |      |        |     
|Current assets          |  |      | 6,703  |     
|Non-current assets      |  |      | 19,753 |     
|Total Assets            |  |      | 26,456 |     
|                        |  |      |        |     
|Current liabilities     |  |      | 10,545 |     
|Non-current liabilities |  |      | 7,485  |     
|Total liabilities       |  |      | 18,030 |     



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, 2017, was AUD 1.00 = USD$0.7839.



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    |  | Rate |  | Rate  
|2013                       |  |           |  | 0.9275  |  |      |  | 1.0271
|2014                       |  |           |  | 0.9420  |  |      |  | 0.9187
|2015                       |  |           |  | 0.7680  |  |      |  | 0.8382
|2016                       |  |           |  | 0.7426  |  |      |  | 0.7272
|2017                       |  |           |  | 0.7692  |  |      |  | 0.7545



|           |  | High
Rate |  | Low
Rate
|---------- |  | --------- |  | --------
|2017 Month |  |           |  |         
|April      |  |           |  | 0.7602  
|May        |  |           |  | 0.8046  
|June       |  |           |  | 0.7692  
|           |  |           |  |         
|2018 Month |  |           |  |         
|July       |  |           |  | 0.8046  
|August     |  |           |  | 0.8011  
|September  |  |           |  | 0.8121  



(1)
Averages, high and low rates 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.





8







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.



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, during our 2016 fiscal year we re-launched our solar business in Australia under our own brand which requires
additional working capital to fund growth to levels that would make a meaningful contribution to our profitability. Although we
have discontinued our direct operations and maintenance, or O&M, service offerings, we have plans to expand our O&M support
services for renewable energy customers 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, Australian solar installations and renewable O&M support service 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.



Our
project-driven businesses are subject to irregular revenues or seasonality that has led to significant fluctuations in profitability
and cash flow from period to period. Although we have withdrawn from certain of these business, our climate control business continues
and represents a meaningful percentage of our revenue operating result 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.





9







Although
no longer material to our overall financial performance because of diminished scope, the solar installation business has
historically experienced peaks and declines related closely to the timing of policy incentive payments and this has
exacerbated our historical quarter-to-quarter revenue and net income volatility and would continue to do so if we were
awarded any large projects in Australia. As a consequence of these dynamics, it is very difficult to identify historical
trends in overall business activity or profitability for the consolidated company or to anticipate future profitability based
on recent results. Moreover, the relatively 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.



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. 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 (to fund growth), 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
short-term borrowings and other liabilities payable by our corporate parent and the secured term debt at major subsidiaries as
of June 30, 2017 (excluding current trade balances and accruals) was approximately A$5.6 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,  it could have a material adverse effect on our results of operations
and financial condition.





10







One
of our growth strategies is to pursue targeted acquisitions of competitive and complementary operating companies. The
prospective acquisitions of Green States Energy, Inc., or GSE and the shares of Inaccess that we do not own exemplify this
strategy (refer to Item 4.A. under the heading “Recent / Prospective Acquisitions”). If we are not
successful in completing one or both of these acquisitions or implementing such strategy to acquire other targeted companies,
it could have a material adverse effect on our results of operations, financial condition and future prospects. 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 cash liquidity and
the illiquidity and price volatility of our ordinary shares. 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 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;                                                                                            
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | acquire,
                                         form joint ventures with or make investments in complementary businesses, technologies
                                         or products;
| | ■ | develop
                                         new products or services;                                                                                                                    
| | ■ | respond
                                         to competitive pressures; and                                                                                                                
| | ■ | respond
                                         to a downturn in the market climate.                                                                                                         



Our
management expects us to issue additional debt securities to fund ongoing operations 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.





11







Notwithstanding
write-offs of goodwill and intangibles in the VA restructuring and our 2015 and 2017 fiscal years, 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.



In
keeping with our accounting policies, the value of goodwill and intangibles was reviewed as of June 30, 2017 and this practice
will continue at the end of each subsequent fiscal year in light of the circumstances at the time. As a result of our reviews
of the carrying value of goodwill, significant impairments of goodwill were recognized in our fiscal year ended June 30, 2017,
with the result that we recorded impairments of goodwill of A$4.7 million for our fiscal year ending June 30, 2017. Nevertheless,
our assets as of June 30, 2017 included A$12.7 million of goodwill and intangibles. 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 monitoring, control and analytics 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
climate control installation business receives 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 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 systems
at customer sites. This could result in unpredictability of revenue and, in the short term, revenue shortfalls or declines. Similar
characteristics applied to our now-discontinued large-scale solar business that was operating during our 2015 and 2016 fiscal
years and are applicable to much of the revenue of Inaccess Holdings Ltd., or Inaccess (of which we own 22%). 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







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 and Chief Technology Officer, 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 and win
new customers and projects we cannot maintain or grow revenue in this line of business.



Our
monitoring system new installations 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 renewable energy monitoring services and operations and maintenance
services provided to the climate control market in Australia 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 and recurring
revenue is not yet sufficient to make more than a small contribution to our line-of-business fixed costs and there is no assurance
that we will be successful in expanding these activities or realizing meaningful economic benefits from recurring revenue to achieve
profitability.



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



We
do not have contractual relationships with financing sources 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 larger 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.





13







Our
monitoring 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.



We
sometimes act as general contractor for our customers in connection with the installation of energy efficiency / climate control
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 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, some 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 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, limitations on site access, 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. Similar risks are applicable to certain monitoring system installations, particularly when we are acting as a direct
supplier to the project owner.



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.



A
decrease in new project installation activity in the non-residential U.S. solar PV segment could constrain our sales and
adversely affect revenues in our monitoring and control line of business due to the concentration of our customers serving this
market.



The
majority of our monitoring and control revenues are derived from new non-residential solar PV installations in the United States.
Downturns in this market caused by changes or anticipated changes in regulatory or trade policy, such as the discontinuance of
the Clean Power or the threat of tariffs imposed as a result of the pending ITC case could reduce the level of new project opportunities
available to us and intensify competition for the non-residential projects that are constructed. If such case, our revenues and
margins may be adversely affected, exacerbating our losses and increasing the risk that we would not be able to continue as a
going concern.





14







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. Under real-world operating conditions,
which may vary by location and design, 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 our businesses 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 / Prospective 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. 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.





15







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.



If
we fail to effectively manage our planned expansion we may fail to meet our strategic objectives and our financial performance
could be materially and adversely impacted.



The
further expansion of our business into new jurisdictions is one of our primary strategies for growing revenues from renewable
system monitoring and O&M support services utilizing our monitoring technology software platform and data. Following
the acquisition of Draker (refer to Item 4.A. under the heading “Recent / Prospective Acquisitions”) our customer
base for monitoring services became highly concentrated in the United States. Inaccess has more geographic diversification, with
most of its activity and customer relationships being located in Europe, Africa and Latin America. If we are able to complete
the acquisition of the Inaccess shares that we do not already own, which is not assured, 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 the policy environment may become less accommodating for new solar projects.
However, we may not be effective in integrating our operations, work force and business systems with those of Inaccess or any
other acquired business and the expected benefits may not be realized.



If
circumstances require us to undertake further international expansion of our businesses without being able to incorporate enhanced
technology, management and customers of an acquired company, 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 be able to provide suitable products or obtain the necessary resources or local knowledge to effectively
sell and support the provision of monitoring-related systems and services. Our ability to generate cash from existing or expanded
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 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 a substantial fraction of our business in the
U.S. and are seeking to expand into other jurisdictions where political and regulatory environments and compliance regimes are
uncertain and 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, with consolidated revenue from our international activities representing approximately 17% and
22% for our 2016 and 2017 fiscal year respectively. If we are successful in acquiring GSE, the remaining shares of Inaccess
that we do not currently own, or both, the fraction of revenue earned outside of Australia could increase to 60% or more by the
end of our 2018 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;            





16







| | ■ | 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.                                                                       



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 companies 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 multiple 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.



Certain
components in the systems and products that we sell or expect to sell are produced in places other than 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, 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 and Inaccess systems that we
resell in the United States are manufactured in Europe. 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.





17







Licenses,
permits and product certifications are required to operate or install systems in some jurisdictions, and our inability or failure
to comply with applicable laws and regulations regarding permits, licenses or certifications could prevent us from either completing
current projects or obtaining or installing systems at 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 or sell
monitoring systems 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 or where we sell systems. It is also possible that existing and proposed governmental
conventions, laws, regulations and standards may in the future add significantly to our operating costs or those of our
customers and thereby limit our activities or the activities and levels of capital spending by our customers. If our
monitoring systems do not comply with certification requirements in a given jurisdiction our customers will not be permitted
to install them and will not purchase systems from us.



In
addition, many aspects of our operations or utilization of our products are subject to laws and regulations that relate, directly
or indirectly, to the energy 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 or use of our systems. The application of these requirements, the modification
of existing laws or regulations or the adoption of new laws or regulations curtailing installation activities 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 systems and O&M support services for renewable power generation
systems targeting markets in North America, the Eurozone and the Pacific region, including various island nations. Through
our ownership of a minority portion of Inaccess 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;                                                                                                                               





18







| | ■ | 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 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. In
addition we are pursuing the acquisition of the shares of Inaccess that we do not own and a business combination with GSE (refer
to Item 4.A. under the heading “Recent / Prospective Acquisitions”). 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. In May 2017 Yves-Regis Cotrel resigned from 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. Mr. Maros was on long-term, unpaid sick leave from September 2016 to June 2017 and his employment terminated on June
30, 2017. Effective December 2015 we appointed Mr. Steve Ritacco as our Chief Technology Officer, replacing the manager who held
that position for BlueNRGY LLC. The employment of Emmanuel Cotrel, the founder of BlueNRGY LLC and a Senior Vice President of
the Company terminated on April 28, 2017. 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
U.S. national securities exchange, our stock price could decline and become completely illiquid and our shareholders could face
a total loss of their investment.





19







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. Together, the lawsuits are referred to as the Texas Actions. In July 2017, the Texas Actions were settled
with respect to all defendants. The settlement provides for no admission of liability or wrongdoing by any defendant and the settlement
payment to the classes, inclusive of all Plaintiffs’ attorneys fees and expenses and settlement costs, was paid solely by
the Company’s insurance carrier and the underwriter of our June 2014 securities offering. Although the Texas actions are
now fully resolved, proceedings of similar nature could be brought against the Company or its officers and directors in the future
if there were to be other misstatements in our public filings or in connection with our future securities offerings and the coverage
provided by our insurance policies could be insufficient to cover the costs of defending or resolving such actions. In addition,
we may have suffered reputational damage from the Texas Actions and uncertainties about the adverse financial effect they might
have on us might have dampened demand from customers for our products and services and from investors to acquire our shares; and
such negative consequences may be continuing.



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.



In
addition, 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.



We
are a claimant in an arbitration proceeding against Emmanuel Cotrel before the American Arbitration Association in New York arising
from the termination of Mr. Cotrel’s employment. We have sought two forms of relief: (i) a declaratory judgment that Mr.
Cotrel’s termination was proper under the terms of his employment agreement and otherwise; and (ii) monetary damages. If
Mr. Cotrel were to file a claim against us for wrongful termination, we could be subject to costs that are not provisioned on
our balance sheet nor recognized in our statement of operations for our 2017 fiscal year. Separately, in response to a demand
for damages asserted by Mr. Cotrel and his affiliates, referred to as Cotrel Parties, we have sought declarations from the Australian
courts that our Board acted lawfully in connection with various securities issuances subsequent to our emergence from VA. Certain
Cotrel Parties are designated as the counterparties in the Australian proceeding. If any of the Cotrel Parties oppose us in the
proceedings in Australia, we may be subject to significant expense to pay legal costs, the amount of which is not currently determinable.
In addition, a derivative action, referred to collectively with the other proceedings involving Mr. Cotrel as the Cotrel
Matters, was filed in Florida state court against us and our Managing Director in June, 2017 by Mr. Cotrel alleging
wrongful conduct in the management of the Company and in connection with our acquisition of BlueNRGY LLC. We believe that the
action is without merit and intend to defend it vigorously if necessary. We have insurance that could mitigate losses arising
from the Cotrel Matters, but it may not apply or be sufficient to cover our financial exposure and we may have to incur expenses
related to these matters that are uninsured or to enforce our insurance policies. It is not possible to estimate our
financial exposure in connection with any of the Cotrel Matters, but individually or in aggregate they could have a significant
adverse effect on our financial condition and the price and liquidity of our shares.





20







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
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 were restated. We have been implementing changes in our accounting policies and procedures and
controls since Mr. Morro became our Managing Director following our emergence from VA and we are continuing to do so with the
goal of bringing the company into compliance with Section 404, but this process is not yet complete. 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.





21







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 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.



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.





22







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. In many countries, slow economic
growth and the inability or unwillingness of governments to fund incentives favoring 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.
In Australia, the government has announced that it will back away from the Clean Energy Targets announced only last year because
of pressure to reduce subsidies of renewables at the expense of other generation technologies. The effects are also being felt
in the United States, where the national Clean Power Plan that favored implementation of renewable energy generation projects
has been recently repealed and where there is a threat, following recent rulings of the International Trade Commission, that tariffs
could be introduced on imported solar panels. This dynamic has adversely affected some of our customers and the lower pace of
new solar installations in particular has limited our growth opportunities in these competitive markets where competitors are
entrenched. However, because of the large installed base of projects in all developed markets, including Europe and the United
States, we still consider these to be promising market to address with our systems and those of Inaccess and in which to offer
additional support services.



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.



ManyU.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. Most recently,
the Australian Government announced a shift away from the Clean Energy Targets set in 2016 in favor of a National Energy
Guarantee for procurement of power form dispatchable sources. Such policy shifts have the potential of reducing the value of RECs
with little advance notice. In the United States, the federal tax credit applicable to solar projects is scheduled to be reduced
from December 31, 2019 and the Clean Power Plan enacted under the Obama administration and that favored implementation
of renewable energy generation projects has been recently repealed. 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 are 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.





23







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 support 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 or portfolios of projects are
traditionally awarded on a competitive bid basis, with pricing often being the primary factor in determining which qualified contractor
or vendor is awarded a job, although each such party’s technical capability, safety performance record and reputation for
quality also can be key factors in the determination. Energy efficiency / climate control and solar installations we implement
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.



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 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 technologies now in existence or developed in the future. Increased
competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical
personnel. There can be no assurance that we will be able to compete successfully against current and future competitors. If we
are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results
of operations would be adversely affected.



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



We
have fully integrated and harmonized the BlueNRGY and Draker monitoring software and are doing the same with Inaccess software
to better serve the market and build on the established base of U.S. customers that use the Draker and Inaccess systems. The roll-out
of our monitoring systems, and those of Inaccess, together with 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. In addition,
new entrants offering battery storage systems that complement renewable generation facilities often offer control systems that
compete with those we offer. 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 and to acquire competitors. 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 O&M
support services would be material to our financial results.





24







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 subsidies and policy incentives for non-renewable energy resources;                                                                        
| | ■ | 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.





25







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.



Some
OEM manufacturers and suppliers of components of the type we use in the systems we install have been financially weakened by
competitive, financial and other factors, possibly including some of our current suppliers. Failures of large equipment
suppliers to the climate control sector, which is more mature, 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 dependent 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. This risk is currently elevated
in the United States by the pending ruling of the International Trade Commission, expected before year-end 2017, that could impose
tariffs on solar panels as a remedy for an action brought by U.S. panel manufacturers who have been found to have been harmed
by Chinese imports.





26







If
potential owners of solar PV systems are unable to secure financing on acceptable terms as a result of financial crisis, rising
interest 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.



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 and regulations. 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 or other forms of subsidies 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 in 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 and in which we lack personnel and effective sales channels. 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, sometimes reversing or limiting prior policies that required utilities to accept power from renewable resources. A new imposition
of tariffs on Chinese-manufactured solar panels that is being considered by the International Trade Commission, if it occurs,
would disrupt 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.





27







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 of our salesif supply of key components is curtailed and our purchases of components may be
constrained by our inability to negotiate 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. Typically, we obtain key components required by these businesses
from a small number of suppliers who are willing to offer us credit terms or produce products to our specifications and the number
of these suppliers is further limited by our small scale and weak financial condition. 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 many of the
components we sell in our monitoring systems 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
supply for critical components. 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.



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



We
acquired the Draker brand and continue to utilize it for all of our monitoring products in the markets where Draker, Inc. was
historically active, notably North America and Japan. The Draker brand was once recognized as the solar monitoring technology
leader in the United States, but recently it 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. Anticipating that we would acquire the equity of Inaccess that we do not
currently own or that we would continue to have a long-term strategic relationship with Inaccess, we have begun co-branding monitoring
systems and services sold in the United States with the Inaccess brand and logo, even though the Inaccess brand does not have
wide recognition in the U.S. market for monitoring and control systems. Our energy efficiency / climate control systems are marketed
and sold under the Parmac brand, which has recognition in its served Australian market.



The
BlueNRGY brand is substantially unknown by purchasers of the systems and services we sell and it has not been utilized to a
significant extent in selling or marketing them. It is utilized as our corporate name and is known to some investors, but it
does not have wide recognition. Given our limited resources and ability to promote awareness of the BlueNRGY brand, it is
unclear whether or not it will gain enough market acceptance to positively influence sales or acceptance of our systems or
services or facilitate increased interest in our equity securities among investors.



If
our brand choices constrain revenue and margin growth and delay our attainment of profitability, it would be detrimental to our
overall business. If any of our brands gain 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 multiple brands in our several served markets is significant and could further impair our liquidity
and chances for success.





28







The
BlueNRGY name and brand is not registered by us in any jurisdiction and we are potentially vulnerable to confusion about our identity
and to initiatives by owners of similar names to limit our use of the BlueNRGY name or brand jurisdictions where we try to use
it, including in the United States and Australia.



Our
application to register the BlueNRGY trademark/service mark in the United States has been rejected and we have not sought to register
the name in any other jurisdiction. Other companies operating in the United States, Australia, Canada and Europe utilize similar
names or marks and some of them appear to be involved in the energy or renewable energy sector. Consequently, there is potential
that customers and investors could confuse us with other companies utilizing similar names. Such confusion could have adverse
impact on our reputation and the acceptance of our products.



Because
we lack the protection of having registered our name in any jurisdiction, the possibility exists that other companies utilizing
a similar name could seek to block our use of the BlueNRGY name or service mark to protect their own identity or to gain competitive
advantage. If we have to defend against such action, it could require substantial expenditure for legal and other costs that could
materially adversely affect our financial performance. Furthermore, there would be no assurance that we would be successful in
such defense. This could result in our having to discontinue use of the BlueNRGY name and mark and to incur additional expenses
to change our branding.



The
risks associated with our monitoring, control and analytics business are similar for Inaccess and could affect the value of our
Inaccess equity investment and our operating results.



Inaccess
provides monitoring and control systems for distributed renewable energy facilities, predominately solar PV. The company’s
operations are primarily in Europe and its renewable energy customers operate in multiple jurisdictions, with significant concentrations
of activity in Europe, Central and South America, Africa and the Middle East. Consequently, Inaccess is challenged by the requirement
of selling and supporting application of its technology and systems outside of its home territory and across multiple regions.
Because the focus of Inaccess is on the monitoring and control of larger systems than Draker and on integration of those systems
with local electrical grids, it must comply with rigorous and varying requirements of utilities and grid operators in many countries
and is subject to a complex mix of regulatory and policy requirements. In addition, Inaccess serves customers in the telecom sector
and must meet different and challenging requirements of that highly regulated and dynamic sector.



The
failure of Inaccess, which is governed and managed independently from us, to manage the risks of its business, or the exposures
it has to changing regulatory and policy dynamics beyond its control, could adversely affect the value of our investment in the
company. The results of the operating performance of Inaccess, in proportion to our equity interest, are consolidated in our financial
statements for our 2017 fiscal year and that will continue to be the case for as long as we hold a percentage equity interest
that requires us to consolidate the Inaccess operating results under applicable accounting rules. Consequently, if Inaccess incurs
losses in future years, our financial performance could be adversely affected.



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



We
had committed to purchase the ordinary and preferred shares of Inaccess that we do not already own (refer to Item 4.A. under the
heading “Recent / Prospective Acquisitions”) but defaulted on that obligation as of April 3, 2017. This default
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, except as otherwise specified in the shareholders 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 Inaccess Articles of Association, a copy of which is filed as Exhibit 4.24 hereto.





29







Risks
Related to our Ordinary Shares



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



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



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



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



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



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.                                                                                                                                                                                                                               





30







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
shell companies (other than business transaction related shell companies) and limits the use of Rule 144 for resale of
securities of 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 year 1999 we had nominal non-cash assets and we had nominal operations. We resumed trading on ASX on April
18, 2000.



The
SEC allows the use of Rule 144 for resale of securities issued by issuers that have been at any time previously a shell company
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 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.



We
intend to pursue a NASDAQ listing if and when we meet the NASDAQ Capital Market’s initial listing requirements, but
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 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, 2015, the
highest trading volume recorded in a single day through September 30, 2017 was 30,801 shares, representing a total value of
shares traded on such day of $15,401. 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.





31







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. If and when we meet the NASDAQ Capital Market’s initial listing
requirements we intend to seek a NASDAQ listing at the earliest opportunity. We 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, but 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.                                                            





32







If
our shares are eventually approved for listing on the NASDAQ Capital Market or any other U.S. national securities 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.



In
our 2016 fiscal year, we completed a 1-for-80 reverse share split and may undertake another reverse share split
to meet the NASDAQ initial listing requirements with the consequence that the market liquidity of our ordinary shares may have
been adversely affected and could continue to be so and the value of your investment could be impaired and our business harmed.



On
December 17, 2015, 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 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 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 in pursuit of meeting the NASDAQ listing requirements
or for other reasons and such action could have similar adverse consequences. If we issue additional shares in the future, it
will 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 if we are successful in regaining our NASDAQ listing. Australian law does not require us to follow
NASDAQ requirements, even if we are listed on NASDAQ, 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.





33







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., and Mr.
Morro (the latter is an officer and director of the Company) and they collectively control over 31.5% of our outstanding ordinary
shares as of September 30, 2017.



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 are eligible to be sold into the market subject to Rule 144, 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 are eligible to be sold, subject to Rule 144. 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.





34







Our
Constitution grants to our Board the authority to issue 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 designations 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.





35







Our
Constitution and applicable Australian laws and regulations may adversely affect our ability to take actions that could be beneficial
to our shareholders.



As
an Australian company we are subject to different corporate requirements than a corporation organized under the laws of the United
States. Our Constitution, as well as the Corporations Act, set forth various rights and obligations that are unique to Australian
companies. These requirements operate differently than from many U.S. companies and may limit or otherwise adversely affect our
ability to take actions that could be beneficial to our shareholders.



ITEM
4.        INFORMATION ON THE COMPANY



4.A.
              History and Development of the Company



We
were originally formed on August 18, 1989 in Australia as London Securities Limited, a corporation subject to the laws of Australia,
specifically, the Australian Corporations Act. Following our inception, we began acquiring energy generation assets. Subsequently,
we undertook major adjustments in strategic focus and changed our name in 1996. 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 DOCAs. 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 endeavoring to complete the steps necessary to relist our ordinary shares on the NASDAQ Capital Market, but there is no assurance
that we will be successful in doing so.



Recent
/ Prospective Acquisitions



We
have developed our current business in part through strategic acquisitions, several of which have had significant impact on the
results of our continuing operations during the 2015, 2016 and 2017 fiscal years and, as also described below, we are actively
pursuing two additional transactions that our management believes, if completed, would have a significant favorable impact on
our operating results for our 2018 fiscal year. The terms of the completed transactions described below are qualified in their
entirety by the applicable acquisition documents included as Exhibits to our filings with the SEC.



GED



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 completing projects of 1MW – 5MW in size. GED ceased operations in the 2017
fiscal year. This description of the GED transaction is qualified in its entirety by the purchase agreement which is filed as
Exhibit 4.25 to this Report.





36







BlueNRGY
LLC Acquisition



In
January 2015, in conjunction with our Reorganization Plans, we acquired 100% of the equity interests of BlueNRGY LLC, a U.S. company
specializing in data acquisition, analysis and management related to the performance of geographically distributed energy generation
systems and providing related operations and maintenance, or O&M, services. At the time of the BN Acquisition, BlueNRGY LLC
was a development-stage enterprise serving a small number of customers in Europe and Asia. Following the Draker acquisition, commercial
application of the BlueNRGY LLC software platform was discontinued. 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.



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 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 and have negotiated and
document continuing service agreements at more than 1,600 sites where the Draker system was installed in the Americas, Japan and
Europe. New installations are being implemented for those customers and new customers and as of September 30, 2017, we
were monitoring operations at more than 2,200 sites. 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 North America.



Inaccess
Transaction



The
Company subscribed to €3.25 million of convertible preferred shares (‘Inaccess Preferred Shares’) of Inaccess
on July 7, 2016. Inaccess 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 Inaccess ordinary equity interests, although subsequent repurchases of its ordinary shares
by Inaccess boosted this percentage to approximately 22%.



Our
agreement with Inaccess contemplated the purchase of all of the remaining shares of Inaccess at a stipulated price, but we did
not complete the purchase within the time required and the Inaccess shareholders’ obligation to transact at the agreed price
expired. As a consequence, there is no assurance about the terms on which we will be able to acquire the remaining Inaccess equity
or if we will be able to do so at any price. Our purchase default also subjects us, at the discretion of Inaccess, to the redemption
of our Inaccess Preferred Shares at the original purchase price or their conversion to Inaccess ordinary shares and reduced governance
participation, which could result in the impairment of our investment value.



Notwithstanding
our failure to timely purchase the remainder of the Inaccess equity we do not own, we maintain a strategic relationship with Inaccess,
support the sale, installation and provision of customer service for their systems and technology solutions in North America and
we expect this relationship to produce enhanced sales and market penetration for us and Inaccess during our 2018 fiscal year.
In addition, we are continuing to actively pursue the acquisition of the Inaccess equity that we do not own, subject to limitations
on the availability of financial resources to do so, but there is no assurance that our expectations regarding enhanced
operating results or the acquisition of additional Inaccess equity interests will be realized.





37







Green
States Energy Transaction



On
August 22, 2017 we entered into a letter of intent, or LOI, with Green States Energy, Inc, or GSE, to acquire, through merger
with one of our U.S. subsidiaries, 100% of the outstanding equity interests of GSE, referred to as the GSE Transaction. GSE owns
and operates solar PV installations in three states commissioned between 2011 and 2014 with total peak generation capacity of
approximately 18MW. GSE was profitable in its last fiscal year, generates positive cash flow, net of debt service and, if its
operating results were consolidated with our own, would make our PPO line of business material to our operating results. The GSE
transaction would also be accretive to our earnings if consummated. Under the agreement, the consideration payable to GSE equity
holders would be would be 34 million of our ordinary shares and up to 4 million additional ordinary shares could be issuable by
us to satisfy GSE liabilities.



The
LOI pertaining to the GSE Transaction is subject to binding exclusivity terms and various contingencies, including
satisfactory completion of due diligence by both parties, negotiation of definitive purchase documentation and approval of
the GSE shareholders, that make it uncertain whether or not the GSE Transaction can be consummated. The LOI, originally set
to expire September 30, 2017 was extended until November 30, 2017 to permit ongoing due diligence and purchase
documentation to be completed and the filing of this annual report on Form 20-F. The managements of both companies are
working actively to satisfy the GSE Transaction contingencies.



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 funding through issue of retail bond |  | 100    
|Secured
Energy Bonds Plc                 |  | United Kingdom                |  | Single-purpose
entity formed to raise funding through issue of retail bond |  | 100    





38







Other
initiatives to streamline operations following our emergence from VA have resulted in the cessation of operations in the following
subsidiaries, although we have not yet taken steps to wind up or liquidate the legal entities:



|Subsidiary                  |  | Jurisdiction of Incorporation |  | Principal Activity      |  | % Owned
|--------------------------- |  | ----------------------------- |  | ----------------------- |  | -------
|Westinghouse Solar Limited  |  | UK                            |  | Solar                   |  | 100    
|Westinghouse Solar Inc      |  | USA                           |  | Solar                   |  | 100    
|Green Earth Developers, LLC |  | USA                           |  | Solar                   |  | 100    
|CBD Energy USA Limited      |  | USA                           |  | Special purpose vehicle |  | 100    
|BlueNRGY, LLC               |  | USA                           |  | Data management         |  | 100    



In
addition, the operating company, Chatham Island Wind Limited, organized to sell power to the Chatham Island Electricity
Trust (referred to as the Chatham Project and discussed below), has been placed into administration in New Zealand and
we expect it to be liquidated in the course of those proceedings.



Our
principal office is located at Level 32, 200 George Street, Sydney, NSW 2000, Australia. Our telephone number is +61 (0)2 8277
4111. 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, 431 Pine
Street, Suite 114, Burlington, VT 05401.



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 life cycle 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 support customers with
the installation of 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.
and subsequently, we have continued to narrow the scope of our businesses to focus on segments in which we believe we can
establish competitive advantage in our served markets. However, 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;                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | Support
                                         services for customers who own, operate and maintain renewable systems (O&M Support
                                         Services);                                                                
| | ■ | Solar
                                         Photovoltaic (or PV) System Design & Installation in Australia and related technical
                                         support for customers elsewhere;                                           
| | ■ | Energy
                                         Efficiency/Climate-control Technology Solutions; and                                                                                                                                                    
| | ■ | Operation
                                         of self-owned renewable generation assets, now referred to as Power Production Operations,
                                         or PPO, and previously termed Remote Area Power Systems, or RAPS.





39







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 a development-stage enterprise, BlueNRGY LLC, and
focused on the collection and application of performance data from distributed renewable power generation facilities. We
augmented these capabilities with the Draker and Inaccess transactions, establishing us as one of the leading independent
providers of solar monitoring and data analytics in North America. Including the solar monitoring business of Inaccess
in which we hold a minority equity-interest, we currently receive, compile and furnish operating performance and other
pertinent data from solar PV installations having a peak generating capacity of approximately 7GW and located in the
Americas, Australia, Asia and Europe, Africa and India. These system monitoring and control solutions have gained wide
acceptance for their reliability, durability and accuracy.



Our
businesses providing operations and maintenance, or O&M,support and optimization are still in the development stage and
not yet material to our operations. However, we intend to scale these in response to requests from our customers who want the
benefit of applying our data-driven processes for efficiently maximizing the financial performance of their projects. Until
the financial results are material, these activities will continue to be reported in the Monitoring and Control business
segment in our financial statements.



Over
the years prior to our VA, we actively attempted to diversify our solar PV installation business geographically in order
to capitalize on changing demand for new renewable energy generation. In our 2017 fiscal year, due to market factors, we stopped
pursuing solar PV installation in all markets other than Australia and our U.S. subsidiary, GED,and our UK subsidiary ceased operations.
For efficiency, although our solar installation activities worldwide are, and will continue to be reported as a separate line
of business in our financial statements, the management of our continuing solar PV installation initiatives in Australiahas
been transferred to our Parmac subsidiary, which also provides engineering, procurement and construction, or EPC services related
to energy efficient climate control systems. Because of our extensive experience, we believe we can deliver solar PV projects
profitably in the Australia. This experience includes the design and completion of more than 70MW of large-scale projects in Australia,
the U.S. and other international markets and more than 17,000 small-scale and residential systems in Australia.



Our
wind project development business was historically confined to Australia and was discontinued during our 2015 fiscal year
pursuant to our Reorganization Plans. While this line of business was active, we developed and managed the construction of
wind farms with peak generating capacity of 107MW, including a 0.5 MW installation on Chatham Island, referred to as the
Chatham Project. Due to a commercial dispute, Chatham Project operations, reported in our financial statements under our RAPS
line of business, have been curtailed and we expect that operating subsidiary to be liquidated during our 2018 fiscal year.
As a wind-project developer, we acquired and demonstrated competencies in negotiation of long-term energy off-take
agreements, or PPAs that have been retained and that we believe will have application in our Data Management and Performance
Analytics business.



Our
energy efficiency and technology solutions business segment, Parmac, is active only in Australia, where strong incentives
exist for end-users to employ energy efficiency measures to reduce cost and/or comply with government regulations.



Our
Industry



The
renewable energy industry, which includes energy derived from wind, solar and renewable biological resources, grew rapidly throughout
the world in recent years. Although the level of renewable energy investment has declined in the seven calendar quarters through
March 31, 2017, according to the Renewables 2017 Global Status Report, or the REN21 Report, published by the Renewable Energy
Policy Network for the 21st Century, it is still averaging over US$200 billion per annum. This sustained level of investment
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 in key regions of the world, as shown in the table below:





40







Figure
1:Global Investment in Clean Energy by Calendar Quarter(Billions of US$)







Source:
https://about.bnef.com/blog/clean-energy-investment-q1-2017-figures/



Although
Figure 1 illustrates that the aggregate investment in renewable energy has fallen, the installation rate of new renewable energy
generating capacity is growing, according to the REN21 Report, because the decline in unit costs of installing renewable
capacity more than offsets the reduced investment amounts. According to the REN21 Report, newly installed renewable
power capacity set new records in 2016, with 161 gigawatts (GW) added, increasing the global total by almost 9% relative to 2015.
The REN21 Report also stated that Solar PV was the star performer in 2016. Solar PV represented approximately 47% of the
total renewable capacity additions globally, followed by wind power at 34% and hydropower at 15.5%. These three sub-segments,
representing a combined total of 96.5% of global renewable energy capacity installations in 2016, comprise the primary end-markets
for our monitoring and control technologies and related services. Including activities of Inaccess, in which we hold a minority
interest, we are most active in serving the solar segment and in the current fiscal year have initiated offerings for the,
wind, smaller hydro projects (typically less than 50MW) and for energy storage and efficiency applications that complement other
types of renewable energy installations. Our technology can be deployed in any geographic market and thus our business is not
constrained by the ebb and flow of investment to any specific region.



Solar
PV



As
reflected in the REN 21 Report, the solar segment received approximately $114 billion of investment capital in 2016, which
includes amounts for commercial technologies such as solar thermal systems and concentrating solar thermal power. However, all
but a small fraction is represented by solar PV, which has become the fastest growing sub-segment of the renewable energy
industry. The growth trend of solar PV is illustrated in Figure 2 below.





41







Figure
2: Solar PV Global Capacity and Annual Additions, 2006-2016







Our
management believes that several factors recognized in the REN 21 Report and discussed below have contributed to the robust growth
of key renewable sub-segments and to growth in solar PV in particular. These dynamics create substantial opportunity for
participants such as ourselves who serve the solar PV market.





Costs
of renewable energy delivered have declined to or below that derived from traditional fossil-fuel sources and the installed
cost of solar PV is continuing to fall rapidly.







42







Figure
3, shown below, illustrates the Levelized Cost of Energy, or LCOE, from various renewable energy technologies at year-end 2014.
It shows clearly that utility-scale installations are able to deliver electric power in a cost range that is competitive with
traditional fossil fuels.



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







The
downward trend in the LCOE of solar PV appear to have been sustained between 2014 and 2016 based on installed solar PV system
price figures published for the U.S. market and shown in Figures 4 below:





43







Figure
4: Prices and installation rates of solar PV systems in the United States (2009–2016)







Source:
Industry Data SEIA Research and Resources



Over
the past several years, reductions in the costs of solar PV system components such as modules have been a primary driver of lower
costs but the rate of decline has moderated recently, as shown in Figure 5 below. However, our management believes that reductions
in balance of system costs and improvements in system efficiency will continue the trend of lower LCOE for solar PV and will foster
increased demand in coming years.



Figure
5: Reduction in solar PV modules Prices in Australia







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





44







We
also believe that observed reductions in cost of complementary storage technologies will allow electricity from renewable generation
to be used cost-effectively after sunset or when the wind isn’t blowing and that this will further augment demand for renewable
energy.



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, retail electricity price has roughly doubled over the last decade, although the rate of increase has recently moderated.



Figure
6: Electricity price indices for households and businesses in Australia







Source:
Australian Energy Council



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 7 below:





45







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







Regulatory
structures that incentivize solar installations are prevalent and have been important to driving historical demand in our markets,
but they are declining in significance.



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 and tax credits.



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 20% 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.





46







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. In 2016,
Australia adopted a large-scale renewable generation target, the Clean Energy Target, through 2020 at 33,000GWh, almost
double the 17,500GWh of energy that was produced by large-scale renewable generation in 2016
(https://www.cleanenergycouncil.org.au/policy-advocacy/reports/clean-energy-australia-rep). If the Clean Energy Target is
maintained, it would create ample opportunity for development of large-scale installations over the next three years that,
according to the Australian Clean Energy Council, would represent investment of more than A$7 billion over the period. The
value of RECs has trended up as a result, making more renewable projects financially viable. However, more recently the
Australian government has retreated from the Clean Energy Target and announced instead support for a new initiative referred
to as the National Energy Guarantee as well as continued  meeting commitments of the Paris Climate Accord that favor
renewable energy. The National Energy Guarantee requires purchase by energy retailers of sufficient dispatchable energy to
meet peak demands. This would favor the implementation of renewable systems that are linked to storage to ensure the
availability of committed power on demand. As reflected by the recent shifts, there can be no assurance that Australian
government policy will remain stable or will be sufficient to incent investment and there is a possibility that renewable
generation targets and new installations will be reduced.



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 and other renewable energy 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 2017– 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 globally, as well as in our historical
key markets of the USA and Australia.



Australia.
Research funded by the Australia Renewable Energy Agency and the Australia PV Institute demonstrates the rapid and
continuing growth of Solar PV in Australia. However, through 2015, most Australian solar PV installations were small
residential systems and steady growth in the capacity of such systems is forecast by the Australia PV Institute, as shown in
Figure 7 below:



Figure
8: Historical and projected residential capacity increases – 2001 to 2017







Source:
Australia PV Institute (APVI) Solar Map





47







We
took advantage of this robust residential market, installing more than 17,000 residential systems before shifting our focus to
the development of larger systems and opportunities in other markets. We no longer design or install residential solar systems.



As
the Australian solar PV market has continued to mature, financing has become more readily available for larger projects as reflected
in the Clean Energy Australia Report published by the Clean Energy Council. In 2016, seven projects greater than 5MW were commissioned,
which represents a 64% increase in cumulative installed capacity over the installed base at the end of 2015. Our management believes
that the number of non-residential projects will grow in coming years and that there is significant potential for us to market
both our monitoring solutions and O&M support services for solar PV in Australia.



United
States. Overall demand for PV solar installations has continued to grow in the United States following the extension of the
Federal investment tax credit program at year-end 2015. As illustrated by Figure 9 below, according to a publication of Solar
Energy Industries Association (the “SEIA”), recent growth has been driven primarily by utility-scale and residential
installations which 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. SEIA forecasts this pattern to continue along with overall market growth even after the sunset of the investment tax
credit program that begins in 2019.



Figure
9: U.S. PV Installations, 2017 Solar PV Forecast







Source:
gtmresearch / SEIA: http://www.seia.org/research-resources/solar-industry-data



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.



We
no longer operate a solar development or installation business in any market other than Australia but are now pursuing
solar development in that market on a limited basis in conjunction with our Energy Efficiency and climate control business. Consequently,
we do not have or expect to develop meaningful market share for solar installations in Australia. However, our management believes
that the fragmented nature of the installation market globally lowers barriers for us to penetrate new accounts with our monitoring
and control solutions.





48







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 sub-sectors, installation
of wind power generation capacity has grown substantially over the past decade, although wind energy investments globally have
recently plateaued, as shown in Figure 10 below.



Figure
10: Wind Power Global Capacity and Annual Additions (2006 – 2016)







Despite
the trend in capacity additions, the market represented by existing and new wind installations is large and represents an attractive
potential market for independent monitoring and control systems. Hence, the wind sector represents an attractive future market
for the application of monitoring and control solutions and related services. Inaccess, in which we currently own a minority equity
interest, has recently developed new applications solutions for wind systems that augment the capabilities of control systems
typically provided by turbine manufacturers and in some cases can substitute for such systems. We intend to support the marketing
and sale of Inaccess solutions to our existing customers and prospective new customers where applicable. We expect to have advantages
in doing so in our home market of Australia, particularly.



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 11
below:





49







Figure
11: 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 Figure 12 below, as of December 2016 there were 8 wind projects under construction at
that time represented 867MW of wind generation capacity.



Figure
12: Wind Farms Under Construction And Committed At End 2016







Source:
Clean Energy Australia Report 2016



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 U.S. and Europe is less complete, but based on the REN21 Report, numerous
large-scale wind projects will be developed in both regions over the coming years.



Small-Scale
Hydro



According
to World Small Hydro Power Development Report from the World Bank, Small-scale Hydro, or SSH, is among the most important renewable
energy sources, representing about 7% of the total installed renewable energy capacity (11.4% of total hydropower capacity) as
shown in Figure 13 below.





50







Figure
13:







SSH
has unique benefits, notably it is: a mature technology, generally economically feasible due to relatively low
investment capital, and has minimal impact on the environment. SSH holds opportunity for significant growth in many
countries, especially rural areas and emerging markets. As shown in Figure 14 In 2016, the global capacity of SSH
installations below 10MW was estimated at 78GW, but the total estimated SSH potential was estimated to be 217GW in the same 3
years.



Figure
14:



From
the International Center on Small Hydro Power (ICSHP)









51







One
of the characteristics of SSH is that it is widely dispersed geographically and the revenue from site production is typically
insufficient to support on-site personnel. Hence, SSH is an ideal candidate for remote monitoring and control solutions that can
be utilized through a central control portal similar to solutions we provide for solar PV. Consequently our management team believes
that SSH can become a significant application for our technology and we are actively working to commercialize solutions for this
sub-sector, although there can be no assurance that this initiative will be successful.



Monitoring,
Controls & Performance Analytics and Related Support 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 and new installations, with
adjustments for differences that exist in project sizes and vertical integration among regional markets. Based on installed
capacity projections by Bloomberg New Energy Finance displayed in Figure 15, this addressable market, excluding SSH, is
expected to grow by 46% from 2016-2019.



Figure
15: Forecast 3 year growth – renewable generation capacity







Our
monitoring and control systems, including those of Inaccess, are deployed primarily on solar PV facilities. We now also have pilot
deployments at wind sites and are seeking to apply our technology to SSH installations. 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. These systems are often referred to as data acquisition systems, or DAS
systems and if they include robust site control capabilities, supervisory control and data acquisition, or SCADA systems. Many
DAS and SCADA providers, as do we, offer facility owners and managers the capability to view operating data collected at site
through a remotely-accessible software platform and to aggregate and analyze historical operating and other pertinent data, such
as weather conditions, for purposes of maximizing revenue derived from their renewable generation assets.



Given
our capabilities to provide data management and control and support for operations and maintenance, the sub-sectors that have
been most relevant for our products and services are solar PV installations range in size from small-scale commercial facilities,
often involving fleets of systems to megawatt-scale installations for both small- and large-fleet owners. With the enhanced capabilities
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. Our target market does not currently include residential-scale systems,
which typically have capacities less than 10 kW.





52







DAS
and SCADA systems for solar PV facilities 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. Our management believes that the global market for monitoring and control systems for solar PV is highly fragmented
and that neither we, together with Inaccess, nor any market participant has established market leadership. As of year-end 2016,
the Global PV Monitoring 2017-2022 published by GTM Research and SOLCHAMBA, the Monitoring Report, placed Draker-Inaccess as one
of the top 5 independent solar PV monitoring system providers and our management estimates our share of the addressable global
market at less than 5% with the largest independent competitor being less than twice our scale. As further described below, the
competitive landscape varies among important regional markets we serve or seek to serve with our monitoring and control systems
for solar PV.



U.S.
Market.

Our
management believes, and the Monitoring Report report confirms, that the U.S. market for DAS and SCADA systems is one of the
world’s most competitive and fragmented. Notable competitors serving the U.S. market with specialized data management
and control systems for solar PV (including small-scale and mega-watt scale) include MeteoControl, Green Power Monitor, Locus
Energy, Swinerton, Also Energy, TriMark and various inverter OEMs such as SMA, ABB and Huawei.



Based
on statistics published by the U.S. Department of Energy SunShot Initiative, the total addressable market for solar PV monitoring
in the United States is concentrated in a handful of states, with California being the largest by far. The geographic concentration
of these installations for distributed solar PV illustrated in the Figure 16 below and provides perspective on states with the
greatest market potential:



Figure
16: Representative Solar PV Installations









53







The
chart above excludes large utility-scale facilities, but we believe that the geographic concentration is similar to that depicted
for Distributed Solar by the US EIA. The U.S. utility-scale market includes a high concentration of site 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, particularly following the Inaccess transaction, our market share in this sub-segment
is insignificant. Nonetheless, 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.
We believe that the Inaccess technology has distinct competitive advantages in serving this market segment and funds of this nature
are active in developing and building portfolios of utility-scale solar PV facilities. Aggregators of renewable generation assets,
whether public or private, typically have requirements for enhanced data analytics delivered through a single platform and we
believe they will form an important category of customer in North America for our monitoring, control solutions and O&M support
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.



Australia.Government data shows that the preponderance of solar PV
installations in Australia in recent years have been residential or were constructed by the major vertically-integrated utilities
and the application for our monitoring and control solutions has been limited. However, as the market has continued to mature
and financing has become more readily available for commercial and utility scale installations our management believes that a
viable market will emerge for both our monitoring solutions and O&M support services for solar PV. Table 14 shows that in
2016 over 120 MW of large scale (over 5MW) solar plants were commissioned in Australia, which represents a 64% increase in cumulative
installed capacity over the installed base at the end of 2015 according to the Clean Energy Australia Report.



Table
14: Large Scale Solar Plants Commissioned in 2016







Source:
Clean Energy Australia Report 2016



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, other than through the existing relationships we now hold
following the Inaccess transaction. Major competitors for Inaccess solutions for solar PV in Europe include the large global inverter
companies listed above as well as GreenPowerMonitor, Skytron, and MeteoControl as well as numerous independent SCADA providers.
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 support services.





54







Wind
and Hydro Monitoring.

To
our knowledge, most local supervisory control systems deployed on wind projects and hydro projects throughout the world are generally
proprietary to the turbine manufacturers and linked to warranties, although a few specialized independent companies are emerging
that offer data management systems tailored for wind installations. These companies include: Baze, BaxEnergy, Breeze, Osisoft
and their primary served markets are North America and Europe. We are not aware of other independent monitoring companies active
in the hydro sub-sector. The apparently growing market appetite for independent monitoring of wind facilities in particular
and our observation that some financial owners of multiple classes of renewable assets wish to consolidate data on a single information
platform supports the belief of our management that we can expand our addressable market to include wind and hydro facilities.
However, there can be no assurance that we will be successful in expanding into these subsector markets.



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. We are also exploring the applicability of our
centralized monitoring and control solutions to facilities energy management and efficient operation of climate control
systems, but the potential for commercial success with these initiatives is uncertain. We have also established a limited
capability to serve the Brisbane, Australia market during our 2017 fiscal year to capitalize on our historical presence in
that market as a solar PV installer. However, we have not yet generated material revenue from this operation. 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.



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 data collection, software 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 maintenance support 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.





55







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 the implementation of our Reorganization
Plans 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 and, together with Inaccess,
we are a global leader in solar PV monitoring and control. 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 and, together with Inaccess, have presence in key markets for renewables such as the USA, Australia, and Europe. 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 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;                                                                                                                                                                                                                                                                         
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | a
                                         wide base of customers without significant concentration;                                                                                                                                                                                                                                                                                     
| | ■ | 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
                                         support 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.



Deliver
to our customers best-in-class technologies and services.We have invested heavily in technology development in our
monitoring and controls business and continue to do so. In this investment we have emphasized development of capabilities that
make our systems reliable, user-friendly and responsive to rapidly evolving requirements of the renewable sector and to maintain
competitive advantage. In all of our businesses, when we are integrating hardware for our customers we do not have exclusive commitments
to use any specific supplier or system components, giving us the flexibility to incorporate new technologies and 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.





56







Deploy
a flexible business development organization utilizing consistent business processes.As a small company we are challenged
to operate globally with limited resources. To do so we are striving to implement standardized project design methodologies, management
processes and execution objectives across geographies and lines of business in which we operate. In addition, we are investing
heavily in information infrastructure to make our business development personnel productive. 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 our products and services in markets that are subject to variability due to changing regulatory and business environments.



Capture
high-margin opportunities not targeted by traditional installers and developers.We have developed expertise in solar,
wind, energy storage and energy efficiency that gives us unique and complimentary capabilities to provide integrated sustainable
and cost-effective generation management 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, using our systems, to acquire
or sell energy from renewable sources at competitive pricing thorough community and behind-the-meter installations without the
necessity of sacrificing margins to intermediaries.



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 are actively exploring ways to utilize this data resource to deliver
benefits to prospective customers such as 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 renewable generation data, together with the empirical perspective it can provide,
to grow in value over time.



Acquire
complementary businesses, including, selectively, project ownership interests.We have grown and evolved the
Company through acquisitions and intend to continue to do so (refer to the heading “—Acquisitions” below).
We believe that acquisitions and strategic partnerships can accelerate our entry into targeted markets and enhance the depth of
our management team. Notably, we have acquired BlueNRGY LLC and the operating platform certain assets of Draker and made an initial
investment in Inaccess in furtherance of building our capabilities in the monitoring and control systems sector. 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 or foster future business development. The announced acquisition of GSE is exemplary of this strategy,
although there is no assurance that the GSE transaction will be consummated.



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, some of our operating subsidiaries that were not part of the VA process required 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. Although we have raised additional
capital to continue our operations we remain thinly capitalized and are currently not profitable. 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 2018 fiscal year if we have access to sufficient
additional capital to fund business development opportunities in our pipeline.





57







Small
scale and low market-share in highly competitive businesses– Competition is intense in all of our continuing 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 recruit 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.



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.                                                                                                                            





58







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 and sub-system suppliers, such as inverter manufacturers and
storage integrators, who are bundling software tools for gathering data and managing site performance into their product offerings.
Several 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,
Control& Performance Analytics



The
acquisition 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 DAS and SCADA 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.



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 those of Inaccess,
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. They also enable dynamic control of generation facilities,
including at the sub-system and component level and for managing grid interfaces. They can be applied to a wide spectrum of
generation system component and sub-system suppliers.



We
also integrate and sell to many of our 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.



Utilizing
our software, renewable generation 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 can be accessed by our customers locally at sites and through internet cloud-based applications that
we license by subscription, sometimes referred to as software-as-a-service or SAAS. Our customers utilize system data billing
validation, revenue collection and to support asset valuations. We expect that financing providers, risk managers & insurers,
among others, will find alternative applications from which we can derive future revenue.



As
of September 30, 2017 our proprietary data management system is monitoring over 2,200 sites with a combined power generation capacity
of more than 2GW and, when considered with the Inaccess customer base, more than 6.5GW. 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. 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. Most of our customers purchase our systems and software subscriptions directly from us, but we intend to broaden our
use of resellers in markets where we do not have operations.





59







O&M
Support Services



During
our 2016 fiscal year we provided O&M services to a few third-party owners of solar PV facilities gain experience in the
application of our data systems and technology to this important activity. Revenues from this activity were not material and
were consolidated with those of our Monitoring, Control and Analytics business for our 2016 and 2017 fiscal years. Based on
this experience, our management believes that our proprietary data management system and integrated software tools can
enhance the ability of renewable asset owners and their service providers to cost-effectively operate and maintain renewable
energy facilities and can provide competitive differentiation from our competitors. For example, we have found that we can
use the system to pinpoint maintenance requirements and to increase the efficiency of work scheduling. Our software tools
also provides clear metrics to demonstrate the effectiveness of O&M results.



Shortly
prior to the end of our 2017 fiscal year we determined to withdraw from directly providing O&M services to third parties,
and to focus on providing our customers, including many O&M service providers, with support services that we can deliver on
a round-the clock basis from our facilities and with our software tools. The scope of these services includes active monitoring
of sites for customers and technical advice on site performance issues. This business activity is still in the development stage
and revenues are not yet material to us our business or broken out separately. There can be no assurance that this activity will
gain market acceptance or have a material impact on our financial performance.



Solar
PV Design & Installation



Since
2010 we have installed, primarily through the use of local sub-contractors, over 17,000 small-scale (mostly residential) systems
in Australia. Following our emergence from VA, we withdrew from the residential installation business due to the high costs of
customer acquisition and commodity-nature of this market. In Australia we re-launched sales of commercial-scale systems in Australia
and continue to offer the design and installation of these systems on a small scale.



In
addition, we developed the capabilities to design, construct and update / upgrade large-scale systems and augmented
these capabilities with the acquisition in 2014 of GED, a U.S. company specializing in engineering, procurement and
construction (EPC) of utility-scale solar systems. We continued this activity in the United States after our emergence from
VA, but determined in May 2017 to withdraw form this line of business in the United States and Europe and to curtail
operations at GED and our UK subsidiary, Westinghouse Solar Ltd. We reached this decision because the number and installation
rate of projects awarded to us in these geographies had been highly irregular and we were subject to intense competition from
large, better- capitalized EPC contractors. These circumstances led our management to believe that our limited capital
and technical resources would be better focused on our high-value-added technology-based businesses where we have a
competitive advantages. The revenues from our American and UK subsidiaries has been reclassified as revenue from
discontinued operations in our 2016 and 2015 financial statements.



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 owner. We
did not manufacture or distribute wind generation equipment. Our decision to withdraw from active pursuit of wind projects in
January 2015 was driven by recognition that we lacked the financial resources following our emergence from VA to maintain
our wind development business through a period when Australian renewable energy policy was constraining new wind project developments
in Australia. We intend to confine our future activities in the wind sector primarily to the application of our monitoring, control
and data management technologies to support operations, maintenance and revenue management of commissioned facilities. We intend
to emphasize regions where there are large concentrations of wind projects and we have established business operations and relationships
with asset owners or managers of wind projects.





60







Energy
Efficiency



Since
our emergence from VA, 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 2016 |  |                           | 82 | %             
|Fiscal year 2017 |  |                           | 86 | %             



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.



Parmac
has, 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. Service sales are generated by in-house sales personnel and from relationships with prior installation
customers. 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.





61







Since
the emergence from VA, our management has determined that Parmac should also 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.



Power
Systems



Our
power systems, formerly RAPS, business segment is dedicated to generating or revenue from assets or technologies in which we have
an ownership interest. Following our emergence from VA, the only operating asset remaining in this business segment was the 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, and did not do so during our 2017 fiscal year, due to
a dispute with the counterparty to the power purchase agreement, Chatham Islands Electricity Limited, or CIEL. CIEL is seeking
to terminate its power purchase agreement with our New Zealand subsidiary, Chatham Islands Wind Ltd (“CIWL”), and
acquire the generating assets in accordance with its interpretation of contractual rights triggered by our VA. We are disputing
the position of CIEL, but at this time it is not possible to predict how this matter will be resolved or what economic impact
it will have on us. Complicating the resolution of this issue is fact that CIWL is in liquidation in New Zealand and may be dissolved
by the Liquidator.



As
availability of capital permits, we will consider acquiring 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. The prospective acquisition of
GSE, which owns and operates solar generating facilities in the United States, is exemplary of this intention, although there
is no assurance that we will be successful in consummating the GSE transaction.



Our
capability to manage already-commissioned generating assets, should we able to acquire them, is enhanced by our demonstrated capabilities
in monitoring and analyzing operating performance of such systems and providing, so far to a small customer cohort, O&M support
services.



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 proprietary intellectual property covering our data collection and monitoring software systems or applicable to our Monitoring
& Performance Analytics business. This includes proprietary software code and a patent portfolio consisting 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, however, we may elect not to prosecute all applications to issuance.



Research
and Development



We
did not conduct research and development through the end of our 2017 fiscal year.





62







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.



4.C.
              Organization Structure



The
table below lists, as of September 30, 2017, 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
|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 (in Administration)           |  | New Zealand              |  | Special purpose vehicle |  | 100



4.D.
              Property, Plants and Equipment



Our
facilities, as of September 30, 2017, 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 32, 200 George Street, Sydney, NSW 2000    |  | 60sq-m                 
|USA       |  | 431 Pine Street, Suite 114, Burlington, VT 05401 |  | 260 sq-m               



In
addition, our staff based in the USA currently has access, as needed and at no cost, to office facilities in Fort Lauderdale,
FL and Chicago, IL that are leased by affiliates of our Managing Director.



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:





63







|          |  |                                                    |  | Approximate Size (sq-m) |  | Primary BusinessUnit
|--------- |  | -------------------------------------------------- |  | ----------------------- |  | --------------------
|Country   |  | Address                                            |  | Warehouse               |  | Office              
|Australia |  | 15 Terra Cotta Dr., Blackburn, VIC                 |  | 180sq-m                 |  | 290sq-m             
|Australia |  | Unit 7, 3-5 University Drive, Meadowbrook QLD 4131 |  | 320sq-m                 |  | 70sq-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 September, 30, 2017, we owned or held under leases assets in the categories shown in the following table having an
aggregate value of A$1.8 million, which comprised an “at cost” total of A$3.8 million less depreciation and
impairment of A$2.1 million



|Amounts in A$’000    |  |      |       |                          |  |          
|-------------------- |  | ---- | ----- | ------------------------ |  | ---------
|Asset Category       |  | Cost |       | Accumulated Depreciation |  | Net Value
|Plant & Equipment    |  |      | 2,577 |                          |  |          
|Office and Leasehold |  |      | 794   |                          |  |          
|Motor Vehicles       |  |      | 476   |                          |  |          
|Total                |  |      | 3,847 |                          |  |          



Capital
Expenditures



Our
capital expenditures for property, plant and equipment for the fiscal year ended June 30, 2017 and 2016 respectively, were
approximately A$0.05 million and A$0.03 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 2017 and 2016 fiscal years 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.



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.





64







5.A.
              Operating Results



We
are an Australian corporation operating in the renewable energy and energy-efficiency / climate control 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 support customers in the design
and installation of 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,
                                         Control& Performance Analytics                             
| | - | ----------------------------------------------------------------------------------------------------------------
| | ■ | Solar
                                         Photovoltaic (or PV) Design & Installation (Australia only)      
| | ■ | Operation
                                         of self-owned renewable generation assets, referred to as PPO
| | ■ | Energy
                                         Efficiency / Climate Control Solutions                          



In
May 2017, during our 2017 fiscal year, we curtailed our direct operations and maintenance (O&M) service offerings
globally and will no longer provide engineering, procurement and construction (EPC) services for new renewable generation
projects in the Americas and Europe in order to maximize management focus on our monitoring, control and analytics
businesses. Revenues and costs associated with these operations have been classified as discontinued operations in our 2017
fiscal year and retrospectively reclassified as discontinued operations in our 2016 and 2015 fiscal years. We continue to
provide design and installation for commercial-scale solar PV facilities in Australia utilizing project management and other
support from our energy efficiency / climate control subsidiary, Parmac. 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 historically referred to as RAPS and going forward refer to as Power
Production Operations, or PPO. Because the Chatham Project, discussed below, is not producing wind power, PPO is not
currently material to our operations. However, there is a possibility that it will become significant in the future,
particularly if we are able to consummate the prospective acquisition of GSE (Refer to Item 4.A under the
heading “Recent / Prospective Acquisitions”) or a similar acquisition of already-commissioned
facilities.



In
keeping with customary practice in Australia, our fiscal years end on June 30. During the fiscal years ended June 30,
2017 (fiscal year 2017); June 30, 2016 (fiscal year 2016) and June 30, 2015 (fiscal year 2015), we incurred a net loss from
continuing operations of A$8.6 million, A$9.3 million and A$11.1 million respectively, of which A$Nil, A$Nil million and
A$6.2 million for fiscal years 2017, 2016 and 2015 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, 2017, 2016 and 2015:



|Fiscal Year Ended June 30,                             |  | 2017                  |      | 2016               |  | 2015                 
|------------------------------------------------------ |  | --------------------- | ---- | ------------------ |  | ---------------------
|                                                       |  | Revenue (A$ millions) |      | Revenue Percentage |  | Revenue (A$ millions)
|Amounts in A$(000) except as noted                     |  |                       |      |                    |  |                      
|Solar PV Design & Installation (Solar PV)              |  |                       | 0.4  |                    |  |                      
|Large-scale Wind                                       |  |                       | —    |                    |  |                      
|Monitoring & Performance Analytics                     |  |                       | 4.1  |                    |  |                      
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                       | 14.5 |                    |  |                      
|RAPS                                                   |  |                       | —    |                    |  |                      
|Total reported revenue                                 |  |                       | 19.0 |                    |  |                      





65







Monitoring,
Control & Performance Analytics



We
entered the business of data management for renewable generation assets in January 2015 with our acquisition of BlueNRGY
LLC. At the time we acquired BlueNRGY LLC, the BlueNRGY data management business was in the early stages of
commercialization.



In
September 2015 we acquired the Draker data management platform and certain other assets (Refer to Item 4.A under the heading “Recent
/ Prospective Acquisitions”). 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 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 and 2017 fiscal years that have continued into our 2018 fiscal year.



However,
as a result of our investment, our monitoring and performance analytics revenue grew by 54% during our 2017 fiscal year and
due to continuing positive industry growth dynamics, particularly in the USA. We foresee our monitoring and
performance analytics revenue continuing to grow during our 2018 fiscal year. Future 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 access we are providing for industry-leading Inaccess control technology
as discussed further below, and our 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 and license
renewals for our enhanced software from the legacy customers where Draker systems and software were installed prior to the
Draker Transaction. Subscription renewals have now been achieved at more than 80 percent of the active sites monitored by
Draker and this percentage has been growing steadily with the expiration of legacy licenses.



Consequently,
our management expects a turnaround to positive profitability for this line of business in the 2018 fiscal year, however,
there can be no assurances about when, if ever, the data management business will become profitable.



To
further secure our competitive posture, to provide a range of products and system control technologies that are increasingly required
by our utility-scale customers and that we cannot currently supply, and to broaden our market access, we completed an investment
of a minority portion of Inaccess in July 2016 (refer to Item 4.A under the heading “Recent / Prospective Acquisitions”).
Given the acceptance of Inaccess technologies by our customers during the 2017 fiscal year and the additional market penetration
that implies, we are actively pursuing the acquisition of the Inaccess equity that we do not currently own. However, whether or
not we are able to increase the percentage of Inaccess equity that we own, our management expects that the opportunity to deliver
Inaccess technologies in the North American market will significantly boost revenue in our Monitoring and Performance Analytics
line of business for our 2018 fiscal year as compared with our 2017 fiscal year. Inaccess is currently profitable
and the scale economies and other efficiencies that we expect would accompany a complete integration of the Draker and Inaccess
monitoring and control businesses would accelerate the timing and magnitude of our turnaround to positive profitability for
this line of business. Such an outcome cannot be assured, however, and is only possible if we are able to consummate the acquisition
of the Inaccess shares that we do not already own.





66







Since
the acquisition of BlueNRGY LLC, the revenues in our line of business providing direct O&M services have not
been material to our overall operations, or profitable, and this business was discontinued during the 2017 fiscal year.



Solar
PV Design & Installation



In
May 2017 we formally ceased to provide engineering, procurement and construction (EPC) services for new renewable generation projects
in the Americas and Europe. The number and installation rate of projects awarded to us in these geographies had been highly
irregular and 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 our management believes that our limited capital and technical
resources are better focused on our high-value-added technology-based businesses where we have greater competitive advantage.
These EPC services were previously provided through our Westinghouse Solar Ltd. subsidiary in the UK and North Carolina-based
subsidiary, Green Earth Developers LLC. Revenues from our American and UK subsidiaries have been reclassified as revenue from
discontinued operations in our 2016 and 2015 financial statements. We continue to provide solar PV design and installation services
for commercial-scale projects in Australia.



The
decrease in revenue in the solar PV segment from our 2015 to 2016 fiscal years was attributable to the scale down of operations
in our Australian EPC business following the VA process. The subsequent increase from our 2016 to 2017 fiscal years was
primarily derived from contracts for the design and delivery of a small number of commercial solar PV installations. Our intention
is to grow our commercial solar business in Australia through forming a closer operational relationship with our Parmac business
unit, which is located there. This will enable the current personnel focused on solar PV installation to leverage the customer
relationships, scale, procurement, project management capabilities and procurement channels of the Parmac business unit in order
to maximize our delivery capability with the greatest efficiency and to return the solar PV business unit to profitability.
However, there can be no assurance our plan will be successful or that our expectations will be borne out 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 commercial-scale solar business
but it is our intention to begin to do so as new projects are awarded. Because of uncertainties in the contract bidding process,
there can be no assurance about when we will win further new contracts.



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 has 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. During the 2015 fiscal year, Parmac’s net profit was impacted
by one-time expenses totaling A$1.1 million 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 was impacted by cyclical
industry wide downward pressure on margins for large tendered projects and with poor cost control on a number of projects.
Following a strategic review of this business in May 2016, a number of personnel changes were made, business development
was 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, Parmac returned to profitability in the 2017 fiscal
year and achieved a 19% growth in revenue from 2016 to 2017. Our management believes that Parmac will continue to be profitable
in the current fiscal year, however, there can be no assurance that this will be the case.





67







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. In order to counteract some of this regional concentration risk, Parmac has applied for and received a license
to operate in Queensland and has begun source projects in the region. During our 2017 fiscal year no revenue was generated in
Queensland, however, construction of our first project in this state has commenced during our 2018 fiscal year. The Queensland
operations can fully leverage the infrastructure of Parmac’s Melbourne division which allows for a streamlined, low cost
entry into this new market.



PPO
(formerly RAPS)



Chatham
Project. This business segment currently comprises solely 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 and the operating company, Chatham
Island Wind Limited, organized to sell power to the Chatham Island Electricity Trust, has been placed into administration in
New Zealand and we expect it to be liquidated in the course of those proceedings. 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 development of large-scale wind projects in Australia and
the associated costs were reflected in our expenses for those years. Our active pursuit of new large-scale wind opportunities
was curtailed during our 2016 fiscal year and we are no longer incurring expenses related to this activity 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 recovery 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.



During
the early stages of our 2015 fiscal year we earned management fees from the project management agreement for the Taralga
Wind Farm Project, but this was terminated later in our 2015 fiscal year and we have not realized any management fee revenue
in subsequent fiscal years.



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.



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 related businesses
including Monitoring & Performance Analytics.





68







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.                                                                                             
| | ■ | The
                                         potential for renewables to achieve high penetration rates is rapidly improving as complementary
                                         storage technologies are beginning to be manufactured at scale and declining unit cost
                                         and are demonstrated to overcome inherent limitations of renewable generation such as
                                         intermittency and grid destabilization.



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, although expected to diminish over time, 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 currently 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. Significant and 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 favorable 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 limit competition or foster higher 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 perceived subsidies for renewable energy, some of the demand for new renewable energy capacity
may be dampened. This impact will fall unevenly across countries and regions as corrections are made to compensate for policies
that were not sustainable when implemented or are no longer sound given changing sector dynamics. Our management expects the effect
of this trend will most greatly affect our business opportunities in the medium term, although we have already seen corrections
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 believe that the impact of intense competition on downstream participants such as
ourselves has been dampened by market balkanization, but as the industry matures and regional competitors grow and expand
their regional scope, competition is intensifying in the monitoring and control sector. Consequently, we expect to be
required to continuously improve service levels and efficiency and apply new technologies to maintain customer loyalty, build
scale attain profitability and grow market share to a level that can remain viable long-term.





69







In
addition, access to incremental capital, attainment of profitability and demonstrating financial stability 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.            
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | Monitoring
                                         and control systems have strategic significance for managers of large portfolios of renewable
                                         generation assets and financial strength is fast-becoming a prerequisite for providers
                                         of systems and software.                               
| | ■ | 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.                                                                                                                                                   



Results
of Operations



Fiscal
Year Ended June 30, 2017 Compared to Fiscal Year Ended June 30, 2016 —Consolidated Results

|Amounts in A$(000) except as noted                       |  | Year ended 
June 30, 2017 |         | Year ended 
June 30, 2016
|-------------------------------------------------------- |  | ------------------------- | ------- | -------------------------
|                                                         |  |                           |         |                          
|Revenues from continuing operations                      |  |                           | 18,956  |                          
|                                                         |  |                           |         |                          
|Operating Expenses                                       |  |                           |         |                          
|Cost of raw materials, consumables used, and contractors |  |                           | (9,839  | )                        
|Employee benefit expenses                                |  |                           | (12,250 | )                        
|Compliance and consultants                               |  |                           | (1,176  | )                        
|Insurance                                                |  |                           | (437    | )                        
|Occupancy expenses                                       |  |                           | (565    | )                        
|Travel costs                                             |  |                           | (620    | )                        
|Bad and doubtful debts                                   |  |                           | (63     | )                        
|Other expenses                                           |  |                           | (1,256  | )                        
|Amortisation and depreciation                            |  |                           | (419    | )                        
|Sub-total - operating costs                              |  |                           | (26,625 | )                        
|                                                         |  |                           |         |                          
|Other income                                             |  |                           | 13      |                          
|Share of net profit of associates                        |  |                           | 358     |                          
|Net finance income/(costs)                               |  |                           | (1,288  | )                        
|Impairments                                              |  |                           | —       |                          
|Loss from continuing operations before income tax        |  |                           | (8,586  | )                        
|Income tax benefit/(expense)                             |  |                           | —       |                          
|Net profit/(loss) for the period                         |  |                           | (8,586  | )                        
|Net (loss) / profit from discontinued operations         |  |                           | (5,217  | )                        
|Net loss for the period                                  |  |                           | (13,803 | )                        
|                                                         |  |                           |         |                          
|Other comprehensive income                               |  |                           | 193     |                          
|                                                         |  |                           |         |                          
|Total comprehensive loss for the period                  |  |                           | (13,610 | )                        





70







Operating
revenue



Total
operating revenues from continuing operations increased from A$15.0 million for the year ended June 30, 2016 to A$19.0 million
for the year ended June 30, 2017. The revenues increases were mainly attributable to an increase in revenue for Draker and Parmac.



|Amounts in A$(000) except as noted                     |  | Year ended 
June 30, 2017 |        | Year ended 
June 30, 2016
|------------------------------------------------------ |  | ------------------------- | ------ | -------------------------
|                                                       |  |                           |        |                          
|Monitoring & Performance Analytics                     |  |                           | 4,047  |                          
|Solar PV Design & Installation (Solar PV)              |  |                           | 386    |                          
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                           | 14,523 |                          
|RAPS                                                   |  |                           | —      |                          
|Total reported revenue                                 |  |                           | 18,956 |                          



Monitoring,
Control & Performance Analytics revenue increased from A$2.6 million for the year ended June 30, 2016 to A$4.0 million
for the year ended June 30, 2017, as a result of growth in software subscriptions in the existing Draker installed base and sales
of new projects to legacy customers and new customers. The year-over-year increase also reflects the results of Draker operations
for 12 months in our 2017 fiscal year as compared with approximately 9.5 months in fiscal year 2016.



Solar
PV revenue increased by 72% from A$0.2 million for the year ended June 30, 2016 to A$0.4 million for the year ended June 30, 2017,
buoyed by a higher demand for commercial installations in Australia.



Parmac
revenue increased by 19% to A$14.5 million for the year ended 30 June 2017 as a result of improvements in the successful conversion
of project tenders to contracts. There has been an increased focus on business development activities within Parmac which has
increased the number of tender opportunities. Around 86% of Parmac’s revenue is derived from its contracting business with
the 14% balance from its services division. This ratio also remained consistent between the 2016 and 2017 fiscal years.



There
was no PPO revenue in our 2017 fiscal year as a result of the ongoing contractual dispute regarding the Chatham Island
wind project triggered by the our VA. In our 2016 fiscal year there was a temporary resolution to this dispute which generated
a small amount of revenue, however, this did not continue into 2017.



Operating
costs



For
the year ended June 30, 2017 and 2016, 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, 2017 |        | Year ended 
June 30, 2016
|------------------------------------------------------ |  | ------------------------- | ------ | -------------------------
|                                                       |  |                           |        |                          
|Monitoring, Control& Performance Analytics             |  |                           | 8,564  |                          
|Solar PV Design & Installation (Solar PV)              |  |                           | 686    |                          
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                           | 14,383 |                          
|PPO                                                    |  |                           | 125    |                          
|Corporate                                              |  |                           | 2,867  |                          
|Consolidated                                           |  |                           | 26,625 |                          





71







Monitoring,
Control & Performance Analytics operating costs increased from A$6.8 million for the year ended June 30, 2016 to A$8.6
million for the year ended June 30, 2017, because the 2017 fiscal year costs include 12 months of ownership of Draker compared
to only about 9.5 months in fiscal year 2016 following the Draker Transaction in September 2015. We estimate that A$2.5 of these
costs were related to developing critical improvements for the Draker monitoring software required for operating reliability and
to deliver features deemed essential to U.S. customers; these initiatives, culminated in the launch of a new user interface, termed
V7, during the 2017 fiscal year. Further costs were incurred to continue servicing the existing Draker customer base the
period prior to renewal of their subscriptions.



The
10% decrease in Solar PV operating costs to A$0.7 million for the year ended June 30, 2016 was achieved even with a 72%
increase in revenue between the two periods by improving utilization of the personnel in the division, coupled with targeted operating
cost reductions.



Parmac
operating costs were A$14.4 million for the year ended June 30, 2017 as compared to A$13.0 million for the year ended June
30, 2016. The 11% increase in operating costs for Parmac compares favorably with an increase in revenue of 19% in the same
period as a result of gross margin improvement in Parmac’s contracting during the 2017 fiscal year driven by increased
focus on cost control on project delivery, particularly labor utilization efficiencies. PPO operating costs in fiscal year
2016 represent depreciation charges on the wind turbines and operations. The turbines were not operational in fiscal year
2017 and no maintenance costs were incurred.



Corporate
costs declined slightly from A$2.9 million in 2016 to A$2.8 million in 2017. These costs in the main represent executive and finance
staff salaries, Director fees, insurance legal, audit and compliance costs.



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$7.9 million for the year ended June 30, 2016 to
A$9.8 million for the year ended June 30, 2017 as a result of the increase in revenue levels in Parmac and Draker between the
two periods. The percentage increase in this category of expense for the fiscal year ended June 30, 2017 as compared with the
year ended June 30, 2016 was 25%, which is slightly lower than the increase in revenue of 26% in that period which reflects
the fact that revenue growth has been most significant in our higher margin Draker technology business rather than the lower
margin, project orientated Parmac.



Employee
compensation and benefit expense increased by 8% from A$11.3 million for the year ended June 30, 2016 to A$12.3 million for the
year ended June 30, 2017, primarily due to recording 12 months of Draker personnel costs in the 2017 fiscal year as opposed to
only 9 months in the 2016 fiscal year following the Draker Transaction in September 2015.



Total
compliance and consultant’s expense increased by 40% from A$0.8 million for the year ended June 30, 2016 to A$1.2 million
for the year ended June 30, 2017. The most significant contributor to the cost increase was for the use of external consultants
by Draker for software development purposes.



Insurance
costs remained constant at $0.4 million for the years ended June 30, 2017 and 2016.



Occupancy
expenses remained constant at $0.6 million for the years ended June 30, 2017 and 2016 despite the increased costs following
the assumption of the Draker office lease in September 2015 which was offset by reductions in other areas as prior leases expired
and were renegotiated.



Travel
costs increased to A$0.6 million in 2017 from A$0.5 million in 2016 as the level of expenditure for board members and senior operational
executives to travel internationally to oversee our global business operations and to assess or negotiate M&A opportunities
increased.



Our
expense for impairment of receivables and bad debts expense was negligible for the years ended June 30, 2017 and 2016.



Total
depreciation and amortization expense remained consistent at around A$0.4 million per year between the 2016 and 2017 years as
it relates to PPO Parmac and corporate assets which have remained largely unchanged between the two periods.





72







Other
Income



We
recognized negligible amounts of other income in the years ended June 30, 2017 and 2016 from gains on asset disposals and other
incidental transactions.



Share
of net profit of associates



We
recognized a share of the net profits from our equity-accounted investment in Inaccess in July 2016 (refer to Item 4.A. under
the heading “Recent / Prospective Acquisitions”) of A$0.4 million during the 2017 fiscal year.



Finance
Costs



Finance
costs comprise interest expenses and foreign exchange differences on loan balances. In the 2017 fiscal year net interest expense
was A$1.3 million. In the 2016 fiscal year net interest expense was A$0.7 million and foreign exchange losses A$0.1 million. The
increase in net interest expense was as a result of higher borrowing balances during the majority of the 2017 fiscal year.



Income
taxes



No
income tax expense was recorded for the years ended June 30, 2017 and 2016.



Net
loss from discontinued operations



These
represent the profit or loss from our USA and UK Solar PV operations which were discontinued during our 2017 fiscal year. The
2017 loss from discontinued operations includes an amount of A$4.6 million relating to the impairment of goodwill associated with
the discontinued Solar PV business lines.



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



Fiscal
year ended June 30, 2016 and fiscal year ended June 30, 2015 consolidated results have been restated to reflect discontinued operations
reclassifications from cessation of Solar PV operations in our USA and UK divisions in fiscal year 2017.



|Amounts in A$(000) except as noted                       |  | Year ended 
June 30, 2016 |         | Year ended 
June 30, 2015
|-------------------------------------------------------- |  | ------------------------- | ------- | -------------------------
|                                                         |  |                           |         |                          
|Revenues from continuing operations                      |  |                           | 15,036  |                          
|                                                         |  |                           |         |                          
|Operating Expenses                                       |  |                           |         |                          
|Cost of raw materials, consumables used, and contractors |  |                           | (7,889  | )                        
|Employee benefit expenses                                |  |                           | (11,322 | )                        
|Compliance and consultants                               |  |                           | (817    | )                        
|Insurance                                                |  |                           | (467    | )                        
|Occupancy expenses                                       |  |                           | (563    | )                        
|Travel costs                                             |  |                           | (507    | )                        
|Bad and doubtful debts                                   |  |                           | (32     | )                        
|Other expenses                                           |  |                           | (1,493  | )                        
|Amortisation and depreciation                            |  |                           | (505    | )                        
|Sub-total - operating costs                              |  |                           | (23,595 | )                        
|                                                         |  |                           |         |                          
|Other income                                             |  |                           | 52      |                          
|Share of net profit of associates                        |  |                           | —       |                          
|Net finance income/(costs)                               |  |                           | (793    | )                        
|Impairments                                              |  |                           | —       |                          
|Loss from continuing operations before income tax        |  |                           | (9,300  | )                        
|Income tax benefit/(expense)                             |  |                           | —       |                          
|Net profit/(loss) for the period                         |  |                           | (9,300  | )                        
|Net (loss) / profit from discontinued operations         |  |                           | 25      |                          
|Net loss for the period                                  |  |                           | (9,275  | )                        
|                                                         |  |                           |         |                          
|Other comprehensive income                               |  |                           | (35     | )                        
|                                                         |  |                           |         |                          
|Total comprehensive loss for the period                  |  |                           | (9,310  | )                        





73







Operating
revenue



Total
operating revenues from continuing operations decreased negligibly from A$15.1 million for the year ended June 30, 2015
to A$15.0 million for the year ended June 30, 2016. Revenue increases in the Monitoring & Performance Analytics division attributable
to the acquisition of Draker were offset by reductions in Solar PV and large-scale wind revenues.



|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)              |  |                           | 224    |                          
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                           | 12,177 |                          
|Large scale wind                                       |  |                           | —      |                          
|RAPS                                                   |  |                           | 36     |                          
|Total reported revenue                                 |  |                           | 15,036 |                          



*
Includes O&M Services



Monitoring,
Control & 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 decreased by 83% from A$1.3 million for the year ended June 30, 2015 to A$0.2 million for the year ended June 30, 2016,
due to the reduction in scale of our Australian Solar PV business as a result of the VA process.



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



Revenue
from our large-scale wind segment recognized during our fiscal year 2015 was from the provision of project management services
to the now-completed 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.





74







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, Control& Performance Analytics *           |  |                          | 6,762  |                         
|Solar PV Design & Installation (Solar PV)              |  |                          | 743    |                         
|Energy Efficiency / Climate Control Solutions (Parmac) |  |                          | 12,990 |                         
|Large scale wind                                       |  |                          | —      |                         
|PPO                                                    |  |                          | 222    |                         
|Corporate                                              |  |                          | 2,878  |                         
|Consolidated                                           |  |                          | 23,595 |                         



*
Includes O&M Services



Monitoring,
Control & 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 credibility of the Draker monitoring system within the market place, including software
system stabilization, critical software developments and servicing the existing Draker customer base during the period prior to
renewal of their subscriptions.



The
76% decrease in Solar PV operating costs from A$3.1 million for the year ended June 30, 2015 to A$0.8 million for the year ended
June 30, 2016 is due to the reduction in revenues in the same time frame coupled with extensive operating cost reductions implemented
following our exit from VA.



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. PPO, formerly known as 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$7.3 million for the year ended June 30, 2015 to A$7.9
million for the year ended June 30, 2016 as a result of the increase in revenue levels in our Monitoring and Performance Analytics
business coupled with an increase in direct project costs relative to revenue in Parmac.



Employee
compensation and benefit expense increased by 17% from A$9.7 million for the year ended June 30, 2015 to A$11.3 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 54% from A$1.8 million for the year ended June 30, 2015 to A$0.8 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 Inaccess Transaction which concluded in July 2016.





75







Insurance
costs increased by 202% to $0.5 million for the year ended June 30, 2016 as a result of additional insurances required for the
Draker business and price increases across the other group annual premiums.



Occupancy
expenses increased by 11% from A$0.5 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 assumption of the Draker office lease in September 2015. This increase were partly offset by
decreased costs following renegotiation of lease terms on some of our office spaces.



Travel
costs increased by 14% to A$0.5 million as the level of expenditure for senior operational executives to travel to oversee
our global businesses increased and additional costs were incurred to conduct due diligence and negotiations for the Inaccess
Transaction.



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$0.2 million for the same period in 2015. The 2015 fiscal year expense resulted from a major customer of Parmac
entering voluntary administration and difficulties in recovering some debts during the VA process, 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 PPO, 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$1.7 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 fiscal year 2015.



Impairments



No
impairment charge was recognized 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.



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, 2015, 2016 and 2017. The preparation of our financial statements required
management to make judgments, estimates, assumptions and judgments that affect the reported amounts of revenue, assets, liabilities
and expenses. Our management re-evaluates estimates on an on-going basis and such estimates are based on historical experience
and on various other assumptions that management believes to be reasonable under the circumstances. Actual results may differ
from these estimates under different assumptions or conditions. Unless otherwise stated, all dollar amounts stated in our financial
statements are expressed in the currency of the Commonwealth of Australia.





76







Critical
accounting policies



Critical
accounting policies that reflect our industry and activity specific accounting treatments used in preparing our financial statements
as of and for the fiscal years ended June 30, 2015, 2016 and 2017 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$6.2 million for the year ended June 30, 2017. We remain
dependent upon receiving continuing support from existing lenders, raising additional debt or equity 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.



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.





77







(iv)
Subscription revenue



Revenue
from the sale of subscriptions to our data analysis and monitoring software products is recognized 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, 2017, we had A$12.6
million of derecognized deferred tax assets and A$9.8 million at June 30, 2016.



(b)
Share-based payment transactions



We
measure the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined using a Black-Scholes model, with the assumptions detailed
in Note 26 to our audited financial statements included elsewhere in this Report. The accounting estimates and assumptions
relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within
the next annual reporting period.



The
Group measures the cost of equity-settled transactions with regards warrants using an un-modified binominal lattice model giving
consideration to the dilution impact of the shares issued upon conversion of the warrants as well as other options on issue.





78







(c)
Impairment of goodwill and other intangibles other than patents



We
determine whether goodwill and other intangibles other than patents are impaired at least on an annual basis (as of June 30,
the end of our fiscal year) and when circumstances indicate the carrying value may be impaired. The Group’s impairment
test for goodwill and intangible assets with indefinite lives is based on value-in-use calculations that use a discounted
cash flow model using assumptions believed by management to be reasonable. These valuations would not reflect unanticipated
events and circumstances that may occur. However, as detailed in the notes to our statements under the heading
“Goodwill Impairment” (see Note 16 to our audited financial statements included elsewhere in this
Report) indicators of potential impairment exist and there has been an impairment charge recorded of A$4.7 million in the
year ended June 30, 2017 (year ended June 30, 2016; A$Nil) in the Statement of Comprehensive Income – included in Net
Loss from Discontinued Operations - as a result of the cessation of activities of our Solar PV division in the USA and UK.
There can be no assurance that we will avoid further 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, 2017, 2016 and 2015 as reflected in our audited financial statements presented elsewhere in this document.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2017               
|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, 2017 and at June 30, 2016 our cash and cash equivalents remained constant at A$0.3 million as a result of the application
to operating and investing activities of funds raised from the issuance of ordinary shares, preferred shares and borrowings during
both years. During each of the last three fiscal years ended June 30, 2017, 2016 and 2015 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$28.2 million during fiscal years 2017, 2016 and 2015, A$4.9 million was used: to fund our acquisition
in July 2014 of GED; the acquisition of the assets of Draker, Inc. and Draker Laboratories, Inc. in September 2015; our investment
of A$4.8 million in Inaccess in July 2016 (see Item 4.A “Recent / Prospective Acquisitions”); with the remainder
used to fund cumulative losses from operations.



During
fiscal year 2017 we exchanged A$8.8 million of borrowings and A$8.8 million of Subsidiary Preferred Shares for Series C Preferred
Shares which have been classified as equity at June 30, 2017. We also negotiated extensions to the maturity dates of US$4.2 million
of borrowings which have been classified as non-current liabilities at June 30, 2017. In July 2016 we received A$6.6 million of
funds from the issue of Subsidiary Preferred Shares, which were subsequently exchanged for Series C Preferred Shares as
described above, of which A$4.8 million was used to fund the investment in Inaccess (see Item 4.A “Recent / Prospective
Acquisitions”) and associated transaction costs. The balance was used for working capital. At June 30, 2017 our current
liabilities exceeded our current assets by A$3.8 million.



During
fiscal year 2016 we negotiated extensions to the maturity dates of US$5.6 million and A$0.8 million of borrowings which were 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. 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.





79







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
2015 (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 as 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:Only our Parmac subsidiary is consistently 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 changes to maximize
                                         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, 2017 certain unprofitable
                                         operations within our Solar PV business units and O&M units were closed in order
                                         to reduce overall costs. In addition, the Company has continued to make investments in
                                         developing our software systems which our management believes gives the Group a platform
                                         to achieve profitability in its Monitoring, Control& Performance Analytics business
                                         within the next 12 months.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Raise
                                         new debt and/or equity capital: During the twelve months ended June 30, 2017 we have
                                         been successful in raising funds through further borrowings. Proceeds from borrowing
                                         during the financial year ended June 30, 2017 across the group were A$4.5 million. The
                                         lenders of over 95% 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. During the 2017 fiscal year,
                                         total borrowings denominated in both U.S. and Australian dollars equating to A$8.8 million
                                         raised during our 2015-2017 fiscal years were exchanged for Series C Preferred Shares
                                         (refer to Item 14 under the heading “Issuance of Series C Preferred Shares in
                                         exchange for Subsidiary Preferred and Debt Securities”). Additionally,
                                         a further US$0.2 million (A$0.3 million) of liabilities for fees and salaries due to
                                         executives and service providers of the company were extinguished through the issuance
                                         of 76,708 ordinary shares in the company. Subsidiary preferred shares convertible into
                                         our ordinary shares with a face value of US$6.5 million (A$8.8 million) were issued during
                                         the 2016 fiscal year to fund the Draker asset acquisition and our investment in Inaccess
                                         (refer to Item 4.A “Recent / Prospective Acquisitions”). All of these
                                         Subsidiary Preferred Shares, were subsequently exchanged for Series C Preferred Shares
                                         prior to the end of the 2017 fiscal year.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 with continuing
operations to do so.





80







Operating
activities



As shown in the table below the cumulative utilization of
cash over the last three fiscal years has been A$19.6 million.



|                                                       |  | Year Ended June 30,
|------------------------------------------------------ |  | -------------------
|Amounts in A$(000) except as noted                     |  | 2017               
|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, 2017, net
cash used in operating activities was A$6.2 million as compared with an outflow of A$7.8 million for the year ended June 30, 2016.
The excess of disbursements to suppliers and employees over receipts in the year ended June 30, 2017 was A$6.19 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 and our corporate costs.



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 and our corporate costs.



Investing activities



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



|                                                                      |  | Year Ended June 30,
|--------------------------------------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted                                    |  | 2017               
|Cash flow from investing activities                                   |  |                    
|Proceeds from sale of property, plant and equipment                   |  |                    
|Purchase of property, plant and equipment                             |  |                    
|Cash forfeited during reorganisation                                  |  |                    
|Payment for the investment in associates                              |  |                    
|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$4.8 million for the year ended June 30, 2017, as opposed to A$3.0 million cash used in investing activities for the year
ended June 30, 2016. Payment for the investment in associates of A$4.8 million in the year ended June 30, 2017 related to our investment
in Inaccess (refer to Item 4.A under the heading “Recent / Prospective Acquisitions”). 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.





81







Financing activities



As shown in the table below, we generated
the cash used in operating and investment activities during fiscal years 2017, 2016 and 2015, with net contributions from financing
activities during those years. Over the three-year period ended in June 2017 we generated A$28.2 million cumulatively from financing
activities:



|                                                            |  | Year Ended June 30,
|----------------------------------------------------------- |  | -------------------
|Amounts in A$(000) except as noted                          |  | 2017               
|Cash flow from financing activities                         |  |                    
|Proceeds from issue of ordinary shares (net of issue costs) |  |                    
|Proceeds from preferred share issues                        |  |                    
|Proceeds from borrowings                                    |  |                    
|Repayment of borrowings                                     |  |                    
|Payment of finance lease liabilities                        |  |                    
|Net cash flows from financing activities                    |  |                    



For the year ended June 30, 2017, net
cash inflows from our financing activities was A$11.0 million as compared with net cash inflows from our financing activities
of A$10.6 million for the year ended June 30, 2016. In the year ended June 30, 2017 we raised $6.6 million from the issuance of
subsidiary preferred shares and our parent company borrowed A$4.5 million. 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 preferred
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 preferred 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).



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$8.3 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”. During our 2017 fiscal year all of this debt was exchanged for our Series
C Preferred Shares (refer to Item 14 under the heading “Issuance of Series C Preferred Shares). Subsequent to June
30, 2017, up to the date of September 30, 2017, our parent company has borrowed a further A$988,000 from shareholders
and affiliates of our Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”)
and it has arranged commitments to borrow up to an additional $1.0 million on the same terms through December 31, 2017 to fund
our near-term liquidity requirements. Interest accrues on this debt at 15.0% per annum until the loans are repaid. As further
described below, as of September 30 2017, our Parmac and Draker subsidiaries have obligations that are non-recourse to our Parent
Company under separate secured credit facilities and deferred payment plans with trade creditors and, in the case of Parmac, finance
leases undertaken for the purchase of motor vehicles, equipment and machinery as further described below.



Parmac



Working
Capital Facility 1 - secured: In April 2015 one of our subsidiaries, Parmac, obtained a line of credit with an affiliate of
our Managing Director for up to US$0.5 million to meet its working capital needs, referred to as the First Parmac Liquidity
Facility, against which Parmac has drawn the maximum amount of funds available. The First Parmac Liquidity Facility has a maturity
date of October 30, 2018 and we have an obligation, that we intend to honor in due course to secure this facility with
a lien on all of the assets of Parmac that would be subordinate to statutory liens and liens under finance leases. Interest accrues
at 24.0% per annum on the outstanding balance of the First Parmac Liquidity Facility until the loan is repaid.





82







Working
Capital Facility 2 - secured: In March 2016 one of our subsidiaries, Parmac, secured an additional line of credit with
an affiliate of our Managing Director, for up to US$1.5 million to meet its working capital needs, referred to as the
Second Parmac Liquidity Facility, against which Parmac has drawn the maximum amount of funds available. The Second Parmac
Liquidity Facility has a maturity date of October 30, 2018 and we have an obligation, that we intend to honor in due
course to secure this facility with a lien on all of the trade and other receivables of Parmac that would be subordinate to
statutory liens, liens under finance leases and liens under Working Capital Facility 1. Interest accrues at an annual rate of
10.0% per annum on the outstanding balance until the loan is repaid.



Deferred
Trade Obligations (unsecured):As of September 30, 2017, 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 September 30, 2017 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 September 30, 2017. 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, 2017, 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
Preferred Shares (unsecured):On effectiveness of the Reorganization Plans, Parmac issued 2,200,000 US$1.00 non-voting, redeemable
preferred 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. Giving effect to the amendment to their terms, the
RPS, were reclassified to equity in the Statement of Financial Position at June 30, 2016 as there is 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 was fixed at June 30, 2017 at US$2,200,000.



GED



Upon
our emergence from VA we commenced financial and operational restructuring of our subsidiaries that were not subject to the
VA process, including Green Earth Developers LLC, or GED. These restructuring steps included entering in to negotiated
arrangements with various classes of GED creditors who could not be timely paid from GED’s available funds.



Working
Capital Facility (secured):In November 2014 Washington H. Soul Pattinson & Co. Ltd. (WHSP) extended to 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 our VA process. The maturity of the GED Liquidity Facility was extended
multiple times and on June 30, 2017 the principal and accrued interest was exchanged in full for our Series C Preferred
Shares (refer to Item 14 under the heading “Issuance of Series C Preferred Shares”). From inception through the
date of exchange to Series C Preferred Shares, interest accrued on the GED Liquidity Facility at an annual rate of
6%.





83







Deferred
Trade Obligations (unsecured):Between April and November 2015 we entered into deferred payment arrangements, referred
to as Payment Plan Agreements, with trade creditors owed approximately US$0.7 million by GED from obligations arising prior
to our acquisition of the company in 2014. Interest payable on the outstanding balances due under the Payment Plan Agreements
ranged from between 0% to 4% per annum. As of September 30, 2017 GED’s obligations under the Payment Plan Agreements
had been reduced to US$0.4 million but the company has defaulted on all of the Payment Plan Agreements. Some creditors have
obtained judgments against GED under the Payment Plan Agreements and others may seek to do so or bring collection actions.
With the discontinuance of operations, GED has no cash flow from which to pay the remaining obligations under the Payment
Plan Agreements and no assets from which judgments could be satisfied through liquidation or otherwise.



Disputed
Contractual Obligations:In connection with EPC contracts performed by GED prior to discontinuance of operations, two counterparties
have made claims against GED and each other that could ultimately result in the recognition of additional liabilities by GED.
GED disputes that it has any financial obligations in connection with the claims and negotiations to resolve the dispute are ongoing.
The financial exposure to GED related to the contract dispute is not possible to determine at this time, but the company has no
assets to allocate to a settlement.



BlueNRGY
LLC



Deferred
Trade Obligations (unsecured):As of September 30, 2017, our BlueNRGY LLC subsidiary had past due balances with a
number of trade creditors who were collectively owed US$0.1 million. We have entered into deferred payment arrangements with
a number of these creditors and others have chosen to forbear in pursuing collection of amounts owed by BlueNRGY LLC
because there are no assets or revenues from which to satisfy those obligations. However, there can be no assurance that the
affected creditors will continue to forbear in the collections of amounts owed by BlueNRGY LLC and actions brought by
creditors may necessitate liquidation of BlueNRGY LLC.



Chatham
Island Wind Limited (CIWL)



Deferred
Trade Obligations (unsecured):As of September 30, 2017, our CIWL subsidiary had past due balances with a number of trade
creditors who were collectively owed NZ$0.2 million. In July 2017, one of these creditors appointed a liquidator to CIWL, however,
there are no assets or revenues from which to satisfy those obligations. This action may result in the liquidation of CIWL.



Redeemable
Preferred 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 September 30, 2017 is US$1,400,000 and dividends have accrued, but not been paid, of US$0.1 million.



Draker
Corporation



Term
loan – secured: As part of the Draker Transaction (refer Item 4.A under the heading “Recent / Prospective 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$75,000 (US$58,000) is classified
as a current liability with the balance of A$26,000 (US$20,000) classified as a non-current liability on the Statement of Financial
Position.





84







Working
Capital Facility - unsecured: In March 2016 Draker, secured a line of credit with an affiliate of our Managing Director 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, 2018. 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 lien on all of the trade and other receivables of Draker, subordinate to
statutory liens and liens under finance leases and VEDA. 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 Exhibit 4.18 hereto.



5.C.
              Research and Development



For
our fiscal years 2015-2017 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” and Item 5.A under the heading “Operating Results”.



5.E.
               Off-Balance Sheet Arrangements



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



5.F.               
Tabular Disclosure of Contractual Obligations



As
of September 30, 2017, our contractual, obligations, excluding amounts due to 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 Preferred Shares as at September 30, 2017 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           |  |     | 63 |         
|Richard Pillinger       |  |     | 43 |         
|                        |  |     |    |         
|Non-Executive Directors |  |     |    |         
|Carlo Botto             |  |     | 56 |         
|Olivier Ferrari         |  |     | 56 |         





85







Executive
Officers



William
Morro. Mr. Morro was appointed to our Board in February 2014 and has served continuously in that capacity since then except
for a brief interruption during the VA process when the Administrator assumed all governance responsibilities. Mr. Morro was appointed
our Managing Director and Chairman on February 9, 2015. Mr. Morro is also a Managing Partner of the InterAmerican Group, a U.S.
investment and advisory firm focused primarily on middle-market businesses with cross-border operations in North America and/or
Latin America.Since 2015, he also serves as a member of the board of directors of ESOL B.V., an investment
holding company (one of our principal shareholders), and certain of its affiliates (together “ESOL”)  and
also served on the board of supervisors / directors of two banks in which ESOL was invested, JSC “Capital
Bank” of Georgia from October 2015 through October 2016 and InterMarket Bank of Zambia, from July 2016 through November
2016. Since July 2016 Mr. Morro has been a member of the board of directors of AEE Power Corporación SL, which designs
and builds electrical infrastructure in Africa, and in June 2017 he was appointed as a member of the board of directors of Moneyswap
Plc, whose subsidiaries regulated in the UK and Hong Kong process transactions as licensees of international payment networks.
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
the largest holder of our ordinary shares. 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.



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 as our 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. Mr. Botto currently sits on the board of SolarShareCommunity
Energy Ltd as a non-executive director and is a member of the ACT Government’s Business Advisory Board for its Renewable
Energy Innovation Fund. 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.



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 specializing 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.





86







Arrangements
Concerning Election of Directors; Family Relationships

Family
Relationships



There
are no family relationships between any of our current directors or executive officers.



Arrangements



There
are no 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.



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, 2017.



|                                                                                      |  | 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                                                |  |                     | 91,004    |                          |  |                               | — |       
|William Morro - Executive Chairman and Managing Director 1                            |  |                     | 455,018   |                          |  |                               | — |       
|Yves-Regis Cotrel - Non-Executive Director 1,2                                        |  |                     | 75,836    |                          |  |                               | — |       
|Olivier Ferrari - Non-Executive Director 1                                            |  |                     | 91,004    |                          |  |                               | — |       
|Emmanuel Cotrel - Senior Vice President Monitoring and Data Analytics Business 3      |  |                     | 270,840   |                          |  |                               | — |       
|Richard Pillinger - Chief Financial Officer                                           |  |                     | 250,000   |                          |  |                               | — |       
|Peter Maros - Senior Vice President & Managing Director of U.S. Renewable Solutions 4 |  |                     | 86,670    |                          |  |                               | — |       
|Total                                                                                 |  |                     | 1,311,726 |                          |  |                               | — |       



1By agreement, all salary and fee amounts shown have been deferred and were not paid in our 2017 fiscal year, although the
company has accrued for such amounts.

2Resigned May 2, 2017

3Resigned April 28, 2017.

4On long term, unpaid sick leave commencing October 2016. Employment terminated as of June 30, 2017.



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.





87







|                                                                                      |  | 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 |                          |  |                               | — |       



1By agreement, all salary and fee amounts shown have been deferred and were not paid in our 2017 fiscal year, although the
company has accrued for such amounts.

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



Remuneration
Policy



All
key executives are eligible to receive a base salary, post-employment benefits (superannuation) if they reside in Australia,
fringe benefits 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 9.50% 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. However, this has not typically been the case subsequent to the effectiveness of our Reorganization Plans,
but 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 due to turnover on our Board and
among our key executives. 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.





88







Executive
Employment Arrangements / Service Agreements



The
following terms of employment apply to our key executives:



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, which Mr. Morro has elected to defer. He
has a notice period of 3 months. Mr. Morro is eligible for bonus payments of up to 100% of base compensation, subject to meeting
targets set by the board. No bonus was awarded during our 2015, 2016 or 2017 fiscal years.



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.
Subject to oversight by the Compensation Committee of the Board, Mr. Pillinger’s contract provides for a bonus upon
meeting defined performance objectives mutually established by the executive and the Managing Director. No bonus was awarded
during our 2015, 2016 or 2017 fiscal years.



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
5,000 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 625 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 is administered by the Compensation Committee of the Board. The Compensation Committee has 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.



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.





89







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.





90







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.



To
date no awards have been made under the 2014 Equity Plan.



6.C.
              Board Practices



Independence



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



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



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



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



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.







91







Audit
Committee



Mr.
Botto is the only member of the Audit Committee as of the date of this Report.



Compensation
Committee



At
the date of this report there is no separate Compensation Committee and matters typically delegated to the Compensation
Committee are being considered by the full Board.



6.D.
              Employees



As
of September 30, 2017, we employed 90 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 by
line of business at the end of each of our last three fiscal years and as of September 30, 2017 is:



|                                   |  | Number of employees
|---------------------------------- |  | -------------------
|                                   |  | as of June 30,     
|Business Segment                   |  | 2017               
|                                   |  |                    
|Head office                        |  |                    
|Solar PV                           |  |                    
|Parmac                             |  |                    
|Monitoring & Performance Analytics |  |                    
|Large-scale wind                   |  |                    
|Total                              |  |                    



Of
our 90 employees, as of September 30, 2017, 58 were located in Australia and 32 were in the United States. In addition,
we engage specialist consultants 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



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 15, 2017
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.                                                                                   





92







|Name and Address of Beneficial Owner (1)                                                                                                                                                        |  | Number of Shares |           | Percentage (2)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------- | --------------
|                                                                                                                                                                                                |  |                  |           |               
|Washington H. Soul Pattinson & Company Limited (3)                                                                                                                                              |  |                  | 1,243,397 |               
|ESOL B.V. (4)                                                                                                                                                                                   |  |                  | 1,367,599 |               
|Alpha Capital Anstalt (5)                                                                                                                                                                       |  |                  | 598,190   |               
|Mr. Yves-Regis Cotrel (6)                                                                                                                                                                       |  |                  | 806,980   |               
|Mr. Emmanuel Cotrel (6)(7)                                                                                                                                                                      |  |                  | 479,891   |               
|                                                                                                                                                                                                |  |                  |           |               
|Directors and Executive Officers                                                                                                                                                                |  |                  |           |               
|Mr. William Morro (8)                                                                                                                                                                           |  |                  | 1,410,474 |               
|Mr. Carlo Botto (9)                                                                                                                                                                             |  |                  | 19,920    |               
|Mr. Richard Pillinger                                                                                                                                                                           |  |                  | 62,500    |               
|Mr. Olivier Ferrari                                                                                                                                                                             |  |                  | nil       |               
|                                                                                                                                                                                                |  |                  |           |               
|Executive officer (as defined by Rule
    3b-7 of the Securities and Exchange Act of 1934) and directors as a group (4 persons, including the executive officers
    and directors names above) |  |                  | 1,492,894 |               



| | 1) | Unless
                                         otherwise indicated, the address for each of the shareholders is c/o BlueNRGY Group Limited,
                                         Level 32, 200 George Street, Sydney, NSW 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2) | The
                                         applicable percentage of ownership for each beneficial owner is based on 6,033,161 ordinary
                                         shares outstanding as of October 15, 2017. 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. Number of shares excludes Series
                                         C preferred and subsidiary preferred shares owned by WHSP and affiliates that are convertible
                                         into our ordinary shares to the extent which, if converted into our ordinary shares, would
                                         result in the beneficial ownership of WHSP and affiliates exceeding 19.9%. As of the
                                         date of this Report, the total of the equity and equity-linked securities owned by WHSP
                                         is (i) 1,028,333 of our ordinary shares, (ii) 500 of our Series B Preferred shares convertible
                                         into 124,627 of our ordinary shares, (iii) 1,068,662 of our Series C Preferred shares
                                         convertible into 2,137,324 of our ordinary shares, (iv) 2,200 Parmac Subsidiary Preferred
                                         shares, convertible into 756,172 of our ordinary shares and (v) 1,400 CWIL Subsidiary
                                         Preferred shares, convertible into 490,422 of our ordinary shares, in the case of (ii),
                                         (iii), (iv), and (v) without giving effect to applicable conversion restrictions.
| | 4) | Address
                                         of the shareholder is c/o Zala Group LLC (U.S. Agent), 500 E. Broward Blvd Suite 2400,
                                         Fort Lauderdale, FL 33301; number of shares (i) includes all shares owned by Gilbert
                                         Armenta, an affiliate of the shareholder and (ii) excludes Series C preferred shares
                                         owned by ESOL that are convertible into our ordinary shares to the extent which, if converted
                                         into our ordinary shares, would result in the beneficial ownership of ESOL and affiliates
                                         exceeding 19.9%. Mr. Morro is a Board Member of the shareholder. As of the date of this
                                         Report the total of the equity and equity-linked securities of ESOL and Mr. Armenta is:
                                         (i) 528,403 of our ordinary shares, (ii) 9,063,075 of our Series C Preferred shares which
                                         are convertible into 18,126,150 of our ordinary shares and (iii) warrants to purchase
                                         495,377 of our ordinary shares (without giving effect to conversion restrictions applicable
                                         to the Series C Preferred Shares and warrants).                                      
| | 5) | Address
                                         of the shareholder is Pradefant 7, 9490 Furstentums, Faduz, Lichtenstein                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | 6) | Address
                                         of the shareholder is 101 Chemin Du PrazBuchilly, 1000 Lausanne 25, Switzerland. Includes
                                         shares owned by Mr. Yves-Regis Cotrel’s spouse, the beneficial ownership of which
                                         is disclaimed. 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           





93







| | 7) | Address
                                         of the shareholder is 1040 Seminole Drive, #1463 Fort Lauderdale FL 33304, USA. Includes
                                         (i) 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; and (ii) deferred executive remuneration conversion rights of Mr. Emmanuel Cotrel
                                         that are convertible into 33,904 of our ordinary shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 8) | Number
                                         of shares (i) includes shares owned by WHI, Inc Retirement Savings Plan Trust, of which
                                         Mr. Morro is the beneficial owner and (ii) excludes Series C preferred shares owned by
                                         WHI, Inc Retirement Savings Plan Trust and deferred executive remuneration conversion
                                         rights of Mr. Morro that are convertible into our ordinary shares to the extent which,
                                         if converted into our ordinary shares, would result in the beneficial ownership of Mr.
                                         Morro, WHI, Inc Retirement Savings Plan Trust and affiliates exceeding 19.9%. As of the
                                         date of this report, the total of the equity and equity-linked securities beneficially
                                         owned by Mr. Morro is (i) 355,825 of our ordinary shares and 3,149,452 of our Series
                                         C Preferred shares which are convertible into 6,298,904 of our ordinary shares (without
                                         giving effect to conversion restrictions applicable to the Series C Preferred Shares
                                         and warrants), and (iii) the right to exchange $740,927
                                         of deferred compensation for 244,692 of our ordinary shares.
| | 9) | Includes
                                         all shares owned by Mr. Botto’s spouse, the beneficial ownership of which is disclaimed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 



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 15, 2017. See Item 6.E under the
heading “Beneficial Ownership (including Executive Management and Directors)”.



As
of October 15, 2017, we estimate that 36.9% of our outstanding ordinary shares were held in the United States by 79 holders of
record, and 63.1% 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 2017 fiscal years, and subsequently through the date of this Report, other than as disclosed below,
we have not entered into any transactions or loans between us and any (a) enterprises that directly or indirectly through one
or more intermediaries, control or are controlled by, or are under common control with us; (b) associates; (c) individuals owning,
directly or indirectly, an interest in our voting power that give them significant influence over us, and close members of any
such individual’s family; (d) our key management personnel and directors and close members of such individuals’ families;
or (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described
in (c) or (d) or over which such person is able to exercise significant influence. The value of the consideration ascribed to
these transactions, including the exchange value for our ordinary shares at the time the transactions occurred was at the amounts
agreed to by parties and approved by our Board. We believe that all of these transactions were conducted on terms substantially
equivalent to, or no less favorable to the Company, than those that would have been established for similar transactions with
non-affiliated parties.



During
the period from July 1, 2017 through the date of this Report:



| | ■ | Between
                                         July 1, 2017 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$775,000 to pay certain of
                                         our operations expenses. The amounts advanced have not been repaid as of the date of
                                         this Report.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Between
                                         July 1, 2017 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$42,000 for such expenses incurred by Mr. Morro thus far
                                         during our 2018 fiscal year. Through the date of this Report, we have reimbursed A$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.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





94







During
the fiscal year ended June 30, 2017:



| | ■ | Mr.
                                         Morro and affiliates have made cash advances to us in the twelve months to June
                                         30, 2017 in the aggregate amount of US$3,517,000 to pay certain of our operations expenses.
                                         A total of US$5.7 million, comprising cash advances made by affiliates of Mr. Morro during
                                         our 2015-2017 fiscal years, plus accrued interest were exchanged for 5,712,527 Series
                                         C Preferred Shares issued by the Company during the year ended June 30, 2017.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Mr.
                                         Morro and his affiliates exchanged, in full, Subsidiary Preferred Shares with
                                         a face value of US$6.5 million for 6,500,000 Series C Preferred Shares issued by the
                                         Company during the year ended June 30, 2017.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Mr.
                                         Morro has incurred expenses for travel and made disbursements for operating expenses
                                         incurred on our behalf. In aggregate, we have recorded, subject to our internal review
                                         procedures, an aggregate of A$142,716 for such expenses incurred by Mr. Morro during
                                         our 2017 fiscal year. During our 2017 fiscal year, we have reimbursed A$Nil to Mr. Morro
                                         for such expenses and expect to reimburse the remainder as soon as practicable.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Our
                                         staff based in the USA currently has access, as needed and at no cost, to office facilities
                                         in Fort Lauderdale, FL and Chicago, IL that are leased by affiliates of Mr. Morro.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | In
                                         February 2017, our Senior Vice President at the time, Emmanuel Cotrel, agreed
                                         to exchange, and our Board unanimously approved, US$90,840 of previously deferred executive
                                         compensation for the issuance of 30,000 of our ordinary shares, at price per share of
                                         $3.03 under the EC Deferred Compensation Agreement, which was effective November 30,
                                         2015 (during our 2016 fiscal year).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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, 2017 and June 30, 2016 included under Item 18 of this annual
report.



Legal
Proceedings



Settlement
of Texas Actions.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.





95







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.



In
July 2017 both the First and Second Texas Lawsuits were settled. The settlement was reached in connection with a voluntary mediation
and includes a full release of all defendants in connection with the allegations made in the lawsuit. The settlement provides
for no admission of liability or wrongdoing by any defendant and a settlement payment to the classes, inclusive of all Plaintiffs’
attorneys fees and expenses and settlement costs, that will be paid solely by the Company’s insurance carrier and the underwriter
of the June 2014 securities offering.



Chatham
Project Actions.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 to 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 recognized in our financial
statements in relation to the dispute.



Cotrel
Matters.We are a claimant in an arbitration proceeding against Emmanuel Cotrel before the American Arbitration Association
in New York arising from the termination of Mr. Cotrel’s employment. We have sought two forms of relief: (i) a declaratory
judgment that Mr. Cotrel’s termination was proper under the terms of his employment agreement and otherwise; and (ii) monetary
damages. Separately, in response to a demand for damages asserted by Mr. Cotrel and his affiliates, referred to as Cotrel Parties,
we have sought declarations from the Australian courts that our Board acted lawfully in connection with various securities issuances
subsequent to our emergence from VA. Certain Cotrel Parties are designated as the counterparties in the Australian proceeding.
In addition, a derivative action, referred to collectively with the other proceedings involving Mr. Cotrel as the Cotrel Matters,
was filed in Florida state court against us and our Managing Director in June, 2017 by Mr. Cotrel alleging wrongful
conduct in the management of the Company and in connection our acquisition of BlueNRGY LLC. We believe that the action is without
merit and intend to defend it vigorously, if necessary. It is not possible to estimate our financial exposure in connection with
any of the Cotrel Matters, but individually or in aggregate they could have a significant adverse effect on our financial condition
and the price and liquidity of our shares.



Other.Except for disputes with trade creditors of certain of our subsidiaries (refer to Item 5.B. under the headings “Indebtedness
– GED” and “Indebtedness – BlueNRGY LLC”), 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, 2017 on the dates indicated:



(a)
Transactions



Not
applicable.





96







(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, including advances between July 1, 2017 and the date of this Report,as
described in Item 7.B. under the heading “Related Party Transactions”.



(c)
Other



Not
applicable



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



As
of June 30, 2017 we had outstanding 6,033,161 ordinary shares. Subsequent thereto, through the date of this Report,we issued
no additional ordinary shares.



(e)
Entry into Other Material Definitive Agreements



Not
applicable



(f)
Board and Executive Changes



Not
applicable



ITEM
9.        OFFER AND LISTING



9.A.
              Offer and Listing Details



As
detailed below, our shares have been listed and traded on three exchanges during the last five years, with some periods of suspended
trading.



Australian
Securities Exchange

Our
ordinary shares traded on the Australian Securities Exchange, or ASX, under the symbol CBD from 1989 through January 31, 2014.
Our shares 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 until we voluntarily delisted from the ASX effective
January 31, 2014. The following table sets forth, for the periods indicated, the high and low market quotations for
our ordinary shares as quoted on the ASX.



|                  |  | Company Ordinary Share Closing - ASX
|----------------- |  | ------------------------------------
|                  |  | Prices A$                           
|                  |  | High                                
|Fiscal Year Ended |  |                                     
|June 30, 2013     |  |                                     
|June 30, 2014     |  |                                     





97







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, at which time our ordinary shares commenced trading on the NASDAQ
Capital Market until trading on that market was suspended. Our shares again qualified for and commenced trading on the OTC market
on September 9, 2015 under the ticker symbol CBDEF and have continued to trade on the OTC market through the date of this Report.
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.



|Company Ordinary Share Closing Prices US$ - OTC Markets
|-------------------------------------------------------
|                                                       
|Fiscal Year Ended                                      
|June 30, 2014                                          
|                                                       
|June 30, 2015                                          
|                                                       
|June 30, 2016                                          
|June 30, 2017                                          
|                                                       
|Fiscal Year Ended June 30, 2016                        
|First Quarter                                          
|Second Quarter                                         
|Third Quarter                                          
|Fourth Quarter                                         
|                                                       
|Fiscal Year Ended June 30, 2017                        
|April 2017                                             
|May 2017                                               
|June 2017                                              
|First Quarter                                          
|Second Quarter                                         
|Third Quarter                                          
|Fourth Quarter                                         
|                                                       
|Month (Fiscal Year 2018)                               
|July 2017                                              
|August 2017                                            
|September 2017                                         
|October 2017 (through October 17)                      
|First Quarter                                          



The
NASDAQ Capital Market



Our
ordinary shares began trading on The NASDAQ Capital Market on June 13, 2014 under the symbol CBDE. Trading was suspended on November
13, 2014 upon 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.





98







|            |  | CBD Ordinary Share Closing Prices
|----------- |  | ---------------------------------
|            |  | US$                              
|            |  | High                             
|Fiscal Year |  |                                  
|2014        |  |                                  
|2015        |  |                                  



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, with a suspension in
trading between October 8, 1998 and April 18, 2000. Trading of our ordinary shares on the ASX ceased 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 until trading was suspended
on November 13, 2014 upon commencement of the VA process. Due to concerns of The NASDAQ about whether we could be objectively
confirmed to be meeting 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 intend to reapply for listing on the NASDAQ Capital Market if and as soon as we are able to demonstrate that
we have regained compliance with all 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.





99







10.C.
            Material Contracts



During
our last two fiscal years we have entered into material agreements related to acquisitions, financing of our operations and acquisitions
and compensation of our key executives that are described below and elsewhere in this Report as noted.



Contracts
Related To Acquisitions



Draker
Transaction - September 16, 2015



We
acquired the monitoring platform, accounts receivable, inventory, plant, property and equipment and certain other assets of
Draker, Inc. and Draker Laboratories, Inc., referred to collectively as Sellers, for approximately US$2.4 million plus the
assumption of secured indebtedness to VEDA of approximately US$0.2 million. The Sellers sold systems and software, primarily
in North America, for monitoring the operating performance of distributed solar PV installations (refer to Item 4.A. under
the heading “Recent / Prospective Acquisitions”).



Inaccess
Transaction – July 7, 2016



We
subscribed to €3.25 million of convertible preferred shares (‘Inaccess Preferred Shares’) of Inaccess on July
7, 2016. Inaccess is a UK company that provides hardware and software systems for monitoring and controlling the performance of
distributed renewable energy and telecom facilities in numerous countries. Our agreement with Inaccess committed us to purchase
all of the remaining shares of Inaccess at a stipulated price, but we defaulted on that commitment and there is no assurance about
the terms on which we will be able to acquire the remaining Inaccess equity or if we will be able to do so at any price. Our purchase
default also subjects us, at the discretion of Inaccess, to the redemption of our Inaccess Preferred Shares at the original purchase
price or their conversion to approximately 22% of Inaccess ordinary shares and reduced governance participation in the company
that could result in the impairment of our investment value (refer to Item 4.A. under the heading “Recent / Prospective
Acquisitions”).



The
foregoing descriptions of the Draker Transaction and Inaccess Transaction are qualified in the entirety by the transaction agreements
filed as Exhibits 4.12, 4.17, and 4.18 (Draker) and 4.22 to 4.24 (Inaccess) this Report.



Contracts
Related To Debt and Equity Financings



Following
our emergence from VA, it has been necessary to raise debt and equity to fund losses and to make acquisitions. Other than issuances
of our ordinary shares from time to time at US$3.03 per ordinary share pursuant to subscription agreements in substantially the
form included as Exhibit 4.10 to this Report, all other financings have been with affiliates of our Managing Director in
the amounts and on the terms summarized below (refer to Item 7.B. under the heading “Related Party
Transactions”). In each case, the agreements pertinent thereto are filed as Exhibits to this Report as noted and the
summary descriptions below are qualified in their entirety by those transaction agreements.



Draker
Transaction Financing

When
we undertook the Draker Transaction in September 2015, we sold 495,377 ordinary shares to an affiliate of our Managing Director (refer
to Item 7.B. under the heading “Related Party Transactions”) at a price of $3.03 per ordinary share
for total proceeds to us of US$1.5 million pursuant to form of subscription agreement attached as Exhibit 4.10 to this
Report. We also issued to the subscriber one warrant for every ordinary share sold, being 495,377 warrants in total pursuant
to an agreement attached to this Report as Exhibit 4.17. The warrants have an exercise price of $4.54 and an expiry date of
December 31, 2018. Contemporaneous with the subscription for our ordinary shares, we entered into a subscription
agreement with the same investor, the form of which is attached hereto as Exhibit 4.27 pursuant to which we issued Subsidiary
Preferred Shares (Class A Preferred Shares in Draker Corporation), referred to as Draker Preferred, in consideration for
US$1.0 million, together with an option to purchase up to an additional $1.0 million of Draker Preferred on or prior to
December 31, 2015. The option right was exercised in December 2015 for $0.5 million prior to its expiration. The Draker
Preferred is senior in liquidation to the common shares of Draker Corporation, has a liquidation preferred equal to the face
value, does not accrue dividends, does not vote with the common shares and was agreed to be exchangeable for our ordinary
shares at a price per ordinary share of US$3.03. In consideration for the Draker Preferred holder extending additional
financing to us during calendar year 2017 when we were unable to obtain such financing from other sources, the exchange terms
for the Draker Preferred were adjusted by resolution of the disinterested members of our Board to provide for the exchange of
Draker Preferred for our Series C Preferred Shares having an equivalent face value and that are convertible to our ordinary
shares at US$0.50 per ordinary share.





100







Draker
Liquidity Facility

To
provide working capital for Draker Corporation following its acquisition of assets in the Draker Transaction, we arranged in March
2016 for a debt facility of up to US$1.5 million in principal amount, the Draker Liquidity Facility, from the same party who financed
the Draker Transaction, an affiliate of our Managing Director (refer to Item 7.B. under the heading “Related
Party Transactions”). The form of agreement for the Draker Liquidity Facility is attached as Exhibit 4.18 to this Report.
The lender is entitled to a lien on the assets of Draker Corporation, the facility is fully drawn and its term has been extended
twice, now maturing on October 30, 2018. Interest accrues at 10% per annum. (Refer to Item 5.B. under the heading “Indebtedness
– Draker Corporation -- Working Capital Facility - unsecured”)



Parmac
Liquidity Facility

To
provide additional working capital for Parmac, we arranged in March 2016 for a debt facility of up to US$1.5 million in principal
amount, the Parmac Liquidity Facility, from the same party who financed the Draker Transaction, an affiliate of our Managing Director
(refer to Item 7.B. under the heading “Related Party Transactions”). The form of agreement
for the Parmac Liquidity Facility is attached as Exhibit 4.19 to this Report. This debt facility is secured, the lender is entitled
to a subordinate lien on the assets of Parmac, it is fully drawn and the term has been extended twice, now maturing on October
30, 2018. Interest accrues at 10% per annum. (Refer to Item 5.B. under the heading “Indebtedness -- Parmac -- Working
Capital Facility - secured”)



Inaccess
Transaction Funding

On
June 29,2016, we entered into a subscription agreement for Subsidiary Preferred Shares (Class A Preferred Shares in IHL
Acquisition Co Pty Ltd, or IHL), referred to as IHL Preferred, in consideration for US$5.0 million, the form of which is attached
hereto as Exhibit 4.20. The proceeds from the IHL Preferred were used to fund the Inaccess Transaction and associated costs and
for working capital. The IHL Preferred is senior in liquidation to the common shares of IHL, has a liquidation preferred equal
to the face value, does not accrue dividends, does not vote with the common shares and was agreed to be exchangeable for our ordinary
shares at a price per ordinary share of US$3.03. In consideration for the holder of the IHL Preferred, an affiliate of our Managing
Director (refer to Item 7.B. under the heading “Related Party Transactions”), extending additional financing
to us during calendar year 2017 when we were unable to obtain such financing from other sources, the exchange terms for the IHL
Preferred were adjusted by resolution of the disinterested members of our Board to provide for the exchange of IHL Preferred for
our Series C Preferred Shares having an equivalent face value and that are convertible to our ordinary shares at US$0.50 per ordinary
share.



Unsecured
Borrowings

Repeatedly
since our emergence from VA and through the date of this Report we have found it necessary to borrow funds to sustain our
operations. Because we have been unable to source sufficient such funding from third parties, we have borrowed from
affiliates of our Managing Director (refer to Item 7.B. under the heading “Related Party
Transactions”). These borrowings, approved by the disinterested members of our board and referred to as Working
Capital Notes, were unsecured, payable at a specified maturity date and accrued interest at a rate of 15% per annum. The form
of the Working Capital Notes is attached hereto as Exhibits 4.16 and 4.21 to this Report. Borrowed amounts plus accrued
interest for our 2015 and 2016 fiscal years and the first six months of our 2017 fiscal year were initially convertible into
our ordinary shares at a price per share of US$3.03, referred to as the Initial Conversion Price. In consideration for
providing further funding after December 31, 2016 and for extending the maturity dates of the Working Capital Notes issued
prior to December 31, 2016, the Initial Conversion price and the conversion price for borrowings after December 31, 2016 was
reset to US$0.50. The principal amounts borrowed under the Working Capital Notes is shown in the table below for each
of our last three fiscal years and subsequent to June 30, 2017 through the date of this Report.



|Fiscal Year                 |  | Principal Borrowed (US$)
|--------------------------- |  | ------------------------
|2015                        |  |                         
|2016                        |  |                         
|2017                        |  |                         
|Subsequent to June 30, 2017 |  |                         





101







During
our 2015 fiscal year, we were successful in borrowing A$766,000 from WHSP. These borrowings, unanimously approved by our
board and referred to as the WHSP Working Capital Notes, were unsecured, payable at a specified maturity date and accrued interest
at a rate of 6% per annum. Other than a difference in the interest rate, the form of the WHSP Working Capital Notes is consistent
with that of the Working Capital Notes, a copy of which is attached is hereto as Exhibit 4.21. Borrowed amounts plus accrued interest
for our 2015 fiscal year were initially convertible into our ordinary shares at a price per share of US$3.03, referred to as the
Initial Conversion Price. In consideration for extending the maturity dates of the WHSP Working Capital Notes issued prior to
December 31, 2016, the Initial Conversion price and the conversion price for borrowings after December 31, 2016 was reset to US$0.50.



Ordinary
Share Equity Subscriptions

At
various times during our last two fiscal years we have entered into subscription agreements approved by our Board, substantially
in the form attached as Exhibit 4.10 to this Report, to sell our ordinary shares at $3.03 per share to various parties during
the months and in total amounts shown in the table below. Some of the subscribers for our ordinary shares are related parties
to our Managing Director or to other members of our Board at the time of the subscription, as noted in the table below (refer
to Item 7.B. under the heading “Related Party Transactions”)



|               |  | Number of shares
|-------------- |  | ----------------
|Month          |  | Related Parties 
|July 2015      |  |                 
|September 2015 |  |                 
|October 2015   |  |                 
|November 2015  |  |                 
|December 2015  |  |                 
|June 2016      |  |                 
|December 2016  |  |                 
|February 2017  |  |                 
|               |  |                 



Contracts
Related To Equity Exchange Agreements

Effective
June 30, 2017 we entered into exchange agreements, substantially in the form attached as Exhibit 4.26 to this Report and approved
by the disinterested members of our Board, pursuant to which we exchanged certain Subsidiary Preferred, all Working Capital Notes
and accrued interest outstanding as of June 30, 2017, all WHSP Working Capital Notes and accrued interest outstanding as
of June 30, 2017 and the GED Working Capital Notes held by WHSP for our Series C Preferred Shares in the amounts shown
in the table below.



|Instrument Exchanged                                |  | US$
Exchanged |            | Number of Series C Preferred Shares Issued
|--------------------------------------------------- |  | ------------- | ---------- | ------------------------------------------
|Subsidiary Preferred                                |  |               | 6,500,000  |                                           
|Working Capital Notes – Managing Director affiliate |  |               | 5,712,527  |                                           
|WHSP and GED Working Capital Notes                  |  |               | 1,068,662  |                                           
|                                                    |  |               | 13,281,189 |                                           



The
terms of our Series C Convertible Preferred Shares are summarized in Item 14 under the heading “Issuance of Series C
Preferred Shares”. Except for the securities held by WHSP, all exchanges shown in the Table above were to affiliates
of our Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”).





102







Contracts
Related to Executive Compensation



On
November 30, 2015, our Managing Director, Mr. William Morro, entered into an agreement, the MD Deferred Compensation
Agreement, whereby his unpaid compensation for calendar year 2015 has been deferred and, unless previously paid by the Company,
may be exchanged by Mr. Morro 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). During our last two fiscal years, a total of 63,543 of our ordinary shares
have been issued to Mr. Morro pursuant to this agreement.



On
November 30, 2015, our former Senior Vice President Mr. Emmanuel Cotrel, entered into an agreement, the EC Deferred Compensation
Agreement, whereby his unpaid 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). During our last two fiscal years, a total of 110,582 of our ordinary shares have
been issued to Mr. Emmanuel Cotrel pursuant to this agreement.



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





103







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



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



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



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



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



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.





104







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.



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.





105







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.



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.





106







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.



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.





107







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



If
Australian dollars so received are not converted into U.S. dollars on the date of receipt, the U.S. holder will have a basis
in the Australian dollars equal to their U.S. dollar value on the date of receipt. Any gain or loss on a subsequent
conversion or other disposition of the Australian dollars generally will be treated as ordinary income or loss to such U.S.
holder and generally such gain or loss will be income or loss from sources within the United States for foreign tax credit
limitation purposes.



Dividends
received by a U.S. holder with respect to ordinary shares will be treated as foreign source income, which may be relevant in calculating
the holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for credit is calculated separately
with respect to specific classes of income. For these purposes, dividends will be categorized as “passive” or “general”
income depending on a U.S. holder’s circumstance.



Subject
to certain complex limitations, a U.S. holder generally will be entitled, at its option, to claim either a credit against its
U.S. federal income tax liability or a deduction in computing its U.S. federal taxable income in respect of any Australian taxes
withheld by us. If a U.S. holder elects to claim a deduction, rather than a foreign tax credit, for Australian taxes withheld
by us for a particular taxable year, the election will apply to all foreign taxes paid or accrued by or on behalf of the U.S.
holder in the particular taxable year.



You
may not be able to claim a foreign tax credit (and instead may claim a deduction) for non-U.S. taxes imposed on dividends paid
on the ordinary shares if you (i) have held the ordinary shares for less than a specified minimum period during which you are
not protected from risk of loss with respect to such shares, or (ii) are obligated to make payments related to the dividends (for
example, pursuant to a short sale).



The
availability of the foreign tax credit and the application of the limitations on its availability are fact specific. You are urged
to consult your own tax advisor as to the consequences of Australian withholding taxes and the availability of a foreign tax credit
or deduction. See “Australian Tax Considerations — Taxation of Dividends.”



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.”





108







Passive
Foreign Investment Company Considerations



A
non-U.S. corporation will be treated as a passive foreign investment company (a “PFIC”) for any taxable year if either
(a) at least 75% of its gross income for such taxable year consists of certain types of passive income or (b) at least 50% of
gross assets during the taxable year, based on a quarterly average and generally by value, produce or are held for the production
of passive income. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and our unbooked
intangibles associated with active business activities may generally be classified as active assets. Passive income for this purpose
generally includes, among other things, dividends, interest, rents, royalties, gains from commodities and securities transactions
and gains from assets that produce passive income. The average percentage of a corporation’s assets that produce or are
held for the production of passive income generally is determined on the basis of the fair market value of the corporation’s
assets at the end of each quarter. This determination is based on the adjusted tax basis of the corporation’s assets, however,
if the corporation is a controlled foreign corporation, or CFC, that is not a publicly traded corporation for the taxable year.
We would be treated as a CFC for any year on any day in which U.S. holders each own (directly, indirectly or by attribution) at
least 10% of our voting shares and together own more than 50% of the total combined voting power of all classes of our voting
shares or more than 50% of the total value of all of our shares. If we are treated as a CFC for U.S. federal income tax purposes
for any portion of our taxable year that includes this offering, we would likely be classified as a PFIC for the current taxable
year. The CFC determination involves a highly complex and technical factual analysis and, in certain cases such as our own, potentially
cannot be made with complete certainty. However, although no assurances can be made in this regard because of these complexities,
based on our current shareholder composition, we believe that we are not a CFC.



Additionally,
in determining whether a foreign corporation is a PFIC, a pro-rata portion of the income and assets of each corporation in which
it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.



The
determination of whether or not we are a PFIC is a factual determination that must be determined annually at the close of each
taxable year. Based on our business results for the last fiscal year and composition of our assets, we do not believe that we
were a PFIC for U.S. federal income tax purposes for the taxable year ended June 30, 2014. Similarly, based on our business projections
and the anticipated composition of our assets for the current and future years, we do not expect that we will be a PFIC for the
taxable year ended June 30, 2015. If our actual business results do not match our projections, it is possible that we may become
a PFIC in the current or any future taxable year.



If
we are a PFIC for any taxable year during which a U.S. holder holds ordinary shares, any “excess distribution” that
the holder receives and any gain realized from a sale or other disposition (including a pledge) of such ordinary shares will be
subject to special tax rules, unless the holder makes a mark-to-market election or qualified electing fund election as discussed
below. Any distribution in a taxable year that is greater than 125% of the average annual distribution received by a U.S. holder
during the shorter of the three preceding taxable years or such holder’s holding period for the ordinary shares will be
treated as an excess distribution. Under these special tax rules:



| | ■ | 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.





109







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.



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.





110







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.



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.





111







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 23 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.



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 and Parmac 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 and Series C Preferred Stock and the face value of the preferred stock of our Parmac and CIWL subsidiaries, the
Subsidiary Preferred, is denominated in U.S. dollars.



We
do not apply hedge accounting. At June 30, 2017 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, 2017 and 2016, 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, 2017, 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.





112







Liquidity
and capital risk management



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



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



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 Exhibits 4.5 and 4.6 to our Form 6-K/A filed on January
                                         29, 2015 (the “DOCA Exhibits”).
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





113









| | ■ | we
                                         modified the terms of our outstanding Series B Preferred as provided in the DOCA Exhibits. In
                                         summary, qualified in the entirety by the provisions of the DOCA Exhibits, our Series
                                         B Preferred has a preferred in liquidation over the our ordinary shares at face value,
                                         shall be pari passu on liquidation with other senior equity securities, is entitled
                                         to vote only on Series B Preferred Share matters, is redeemable on liquidation or a change
                                         in control pursuant to which our ordinary shares would no longer be eligible to trade
                                         in a public market, is entitled accrual of dividends from the date of issue through January
                                         15, 2015, and conversion to our ordinary shares at US$4.01 per share (giving effect to
                                         the 1:80 share consolidation in December 2015), subject adjustment for future share splits
                                         and consolidations and to certain restrictions if such conversion would result in the
                                         holder owning more than 19.9% of our ordinary shares.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Private
Placements of Unregistered Securities After Emergence From VA



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



| | ■ | issued
                                         1,477,062 ordinary shares in a series of private placements 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$4.5 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 DOCA Exhibits.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Issued
                                         174,125 ordinary shares for US$3.03 in exchange for unpaid Executive Compensation. 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 in conjunction with
                                         the Draker and Inaccess transactions (refer to Item 4.A. under the heading “Recent
                                         / Prospective Acquisitions”and Item 10.C. under the heading “Contracts
                                         Related To Debt And Equity Issuances”).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As
of the date of this report:

| | ● | the
                                         number of outstanding ordinary shares is 6,033,161;                                                                                                                                                          
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | Warrants
                                         and options are outstanding to purchase a total of 500,417 of our ordinary shares;                                                                                                                      
| | ● | the
                                         number of outstanding CIWL Preferred Shares is 1,400, convertible into 490,422 of our
                                         ordinary shares, subject to applicable conversion restrictions; and           
| | ● | the
                                         number of outstanding Parmac Preferred Shares is 2,200, convertible into 756,172 of our
                                         ordinary shares, in each case subject to applicable conversion restrictions.



Conversion
of Series B Preferred Shares



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 and these are convertible into 149,553 ordinary shares, subject
to applicable conversion restrictions on the holder.





114







Issuance
of Series C Preferred Shares in exchange for Subsidiary Preferred and Debt Securities



Our
Board authorized the issuance of Series C Preferred Shares in connection with the exchange of the certain Subsidiary
Preferred Shares and certain of our corporate debt obligations. The Series C Preferred Shares have a face value of US$1.00,
rank paripasu with our Series B Preferred Shares in liquidation and are convertible into our ordinary shares at any time by
the holder or at the discretion of the Company, subject to restrictions on conversion that preclude conversion if it would
cause a holder to own more than 19.9% of our ordinary shares following such conversion. The conversion price is US$0.50 per
ordinary share, subject to adjustment for future share splits and consolidations. No dividend accrues on Series C Preferred
Shares, nor do they have no voting rights, except as pertains to Series C Preferred matters. The Series C Preferred Shares
are only redeemable upon liquidation or winding up of the company. The foregoing description of the terms of the Series C
Preferred Shares is qualified in its entirety by the provisions of the exchange agreements to which Series C Preferred Shares
were issued, the form of which is included as Exhibit 4.26 to this Report.



On
June 30, 2017, a total of 5,000,000 Series C Preferred Shares were issued in exchange for all of the outstanding Subsidiary
Preferred Shares referred to as IHL Preferred and 1,500,000 Series C Preferred Shares were issued in exchange for all of the outstanding
Draker Preferred. 1,068,662 Series C Preferred Shares were issued to WHSP in exchange for outstanding indebtedness equivalent
to US$1,068,662. Also, 5,712,527 Series C Preferred Shares were issued in exchange for outstanding indebtedness of US$5,712,527
on the Working Capital Notes (refer to Item 5.B. under the heading “Indebtedness” and Item ). Except for
the Series C Preferred Shares issued to WHSP, all issuances of Series C Preferred Shares through the date of this Report
were to affiliates of our Managing Director (refer to Item 7.B. under the heading “Related Party Transactions”)
and a total of 13,281,189 Series C Preferred Shares are outstanding as of such date (refer to Item 10.C. under the heading “Contracts
Related To Equity Exchange Agreements”).



As
of the date of this report the number of outstanding Series C Preferred Shares is 13,281,189, convertible into 26,562,378 of
our ordinary shares, subject to applicable conversion restrictions on the holders thereof.



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, 2017.



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





115







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, 2017 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, 2017 under the 2013 Framework due to the following material weakness:



| | ■ | Due
                                         to uncertainties in our business and our ongoing restructuring, which included the discontinuance
                                         of certain lines of business during our 2017 fiscal year, annual budgets have
                                         not been established by our Board. 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.



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, to the extent practicable given our small size and geographically
                                         dispersed operations, 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 2018 fiscal
year that are approved by our Board.





116







ITEM
16A.   AUDIT COMMITTEE FINANCIAL EXPERT



The
composition of our Audit Committee currently and for fiscal years June 30, 2017 and 2016 were:



| | ■ | June
                                         2016 and Currently: Mr. Carlo Botto*
| | - | ----------------------------------------------------------------------------------



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



ITEM
16B.   CODE OF ETHICS



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



Our
Code of Conduct and Ethics is filed as Exhibit 11.1 to this 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
|-------------------------------------------------------------- |  | ------------
|                                                               |  | 2017        
|                                                               |  | $’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          |  |             



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.





117







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



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), subject to being able to recruit additional qualified directors, 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).





118







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. It is our intention to increase the size of our audit committee as soon as we are able to add qualified
independent directors to our Board who are able fulfill this role.



(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 not less than 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.



(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, without approval of the disinterested shareholders or triggering
certain takeover provisions of the Act, 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.





119







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





120











BlueNRGY Group Limited



(A.C.N. 010 966 793)



Annual Financial Report



for the year ended 30 June 2017















Contents





|Report of Independent Registered Accounting Firm | 3                                                           
|------------------------------------------------ | ------------------------------------------------------------
|Statement of comprehensive income                | 4                                                           
|Statement of financial position                  | 5                                                           
|Statement of changes in equity                   | 6                                                           
|Statement of cash flows                          | 9                                                           
|Notes to the financial statements                | 10                                                          
|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.                                              | Investment in Associates                                    
|14.                                              | Discontinued operations                                     
|15.                                              | Plant and equipment                                         
|16.                                              | Goodwill and intangible assets                              
|17.                                              | Trade and other payables                                    
|18.                                              | Interest-bearing loans and borrowings                       
|19.                                              | Provisions                                                  
|20.                                              | Contributed equity                                          
|21.                                              | Reserves                                                    
|22.                                              | Business combinations                                       
|23.                                              | Financial risk management objectives and policies           
|24.                                              | Related party disclosures                                   
|25.                                              | Key management personnel                                    
|26.                                              | Share-based payments                                        
|27.                                              | Commitments                                                 
|28.                                              | Contingent liabilities                                      
|29.                                              | Events after the balance sheet date                         
|30.                                              | Parent entity information                                   
|31.                                              | Auditors’ remuneration                                      





2











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 2017 and 2016, 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 2017. 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 2017 and 2016 and the consolidated results of their operations and their consolidated cash flows for each
of the three years in the period ended 30 June 2017 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. Note 2 to the financial statements advises that
the ability of the Group to continue as a going concern and meet its debts and commitments as and when they fall due requires
that the Group 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 27, 2017









3









Statement of comprehensive income



|                                                                                                                     |  |      |    | Consolidated
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | ------------
|                                                                                                                     |  |      |    | 2017        
|For the year ended June 30                                                                                           |  | Note |    | $’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  |             
|Share of net profit of associates                                                                                    |  |      | 13 |             
|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                                                                         |  |      | 14 |             
|                                                                                                                     |  |      |    |             
|Net (loss) / profit for the period                                                                                   |  |      |    |             
|                                                                                                                     |  |      |    |             
|Other comprehensive income                                                                                           |  |      |    |             
|Items that may be reclassified to profit or loss                                                                     |  |      |    |             
|Exchange differences on translation of foreign operations                                                            |  |      |    |             
|Other comprehensive loss for the period, net of tax of $ Nil (2016:$ 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.





4







Statement of financial position



|                                                  |  |      |    | Consolidated
|------------------------------------------------- |  | ---- | -- | ------------
|                                                  |  |      |    | 2017        
|As at June 30                                     |  | Note |    | $’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                                |  |      |    |             
|Investment in associates                          |  |      | 13 |             
|Plant and equipment                               |  |      | 15 |             
|Goodwill and intangible assets                    |  |      | 16 |             
|Other non-current assets                          |  |      | 12 |             
|Total Non-Current Assets                          |  |      |    |             
|TOTAL ASSETS                                      |  |      |    |             
|                                                  |  |      |    |             
|LIABILITIES                                       |  |      |    |             
|Current Liabilities                               |  |      |    |             
|Trade and other payables                          |  |      | 17 |             
|Interest-bearing loans and borrowings             |  |      | 18 |             
|Provisions                                        |  |      | 19 |             
|Total Current Liabilities                         |  |      |    |             
|                                                  |  |      |    |             
|Non-Current Liabilities                           |  |      |    |             
|Interest-bearing loans and borrowings             |  |      | 18 |             
|Provisions                                        |  |      | 19 |             
|Total Non-Current Liabilities                     |  |      |    |             
|TOTAL LIABILITIES                                 |  |      |    |             
|NET ASSETS                                        |  |      |    |             
|                                                  |  |      |    |             
|EQUITY                                            |  |      |    |             
|Contributed equity                                |  |      | 20 |             
|Accumulated losses                                |  |      |    |             
|Reserves                                          |  |      | 21 |             
|Total equity attributable to owners of the Parent |  |      |    |             
|Non-controlling interests                         |  |      |    |             
|TOTAL EQUITY                                      |  |      |    |             



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





5







Statement of changes in equity



|For the year ended June 30, 2017                     |  | Ordinary shares |         | Preference shares |  | Convertible Notes |        | Share options reserve |  | Translation reserve |   | Accumulated Losses |  | Non- controlling interests (1) |        | Total
|---------------------------------------------------- |  | --------------- | ------- | ----------------- |  | ----------------- | ------ | --------------------- |  | ------------------- | - | ------------------ |  | ------------------------------ | ------ | -----
|                                                     |  | $’000           |         | $’000             |  | $’000             |        | $’000                 |  | $’000               |   | $’000              |  | $’000                          |        | $’000
|                                                     |  |                 |         |                   |  |                   |        |                       |  |                     |   |                    |  |                                |        |      
|At July 1, 2016                                      |  |                 | 147,781 |                   |  |                   | 781    |                       |  |                     | — |                    |  |                                | 1,571  |      
|Loss for year                                        |  |                 | —       |                   |  |                   | —      |                       |  |                     | — |                    |  |                                | —      |      
|Other comprehensive income                           |  |                 | —       |                   |  |                   | —      |                       |  |                     | — |                    |  |                                | —      |      
|Total comprehensive income for the year              |  |                 | —       |                   |  |                   | —      |                       |  |                     | — |                    |  |                                | —      |      
|                                                     |  |                 |         |                   |  |                   |        |                       |  |                     |   |                    |  |                                |        |      
|Transactions with owners in their capacity as owners |  |                 |         |                   |  |                   |        |                       |  |                     |   |                    |  |                                |        |      
|Shares issued                                        |  |                 | 310     |                   |  |                   | 8,824  |                       |  |                     | — |                    |  |                                | —      |      
|Reclassification to shares issued                    |  |                 | —       |                   |  |                   | 8,763  |                       |  |                     | — |                    |  |                                | —      |      
|Reclassify expired options                           |  |                 | —       |                   |  |                   | —      |                       |  |                     | — |                    |  |                                | (1,106 | )    
|Share options issued                                 |  |                 | —       |                   |  |                   | —      |                       |  |                     | — |                    |  |                                | —      |      
|Balance at June 30, 2017                             |  |                 | 148,091 |                   |  |                   | 18,368 |                       |  |                     | — |                    |  |                                | 465    |      



1 Non-controlling interests are Subsidiary Preferred
Shares. Refer Note 20.



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





6







|For the year ended June 30, 2016                                        |  | Ordinary shares |         | Preference shares |  | Convertible Notes |     | Share options reserve |  | Translation reserve |   | Accumulated Losses |  | Non- controlling interests (1) |       | Total
|----------------------------------------------------------------------- |  | --------------- | ------- | ----------------- |  | ----------------- | --- | --------------------- |  | ------------------- | - | ------------------ |  | ------------------------------ | ----- | -----
|                                                                        |  | $’000           |         | $’000             |  | $’000             |     | $’000                 |  | $’000               |   | $’000              |  | $’000                          |       | $’000
|                                                                        |  |                 |         |                   |  |                   |     |                       |  |                     |   |                    |  |                                |       |      
|At July 1, 2015                                                         |  |                 | 144,338 |                   |  |                   | 781 |                       |  |                     | — |                    |  |                                | 2,104 |      
|Loss for year                                                           |  |                 | —       |                   |  |                   | —   |                       |  |                     | — |                    |  |                                | —     |      
|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 |  |                 | —       |                   |  |                   | —   |                       |  |                     | — |                    |  |                                | —     |      
|Reclassify expired options                                              |  |                 | —       |                   |  |                   | —   |                       |  |                     | — |                    |  |                                | (562  | )    
|Balance at June 30, 2016                                                |  |                 | 147,781 |                   |  |                   | 781 |                       |  |                     | — |                    |  |                                | 1,571 |      



1 Non-controlling interests are Subsidiary Preferred
Shares. Refer Note 20.



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





7







|For the year ended June 30, 2015                     |  | Ordinary shares |         | Preference shares |  | Convertible Notes |        | Share options reserve |  | Translation reserve |      | Accumulated Losses |  | Non- controlling interests (1) |        | Total
|---------------------------------------------------- |  | --------------- | ------- | ----------------- |  | ----------------- | ------ | --------------------- |  | ------------------- | ---- | ------------------ |  | ------------------------------ | ------ | -----
|                                                     |  | $’000           |         | $’000             |  | $’000             |        | $’000                 |  | $’000               |      | $’000              |  | $’000                          |        | $’000
|                                                     |  |                 |         |                   |  |                   |        |                       |  |                     |      |                    |  |                                |        |      
|At July 1, 2014                                      |  |                 | 120,323 |                   |  |                   | 4,643  |                       |  |                     | 574  |                    |  |                                | 3,336  |      
|Loss for year                                        |  |                 | —       |                   |  |                   | —      |                       |  |                     | —    |                    |  |                                | —      |      
|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 | )                  |  |                                | —      |      
|Reclassify 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 20.



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





8







Statement of cash flows



|                                                                      |  | Consolidated
|--------------------------------------------------------------------- |  | ------------
|                                                                      |  | 2017        
|For the year ended June 30                                            |  | $’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                           |  |             
|                                                                      |  |             
|Cash flow from investing activities                                   |  |             
|Proceeds from sale of property, plant and equipment                   |  |             
|Purchase of property, plant and equipment                             |  |             
|Cash forfeited during reorganisation                                  |  |             
|Payment for the investment in associates                              |  |             
|Payment for the purchase of controlled entities, net of cash acquired |  |             
|Net cash flows used in 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 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                            |  |             



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





9







Notes to the financial statements



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



The consolidated financial statements
of BlueNRGY Group Limited (“BlueNRGY”, “the Parent” or “the Company”) for the year ended June
30, 2017 were authorised for issue in accordance with a resolution of the Directors on October 27, 2017. 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 liabilities exceeded its current assets by $3.8 million
as of June 30, 2017. Key financial data for the Group for the years ended June 30, 2017 and 2016 is disclosed below:



|                                                        |  | Year ended June 30, 2017 |        | Year ended June 30, 2016
|------------------------------------------------------- |  | ------------------------ | ------ | ------------------------
|Consolidated                                            |  | $000                     |        | $000                    
|Cash at bank and in hand less overdraft                 |  |                          | 302    |                         
|Net loss for the year from continuing operations        |  |                          | (8,586 | )                       
|Net cash outflow from operating activities for the year |  |                          | (6,191 | )                       
|Net current assets/(liabilities)                        |  |                          | (3,842 | )                       



The Group has made operating losses during the financial
year ended June 30, 2017 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 95% 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.





10







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:



| | ■ | 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,
                                         2017 the Solar PV business units in the USA and UK were closed as they continued to be
                                         loss making. In addition, the Company has continued to pursue corporate acquisitions
                                         which gives the Group a platform to achieve profitability in its Monitoring & Performance
                                         Analytics division within the next 12 months. In July 2016 the Company made an investment
                                         of A$4,794,000 to acquire 22.4% of the issued share capital of Inaccess Holdings Limited
                                         (IHL). IHL is accounted for as an associate in the consolidated financial statements
                                         and IHL’s unaudited financial statements for the 12 months ended June 30, 2017
                                         show that IHL was profitable for that period. IHL and Draker have commenced working
                                         collaboratively on projects in some geographical markets.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ■ | Raise new debt and/or equity capital, which will
also fund the working capital needed to generate the forecasts used in the value-in-use calculations applied to the impairment
testing of Goodwill, as detailed in Note 16 - Goodwill and intangible assets. During the twelve months ended June 30, 2017 the
Company has been successful in converting US$6,781,000 (A$8,824,000) of new and existing debt into equity instruments. Additionally,
a further US$91,000 (A$118,000) of liabilities for fees and salaries due to executives of the company were extinguished through
the issuance of 30,000 ordinary shares in the company. Proceeds from borrowings during the financial year ended June 30, 2017
across the group were A$4,523,000. Refer to Note 18 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 2016. There has been no material impact on the financial
statements of the Group from these new and amended Standards and Interpretations.





11







A number of new standards, amendments
to standards and interpretations are effective for annual periods beginning after 1 July 2017, 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.



The impact of the application of AASB
9 Financial Instruments, and AASB 16 Leaseshas not been determined.



A preliminary assessment of the impact
of the application of AASB 15 Revenue from Contracts with Customers has been conducted by the Company. It is not expected
to have a material impact on revenue recognition in the Group’s Monitoring and Performance Analytics and Solar PV segments.
The impact on revenue recognition in the Parmac segment is dependent on the terms of specific contracts entered into by the Group.
Under the standard contracts used by the Group, the new standard is not expected to have a material impact on revenue recognition
for this segment, however, there may be instances where the Group deviates from these standard contracts in future which will require
further analysis on a case by case basis.



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



The consolidated financial statements
comprise the financial statements of BlueNRGY Group Limited and its subsidiaries as outlined in Note 24.



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



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



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.





12







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



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



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

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



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

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



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



On consolidation, the results and financial
position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency
different from the presentation currency as translated into the presentation currency as follows:

| | · | Assets and liabilities
for each statement of financial position are translated at the closing rate at the date of that statement of financial position;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Income
                                         and expenses are translated at average exchange rates;                                                 
| | · | All resulting differences
are recognised in other comprehensive income.                                                                                

Goodwill arising on the acquisition
of a foreign operation is treated as an asset of the foreign operation and translated at the closing rate.



| | 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:





13







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 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.



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.





14







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:

| | ■ | when
                                         the deferred income tax liability arises from the initial recognition of goodwill or
                                         of an asset or liability in a transaction that is not a business combination and that,
                                         at the time of the transaction, affects neither the accounting profit nor taxable profit
                                         or loss; or                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | in
                                         respect of taxable temporary differences associated with investments in subsidiaries,
                                         associates and interests in joint ventures, when the timing of the reversal of the temporary
                                         differences can be controlled and it is probable that the temporary differences will
                                         not reverse in the foreseeable future.



Deferred income tax assets are recognised
for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable
that taxable profit will be available against which the deductible temporary differences and the carried forward unused tax credits
and unused tax losses can be utilised, except:

| | ■ | when
                                         the deferred income tax asset relating to the deductible temporary difference arises
                                         from the initial recognition of an asset or liability in a transaction that is not a
                                         business combination and, at the time of the transaction, affects neither the accounting
                                         profit nor taxable profit or loss; or                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | in
                                         respect of deductible temporary differences associated with investments in subsidiaries,
                                         associates and interests in joint ventures, deferred tax assets are recognised only to
                                         the extent that it is probable that the temporary differences will reverse in the foreseeable
                                         future and taxable profit will be available against which the temporary differences can
                                         be utilised.



The carrying amount of deferred tax
assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilised.



Unrecognised deferred tax assets are
reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will
allow the deferred tax asset to be recovered.



Deferred tax assets and liabilities
are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.



Deferred tax assets and deferred tax
liabilities are offset only if a legally enforceable right exists to 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.





15







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:

| | ■ | when
                                         the GST incurred on a purchase of goods and services is not recoverable from the taxation
                                         authority, in which case the GST is recognised as part of the cost of acquisition of
                                         the asset or as part of the expense item as applicable; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | receivables
                                         and payables, which are stated with the amount of GST included.                                                                                                                                                                                                                                                      



The net amount of GST recoverable from,
or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.



Cash flows are included in the statement
of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable
from, or payable to, the taxation authority is classified as part of operating cash flows. Commitments and contingencies are disclosed
net of the amount of GST recoverable from, or payable to, the taxation authority.



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

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



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

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



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





16







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.



| | n) | Investment in associates
| | -- | ------------------------



An associate is an entity over which
the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions
of the investee, but is not control or joint control over those policies.



The Group’s investments in its
associate are accounted for using the equity method.



Under the equity method, the investment in an associate is initially recognised
at cost. The carrying amount of the investment is adjusted to recognise changes in the Group’s share of net assets of the
associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment
and is not tested for impairment separately.



The statement of profit or loss reflects
the Group’s share of the results of operations of the associate. Any change in OCI of those investees is presented as part
of the Group’s OCI. In addition, when there has been a change recognised directly in the equity of the associate, the Group
recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting
from transactions between the Group and the associate are eliminated to the extent of the interest in the associate or joint venture.





17







The aggregate of the Group’s share
of profit or loss of an associate is shown on the face of the statement of profit or loss outside operating profit and represents
profit or loss after tax and non-controlling interests in the subsidiaries of the associate.



The financial statements of the associate
are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies
in line with those of the Group.



| | o) | Plant and equipment
| | -- | -------------------

Plant and equipment is stated at historical
cost less accumulated depreciation and any accumulated impairment losses.



The cost of fixed assets constructed
within the Group 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.





18







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.



| | p) | Leases
| | -- | ------

The determination of whether an arrangement
is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the
arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset



Finance leases, which transfer to the
Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of
the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments
are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on
the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.



Capitalised leased assets are depreciated
over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group
will obtain ownership by the end of the lease term.



Operating lease payments are recognised
as an expense in profit or loss on a straight-line basis over the lease term.



| | q) | Goodwill and other intangibles
| | -- | ------------------------------

Goodwill

Goodwill acquired in a business combination
is initially measured at cost of the business combination, being the excess of the consideration transferred over the fair value
of the net identifiable assets acquired and liabilities assumed.



After initial recognition, goodwill
is measured at cost less any accumulated impairment losses.



Goodwill is reviewed for impairment
annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.



For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating
units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the Group are assigned to those units or groups of units.



Impairment is determined by assessing
the recoverable amount of the cash-generating unit or group of cash-generating units, to which the goodwill relates.



BlueNRGY Group Limited performs its
impairment testing as at 30 June each year or more frequently where there are indicators of impairment. Further details on the
methodology and assumptions used are outlined in Note 16.



When the recoverable amount of the cash-generating
unit or group of cash-generating units is less than the carrying amount, an impairment loss is recognised. When goodwill forms
part of a cash-generating unit or group of cash-generating units and an operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed
of and the portion of the cash-generating unit retained.



Impairment losses recognised for goodwill
are not subsequently reversed.





19







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.



Gains or losses arising from de-recognition
of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and
are recognised in profit or loss when the asset is derecognised.



| | r) | Pensions and other post-employment benefits
| | -- | -------------------------------------------

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



| | s) | Trade and other payables
| | -- | ------------------------

Trade and other payables are carried
at amortised cost. Due to their short-term nature they are not discounted. They represent liabilities for goods and services provided
to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within terms negotiated
with suppliers.



| | t) | Interest-bearing loans and borrowings
| | -- | -------------------------------------

All interest-bearing loans and borrowings
are initially recognised at the fair value of the consideration received less directly attributable transaction costs.



After initial recognition, interest-bearing
loans and borrowings are subsequently measured at amortised cost using the effective interest method. Fees paid on the establishment
of loan facilities that are yield related are included as part of the carrying amount of the loans and borrowings.



Borrowings are classified as current
liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance
date.





20







| | u) | 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.



| | v) | Share-based payment transactions
| | -- | --------------------------------

The Group provides benefits to its employees
(including senior executives) in the form of share-based payments, whereby employees render services in exchange for shares or
rights over shares (‘equity-settled transactions’).



The cost of these equity-settled transactions
with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The
fair value is determined by using a Black-Scholes or Binomial model, further details of which are given in Note 26.



In valuing equity-settled transactions,
no account is taken of any vesting conditions, other than conditions linked to the price of the shares of BlueNRGY Group Limited
(‘market conditions’) if applicable.



The cost of equity-settled transactions
is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions
are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the
vesting date).



At each subsequent reporting date until
vesting, the cumulative charge to profit or loss is the product of:



(i) the grant date fair value
of the award;

(ii) the current best estimate
of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting
period and the likelihood of non-market performance conditions being met; and

(iii) the expired portion
of the vesting period.



The charge to profit or loss for the
period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding
entry to equity.



Until an award has vested, any amounts
recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award
subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided
that all other conditions are satisfied. No expense is recognised for awards that do not ultimately vest, except for awards where
vesting is only conditional upon a market condition.





21







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).



| | w) | 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.



| | x) | Earnings per share
| | -- | ------------------

Basic earnings per share is calculated
as net profit or loss attributable to shareholders, adjusted to exclude costs of servicing equity (other than dividends), divided
by the weighted average number of ordinary shares.



Diluted earnings per share adjusts the
figure used in the determination of basic earnings per share to take into account:

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



| | y) | Parent entity financial information
| | -- | -----------------------------------

The financial information for the parent
entity, BlueNRGY Group Limited, disclosed in Note 30 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.



| | z) | 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.



| | aa) | Discontinued operations
| | --- | -----------------------

A disposal group qualifies as discontinued
operation if it is a component of an entity that either has been disposed of, ceased operations, or is classified as held for sale,
and: represents a separate major line of business or geographical area of operations; is part of a single coordinated plan to dispose
of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to
resale. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as
profit or loss after tax from discontinued operations in the statement of comprehensive income.





22







| | 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

As at June 30, 2017, 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 16.



Carrying value of investment in associates

The Group determines whether investment
in associatesare impaired at least on an annual basis. This requires an estimation of the recoverable amount of the individual
investments in associates by way of a value in use calculation based on a DCF model. The assumptions used in this estimation of
recoverable amount and the carrying amount of investment in associates including a sensitivity analysis are shown in Note 13.



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, 2017 the carrying amount of capitalised project work in progress was $Nil (2016: $Nil).



Share-based payment transactions

The Group measures the cost of equity-settled
transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The
fair value is determined using a Black-Scholes or Binominal model, with the assumptions detailed in Note 26.



The Group measures the cost of equity-settled
transactions with regards to warrants issued to lenders using an un-modified binominal lattice model giving consideration to the
dilution impact of the shares issued upon conversion of the warrants as well as other options on issue.



Contingent consideration

Under the terms of the Membership
Interest Purchase Agreement between the Group and its subsidiary, BlueNRGY LLC, the Group was obligated to create a
management incentive pool of ordinary shares and, subject to vesting conditions, issue all such shares to the named parties.
Identified within this pool of ordinary shares were 50,142 shares ($191,000) unallocated staff incentive shares to be issued
to beneficiaries as directed by parties to the Agreement. As at June 30, 2017 all of the incentive pool shares have been
issued and there is no remaining contingent consideration recorded on the Statement of Financial Position at balance
date.





23







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



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



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



The principal activities of segments
within the consolidated entity were:

| | ■ | Solar
                                         PVprovides engineering design, supply and installation services to retail, commercial
                                         and utility-scale domestic 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. All international
                                         activities in this segment ceased in the 2017 financial year and have been accounted
                                         for as discontinued operations in this report.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | Parmacprovides a full range of mechanical services and air-conditioning services in support
                                         of developers, builders and commercial tenants at the mid-tier level. Their specialty
                                         is working within existing mechanical services infrastructure and tight deadlines to
                                         deliver high-quality commercial grade air-conditioning solutions.                                                                                                                                                                                                                                                                                         
| | ■ | Monitoring
                                         & Performance Analytics provide an integrated, device-agnostic energy monitoring
                                         solution to maximize profitability for any solar PV installation. An all-in-one monitoring
                                         portal, users are provided with the most comprehensive suite of tools to remotely configure
                                         and track energy production.                                                                                                                                                                                                                                                                         
| | ■ | Power
                                         Plant Operations, or PPO (formerly, RAPS/Technology Solutions) includes operating
                                         remote area power systems. The Chatham Island wind project is included in the PPOsegment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ■ | 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



|                                                                            |  | Solar PV |       | Parmac |  | Monitoring & Performance Analytics |        | PPO   |  | Corporate |        | Consoli-dated
|--------------------------------------------------------------------------- |  | -------- | ----- | ------ |  | ---------------------------------- | ------ | ----- |  | --------- | ------ | -------------
|2017                                                                        |  | $’000    |       | $’000  |  | $’000                              |        | $’000 |  | $’000     |        | $’000        
|Revenues from continuing operations                                         |  |          | 386   |        |  |                                    | 14,523 |       |  |           | 4,047  |              
|Other income / (losses)                                                     |  |          | 5     |        |  |                                    | 21     |       |  |           | (12    | )            
|Total revenue and other income from continuing operations                   |  |          | 391   |        |  |                                    | 14,544 |       |  |           | 4,035  |              
|Share of net profit of associates                                           |  |          | —     |        |  |                                    | —      |       |  |           | 358    |              
|Segment net operating profit / (loss) before tax from continuing operations |  |          | (295  | )      |  |                                    | 161    |       |  |           | (4,171 | )            
|Unallocated non-operating income and costs                                  |  |          |       |        |  |                                    |        |       |  |           |        |              
|Loss before tax from continuing operations                                  |  |          |       |        |  |                                    |        |       |  |           |        |              
|Income tax expense                                                          |  |          |       |        |  |                                    |        |       |  |           |        |              
|Net loss after tax from continuing operations                               |  |          |       |        |  |                                    |        |       |  |           |        |              
|Net lossfrom discontinued operations                                        |  |          |       |        |  |                                    |        |       |  |           |        |              
|Net loss after tax                                                          |  |          |       |        |  |                                    |        |       |  |           |        |              
|                                                                            |  |          |       |        |  |                                    |        |       |  |           |        |              
|Depreciation and Amortisation                                               |  |          | 2     |        |  |                                    | 69     |       |  |           | 150    |              
|                                                                            |  |          |       |        |  |                                    |        |       |  |           |        |              
|Total Assets                                                                |  |          | 1,764 |        |  |                                    | 4,956  |       |  |           | 17,576 |              
|Total Liabilities                                                           |  |          | 2,453 |        |  |                                    | 6,177  |       |  |           | 4,973  |              





24







|                                                                            |  | Solar PV |       | Parmac |  | Monitoring & Performance Analytics |        | PPO   |  | Corporate |        | Consoli-dated
|--------------------------------------------------------------------------- |  | -------- | ----- | ------ |  | ---------------------------------- | ------ | ----- |  | --------- | ------ | -------------
|2016                                                                        |  | $’000    |       | $’000  |  | $’000                              |        | $’000 |  | $’000     |        | $’000        
|Revenues from continuing operations                                         |  |          | 224   |        |  |                                    | 12,177 |       |  |           | 2,599  |              
|Other income                                                                |  |          | 6     |        |  |                                    | —      |       |  |           | 10     |              
|Total revenue and income from continuing operations                         |  |          | 230   |        |  |                                    | 12,177 |       |  |           | 2,609  |              
|                                                                            |  |          |       |        |  |                                    |        |       |  |           |        |              
|Segment net operating profit / (loss) before tax from continuing operations |  |          | (530  | )      |  |                                    | (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 profit from discontinued operations                                     |  |          |       |        |  |                                    |        |       |  |           |        |              
|Net loss after tax                                                          |  |          |       |        |  |                                    |        |       |  |           |        |              
|                                                                            |  |          |       |        |  |                                    |        |       |  |           |        |              
|Depreciation and Amortisation                                               |  |          | —     |        |  |                                    | (119   | )     |  |           | (182   | )            
|                                                                            |  |          |       |        |  |                                    |        |       |  |           |        |              
|Total Assets                                                                |  |          | 6,702 |        |  |                                    | 4,619  |       |  |           | 13,435 |              
|Total Liabilities                                                           |  |          | 3,121 |        |  |                                    | 5,800  |       |  |           | 4,682  |              





25







Secondary reporting – geographic segments



|                                                                            |  | Consolidated
|--------------------------------------------------------------------------- |  | ------------
|                                                                            |  | 2017        
|                                                                            |  | $’000       
|Revenues from continuing operations                                         |  |             
|-     Australia                                                             |  |             
|-     United States                                                         |  |             
|-     Other                                                                 |  |             
|                                                                            |  |             
|                                                                            |  |             
|Segment net operating profit / (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                                                                 |  |             
|                                                                            |  |             



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



|                                    |  | Consolidated
|----------------------------------- |  | ------------
|                                    |  | 2017        
|                                    |  | $’000       
|                                    |  |             
|Revenue from sales and services     |  |             
|                                    |  |             
|Other income                        |  |             
|Debt extinguishment 1               |  |             
|Other income                        |  |             
|Gain / (loss) on disposal of assets |  |             
|                                    |  |             





1The 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.





26







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



|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  | 2017        
|                                                         |  | $’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 Solar 1                                    |  |             
|Other                                                    |  |             
|                                                         |  |             
|                                                         |  |             
|Other expenses                                           |  |             
|Bad and doubtful debts                                   |  |             
|Compliance and consultants                               |  |             
|Transaction fees – acquisitions                          |  |             
|Insurance                                                |  |             
|Occupancy expenses                                       |  |             
|Share option expenses                                    |  |             
|Travel costs                                             |  |             
|Other expenses                                           |  |             
|                                                         |  |             
|                                                         |  |             
|Net finance costs                                        |  |             
|Interest income                                          |  |             
|Interest expense                                         |  |             
|Dividends on Preference Shares classified as liabilities |  |             
|Share option expenses                                    |  |             
|Foreign exchange loss/(gain)                             |  |             
|                                                         |  |             





1Impairment of goodwill on
the discontinued Solar PV CGU has been included in loss of discontinued operations in 2017. Refer Note 14.





27







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



|                                                                                        |  | Consolidated
|--------------------------------------------------------------------------------------- |  | ------------
|                                                                                        |  | 2017        
|                                                                                        |  | $’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                                                              |  |             
|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 $9,102,000. Deferred tax assets relating to tax losses totalling $12,551,000 (2016: $9,821,000) 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
(2016: $4,867,000).



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

There are no other material temporary
differences.



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

At June 30, 2017 the Group has $834,000
of available franking credits (2016: $834,000).





28







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



The following reflects the income used
in the basic and diluted earnings per share computations.





|                                                                                                             |  | Consolidated
|------------------------------------------------------------------------------------------------------------ |  | ------------
|                                                                                                             |  | 2017        
|                                                                                                             |  | $’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 and preference shares
on issue at the reporting dates were anti-dilutive and were excluded from the calculation of diluted earnings per share.





29







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



|                                                                    |  | Consolidated
|------------------------------------------------------------------- |  | ------------
|                                                                    |  | 2017        
|                                                                    |  | $’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 (1)                                       |  |             
|Impairment of financial assets and joint venture assets             |  |             
|Share of profit of associates                                       |  |             
|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 losseson 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       |  |             





(1) 2017 impairment of intangibles
classified within loss from discontinued operations in Statement of Comprehensive Income



The Group’s exposure to interest
rate risk is discussed in Note 23. The maximum exposure to credit risk at the end of the reporting period is the carrying amount.





30







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



|                    |  | Consolidated
|------------------- |  | ------------
|                    |  | 2017        
|                    |  | $’000       
|Current             |  |             
|Trade receivables   |  |             
|Retentions          |  |             
|Accrued income      |  |             
|Other receivables 1 |  |             
|                    |  |             







1 Included in Other Receivables
in 2016 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 13). The balance of the funds received were used to fund working
capital within the Group.



Past due but not impaired

As at June 30, 2017, trade receivables
past due but not considered impaired are: $1,158,000 (2016: $1,720,000). 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 $751,000 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 |       | 0-30 Days |  | 30-60 Days |   | > 60 Days
|---------------------------------------------------------------------------- |  | ----- | ----- | --------- |  | ---------- | - | ---------
|                                                                             |  | $’000 |       | $’000     |  | $’000      |   | $’000    
|At June 30, the ageing analysis of trade receivables past due is as follows: |  |       |       |           |  |            |   |          
|2017 Consolidated                                                            |  |       | 1,158 |           |  |            | — |          
|2016 Consolidated                                                            |  |       | 1,720 |           |  |            | — |          



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





|                         |  | Consolidated
|------------------------ |  | ------------
|                         |  | 2017        
|                         |  | $’000       
|Raw materials and stores |  |             
|STCs                     |  |             
|                         |  |             





31







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



|                |  | Consolidated
|--------------- |  | ------------
|                |  | 2017        
|                |  | $’000       
|Current         |  |             
|Prepayments (1) |  |             
|Deposits        |  |             
|Other           |  |             
|                |  |             
|                |  |             
|Non-current     |  |             
|Deposits        |  |             





1 Includes insurance and upfront manufacturing
licence fees.



| | 13. | Investment in Associates
| | --- | ------------------------



In July 2016 the Group acquired a 22.4%
interest in Inaccess Holdings Limited, a UK registered, unlisted private company which provides global vendor independent solar
plant monitoring systems and centralized site management of distributed assets. The Group’s interest in Inaccess Holdings
Limited is accounted for using the equity method in the consolidated financial statements.



Movements during the year in equity
accounted investment in associated entities:



|                                             |  | Inaccess Holdings Limited
|-------------------------------------------- |  | -------------------------
|                                             |  | $ ‘000                   
|Carrying value at July 1, 2016               |  |                          
|Investment in associate in year              |  |                          
|Share of associate’s profit after income tax |  |                          
|Carrying value at June 30, 2017              |  |                          



The following illustrates the summarized financial information
of the Group’s investment in associates:



|                            |  | 2017 $’000
|--------------------------- |  | ----------
|                            |  |           
|Current assets              |  |           
|Non-current assets          |  |           
|Current liabilities         |  |           
|Non-Current Liabilities     |  |           
|Net assets                  |  |           
|Group’s share of net assets |  |           





32







|                                        |  | 2017 $’000
|--------------------------------------- |  | ----------
|Revenue                                 |  |           
|Other net gains                         |  |           
|Cost of sales                           |  |           
|Administrative expenses                 |  |           
|Finance costs                           |  |           
|Profit before tax                       |  |           
|Income tax expense                      |  |           
|Profit for the year                     |  |           
|Total comprehensive income for the year |  |           
|Group’s share of profit for the year    |  |           



The associate had no contingent liabilities or capital commitments
as at June 30, 2017.



The Group performs impairment testing
on the carrying value of investments in associates as at 30 June each year or more frequently where there are indicators of impairment.
In conducting this review of Investment in associates, the Group has considered the results of the value-in-use valuation approach.



At June 30, 2017, no impairment charge
was recorded against the carrying value of Investment in associates based on the value in use calculations performed.



Key assumptions used in value in
use calculations

The recoverable amount of the investment
in associates 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:



|Pre-tax discount rate  |  |  | 15.35 | %
|---------------------- |  |  | ----- | -
|Perpetuity growth rate |  |  | 7.5   | %
|EBITDA growth rate     |  |  | 20.0  | %



The calculation of value in use is most
sensitive to the following assumptions:

| | ■ | earnings
                                         before interest, tax, depreciation & amortisation (EBITDA);
| | - | -------------------------------------------------------------------------------------------------------------
| | ■ | discount
                                         rates; and                                                 
| | ■ | growth
                                         rate used to extrapolate cash flows beyond the budget period.



Earnings before interest, tax, depreciation
& amortisation (EBITDA) – EBITDA forecasts are based on projections for the forthcoming 12 month period, then extrapolated
for a further 4 years. The basis for these projections is the recent historical performance of the associate 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 independent research publications for monitoring and performance analytics.





33







Sensitivity to changes in value-in-use
assumptions - The implications of changes to the key assumptions on the carrying values are shown below – reflected as
potential impairment charge:



|                  |  |                                          |  | Inaccess
    Holdings Limited
|----------------- |  | ---------------------------------------- |  | -----------------------------
|Input             |  | Sensitivity
    Applied                  |  | $’000                        
|                  |  |                                          |  |                              
|EBITDA            |  | 25%
    shortfall in EBITDA achievement  |  |                              
|Discount
    rate |  | 3%
    increase to discount rate applied |  |                              
|Growth
    rate   |  | Long
    term growth rate of 3.75%       |  |                              



The initial investment agreement with
Inaccess committed the Company to purchase all of the remaining shares of Inaccess at a stipulated price, but the Company defaulted
on that commitment. This default allows Inaccess, at their sole discretion, to redeem the Company’s investment at
the original purchase price or to enact steps to reduce the Company’s governance participation in Inaccess which may impact
on the accounting treatment of this investment in future financial periods. The default does not subject the Company to any potential
financial liabilities.



| | 14. | Discontinued operations
| | --- | -----------------------



In May 2017 the Company ceased to provide
engineering, procurement and construction services for new solar PV generation projects in the Americas and Europe and is in the
process of winding up all operations of its Westinghouse Solar Ltd subsidiary in the UK and US based Green Earth Developers LLC
which previously provided these services. These subsidiaries are classified as ‘discontinued operations’ in the 2015,
2016 and 2017 financial year and formed part of the Solar PV reporting segment in those years.



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.





|                                                         |  | Consolidated
|-------------------------------------------------------- |  | ------------
|                                                         |  | 2017        
|                                                         |  | $’000       
|                                                         |  |             
|Revenue                                                  |  |             
|Other income 1                                           |  |             
|Impairment of goodwill of discontinued operations        |  |             
|Expenses                                                 |  |             
|Finance costs                                            |  |             
|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.





34







| | 15. | Plant
                                         and equipment
| | --- | ------------------------------------------------------------



|                                             |  | Consolidated
|-------------------------------------------- |  | ------------
|                                             |  | 2017        
|                                             |  | $’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 amortisation                     |  |             
|Total leased motor vehicles                  |  |             
|                                             |  |             
|Leasehold improvements                       |  |             
|At cost                                      |  |             
|Accumulated amortisation                     |  |             
|Total leasehold improvements                 |  |             
|                                             |  |             
|Total property, plant and equipment          |  |             
|At cost                                      |  |             
|Accumulated amortisation/depreciation        |  |             
|Total property, plant and equipment          |  |             







35







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



|                                                                |  | Computer hardware & software |      | Motor vehicles |  | Plant & equipment |     | Furniture, fittings & office equipment |  | Leased motor vehicles |       | Leasehold improve-ments |  | Total
|--------------------------------------------------------------- |  | ---------------------------- | ---- | -------------- |  | ----------------- | --- | -------------------------------------- |  | --------------------- | ----- | ----------------------- |  | -----
|                                                                |  | $000                         |      | $000           |  | $000              |     | $000                                   |  | $000                  |       | $000                    |  | $000 
|Year ended June 30, 2017                                        |  |                              |      |                |  |                   |     |                                        |  |                       |       |                         |  |      
|At July 1, 2016 net of accumulated depreciation and impairment  |  |                              | 120  |                |  |                   | 68  |                                        |  |                       | 1,714 |                         |  |      
|Foreign currency movement                                       |  |                              | (1   | )              |  |                   | (1  | )                                      |  |                       | (1    | )                       |  |      
|Additions                                                       |  |                              | 17   |                |  |                   | —   |                                        |  |                       | 16    |                         |  |      
|Disposals                                                       |  |                              | (1   | )              |  |                   | (32 | )                                      |  |                       | (7    | )                       |  |      
|Depreciation charge for the year                                |  |                              | (105 | )              |  |                   | (23 | )                                      |  |                       | (132  | )                       |  |      
|At June 30, 2017 net of accumulated depreciation and impairment |  |                              | 30   |                |  |                   | 12  |                                        |  |                       | 1,590 |                         |  |      
|                                                                |  |                              |      |                |  |                   |     |                                        |  |                       |       |                         |  |      
|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  | )                       |  |      
|Movements reclassified to profit from discontinued operations   |  |                              | —    |                |  |                   | —   |                                        |  |                       | —     |                         |  |      
|At June 30, 2016 net of accumulated depreciation and impairment |  |                              | 120  |                |  |                   | 68  |                                        |  |                       | 1,714 |                         |  |      





36







| | 16. | Goodwill and intangible assets
| | --- | ------------------------------



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





|                                                             |  | Development Costs |      | Goodwill |  | Total
|------------------------------------------------------------ |  | ----------------- | ---- | -------- |  | -----
|                                                             |  | $’000             |      | $’000    |  | $’000
|Year ended June 30, 2017                                     |  |                   |      |          |  |      
|At July 1, 2016 net of impairment                            |  |                   | 101  |          |  |      
|Impairment charge                                            |  |                   | —    |          |  |      
|Foreign currency movement                                    |  |                   | —    |          |  |      
|Amortisation                                                 |  |                   | (92  | )        |  |      
|At June 30, 2017 net accumulated amortisation and impairment |  |                   | 9    |          |  |      
|                                                             |  |                   |      |          |  |      
|At June 30, 2017                                             |  |                   |      |          |  |      
|Cost (gross carrying amount)                                 |  |                   | 360  |          |  |      
|Accumulated impairment and amortisation                      |  |                   | (351 | )        |  |      
|Net carrying amount                                          |  |                   | 9    |          |  |      
|                                                             |  |                   |      |          |  |      
|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 accumulated amortisation and impairment |  |                   | 101  |          |  |      
|                                                             |  |                   |      |          |  |      
|At June 30, 2016                                             |  |                   |      |          |  |      
|Cost (gross carrying amount)                                 |  |                   | 360  |          |  |      
|Accumulated impairment and amortisation                      |  |                   | (259 | )        |  |      
|Net carrying amount                                          |  |                   | 101  |          |  |      



1Refer to Note 22
for the details of business combinations.





37







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
|---------------------------------- |  | ------------
|                                   |  | 2017        
|                                   |  | $’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 value-in-use calculations.



At June 30, 2017, an impairment charge
of $4,654,000 was recorded against the Solar PV CGU goodwill based on the value in use calculations performed.



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 |  | Parmac
|------------------------------------ |  | -------------------------------------- |  | ------
|                                     |  |                                        |  |       
|Year-on-year
    EBITDA growth rates |  |                                        |  |       
|2018                                 |  |                                        |  | *     
|2019                                 |  |                                        |  | **    
|2020                                 |  |                                        |  | 355   
|2021                                 |  |                                        |  | 98    
|2022                                 |  |                                        |  | 5     
|                                     |  |                                        |  |       
|Pre-tax
    discount rate            |  |                                        |  | 15.35 
|Perpetuity
    growth rate           |  |                                        |  | 5     



*   
 Reduction in EBITDA loss of 79%

**  EBITDA
forecast to become positive with turnaround of 147%



The calculation of value in use is most
sensitive to the following assumptions:

| | ■ | earnings
                                         before interest, tax, depreciation & amortisation (EBITDA);
| | - | -------------------------------------------------------------------------------------------------------------
| | ■ | discount
                                         rates; and                                                 
| | ■ | growth
                                         rate used to extrapolate cash flows beyond the budget period.



Earnings before interest, tax, depreciation
& amortisation (EBITDA) – EBITDA forecasts are based on projections for the forthcoming 2 year period, then extrapolated
for a further 3 years. The basis for these projections is the recent historical performance of the CGU’s adjusted for any
non-recurring revenue or cost items. This is then overlaid with the impact of changes to revenue streams, gross margins and cost
structures which have either now been put in place or are underway.



Discount rates - discount rates
reflect an estimate of the Group’s time value of money. This is the benchmark used by the Group to assess operating performance
and to evaluate future investment proposals. In determining appropriate discount rates, regard has been given to the weighted average
cost of capital of the entity as a whole. The business risks specific to each unit are reflected in their individual cash flow
estimates rather than the discount rate.





38







Growth rate estimates - these
are based on published industry research such as IbisWorld 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 changes to the key assumptions on the carrying values are shown below – reflected as
potential impairment charge:



|                  |  |                                          |  | Monitoring
    & Performance Analytics |        | Parmac
|----------------- |  | ---------------------------------------- |  | -------------------------------------- | ------ | ------
|Input             |  | Sensitivity
    Applied                  |  | $’000                                  |        | $’000 
|                  |  |                                          |  |                                        |        |       
|EBITDA            |  | 25%
    shortfall in EBITDA achievement  |  |                                        | (1,007 | )     
|Discount
    rate |  | 3%
    increase to discount rate applied |  |                                        | Nil    |       
|Growth
    rate   |  | Long
    term growth rate of 0%          |  |                                        | Nil    |       



| | 17. | Trade and other payables
| | --- | ------------------------



|                            |  | Consolidated
|--------------------------- |  | ------------
|                            |  | 2017        
|                            |  | $’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.





39







| | 18. | Interest-bearing loans and borrowings
| | --- | -------------------------------------



|                        |  | Consolidated
|----------------------- |  | ------------
|                        |  | 2017        
|                        |  | $’000       
|Current - secured       |  |             
|Other loans 1           |  |             
|Finance leases          |  |             
|                        |  |             
|Non-current – secured   |  |             
|Other loans 1,2         |  |             
|Finance leases          |  |             
|Preference shares4      |  |             
|                        |  |             
|Non-current – unsecured |  |             
|Other loans 3           |  |             
|                        |  |             





CURRENT BORROWINGS



1 Other loans –
secured

The other loans – secured balance
as at June 30, 2017 consists of an amount of $101,000 (US$78,000) 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 $75,000 (US$58,000) is classified as current with the balance of $26,000 (US$20,000)
classified as non-current. All of the obligations under this secured agreement are non-recourse to the Group’s parent company.



NON-CURRENT BORROWINGS



2 Other loans –
secured

The other loans – secured balance
as at June 30, 2017 consists of three third-party loans, provided to the parent company and subsidiaries within the Group. Refer
to current other loans – secured for details of the $26,000 loan.



An amount of $1,017,000 (US$781,000)
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, 2018. The lender is an affiliate of our Managing Director, William Morro.



An amount of $4,455,000
(US$3,424,000) is secured by the borrower’s right, title and interest to the trade and other receivables of Parmac and
Draker. Interest is currently payable on this loan at 10% per annum. The loan matures on October 30, 2018. The lender is an
affiliate of our Managing Director, William Morro



3 Other loans –
unsecured

The other loans – unsecured balance
as at June 30, 2016 consisted of two third-party loans, provided to the parent company and subsidiaries within the Group. These
loans were extinguished during the year ended June 30, 2017 in exchange for the issuance of Series C Preferred Shares to the lenders.
Refer note 20.





40







4Preference Shares

One of the Group’s
subsidiaries, Chatham Island Wind Limited (‘CIWL’), issued 1,400,000 US$1.00 non-voting, redeemable preference
shares (‘RPS’) in January 2015. 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, 2017 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.



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 23.



| | 19. | Provisions
| | --- | ----------



|                      |  | Consolidated
|--------------------- |  | ------------
|                      |  | 2017        
|                      |  | $’000       
|                      |  |             
|Current               |  |             
|Employee entitlements |  |             
|                      |  |             
|Non-current           |  |             
|Employee entitlements |  |             





| | 20. | Contributed
                                         equity
| | --- | -----------------------------------------------------------



|                                                |  | Consolidated
|----------------------------------------------- |  | ------------
|                                                |  | 2017        
|                                                |  | $’000       
|                                                |  |             
|Owners of the Parent                            |  |             
|Ordinary share capital, issued and fully paid   |  |             
|Class B Preferred shares, issued and fully paid |  |             
|Class C Preferred shares, issued and fully paid |  |             
|                                                |  |             
|Non-controlling interests                       |  |             
|                                                |  |             









41







|                                                                          |  | 2017             |            | 2016 
|------------------------------------------------------------------------- |  | ---------------- | ---------- | -----
|                                                                          |  | Number of shares |            | $’000
|Movement in ordinary shares on issue                                      |  |                  |            |      
|Balance at the beginning of the year                                      |  |                  | 5,956,453  |      
|Issue of shares under share purchase agreements                           |  |                  | —          |      
|Issue under employee equity plan                                          |  |                  | 46,708     |      
|Issue in exchange for debt or services                                    |  |                  | 30,000     |      
|Transaction costs                                                         |  |                  | —          |      
|Balance at the end of the year                                            |  |                  | 6,033,161  |      
|                                                                          |  |                  |            |      
|Movement in Preference B shares on issue                                  |  |                  |            |      
|Balance at the beginning of the year                                      |  |                  | 600        |      
|Balance at the end of the year                                            |  |                  | 600        |      
|                                                                          |  |                  |            |      
|Movement in Preference C shares on issue                                  |  |                  |            |      
|Balance at the beginning of the year                                      |  |                  | —          |      
|Issue of Preference C shares in exchange for debt                         |  |                  | 6,781,189  |      
|Issue of Preference C shares in exchange for Subsidiary Preference Shares |  |                  | 6,500,000  |      
|Balance at the end of the year                                            |  |                  | 13,281,189 |      
|                                                                          |  |                  |            |      
|Movement in Subsidiary Preference shares on issue                         |  |                  |            |      
|Balance at the beginning of the year                                      |  |                  | 8,700      |      
|Exchange for Series C Preference shares                                   |  |                  | (6,500     | )    
|Issue of Subsidiary Preference shares                                     |  |                  | —          |      
|Reclassification from Debt                                                |  |                  | —          |      
|Balance at the end of the year                                            |  |                  | 2,200      |      



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 and Class C Preferred 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 no fixed rights to
receive dividends other than to the extent dividends are declared on ordinary shares. 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.





42







Class C Preferred Shares

Class C Preferred Shares have a
liquidation preference over the Company’s Ordinary shares, are non-voting (except with respect to any Class C Preferred
Stock matters, a proposal to wind-up the Company, or a proposal for the disposal of the whole of the Company’s
property, business and undertaking) 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 C Preferred Share is convertible is determined by
dividing the face value of each Class C Preferred Share plus accrued but unpaid dividends by US$0.50. Class C Preferred
Shares have no rights to receive dividends other than to the extent that dividends are declared on Ordinary Shares. The Class
C Preferred Shares are redeemable by the Company, in whole or in part, at the Company’s sole election. During the year
ended June 30, 2017, a total of 13,281,189 Class C Preferred Shares were issued in exchange for:

| | ● | $8,824,000
                                         of borrowings of the Company and certain subsidiaries                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| | ● | $8,763,000
                                         IHL Acquisition Co Pty Ltd and Draker Corporation Subsidiary Preferred Shares



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 Draker and IHL Subsidiary Preferred Shares we exchanged for Series C Preferred Shares during the year ended June 30, 2017.



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, 2017
|------------------------
|Grant Date              
|                        
|31-May-12               
|12-Dec-12               
|12-Dec-12               
|30-Dec-12               
|13-Feb-13               
|18-Jun-14               
|31-Dec-15               
|Total                   





43







|Year ended June 30, 2016
|------------------------
|Grant Date              
|                        
|31-May-12               
|12-Dec-12               
|12-Dec-12               
|30-Dec-12               
|13-Feb-13               
|18-Jun-14               
|31-Dec-15               
|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.



| | 21. | Reserves
| | --- | --------



|                                                        |  | Consolidated         
|------------------------------------------------------- |  | ---------------------
|                                                        |  | Share options reserve
|                                                        |  | $’000                
|At July 1, 2016                                         |  |                      
|Current year translation                                |  |                      
|Transfer to accumulated losses on expiration of options |  |                      
|At June 30, 2017                                        |  |                      







44







|                                                                        |  | 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                                                        |  |                      





Share
options reserve

The
share options reserve is used to record the value of share based payments provided to employees and directors as part of
their remuneration and options granted as part of borrowing agreements. No options were granted during 2017 (2016: 495,377). 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.



| | 22. | 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.





45







Details of purchase consideration, net
liability acquired and goodwill at acquisition date are as follows



|                                  |  | Total USD |       | Total AUD
|--------------------------------- |  | --------- | ----- | ---------
|Purchase consideration            |  | $’000     |       | $’000    
|                                  |  |           |       |          
|Total cash purchase consideration |  |           | 2,158 |          



|                              |  | Cost USD |     | Fair value USD |  | Total AUD
|----------------------------- |  | -------- | --- | -------------- |  | ---------
|Assets & liabilities acquired |  | $’000    |     | $’000          |  | $’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       |  |          |     |                |  |          



There were no business combinations
during the year ended June 30, 2017.



| | 23. | Financial risk management objectives and policies
| | --- | -------------------------------------------------



The Group’s principal financial
instruments comprise receivables, payables, loans, convertible notes, finance leases, available-for-sale investments and cash and
short-term deposits.



Risk exposures and responses

The Group manages its exposure to key
financial risks in accordance with the Group’s financial risk management policy. The objective of the policy is to support
the delivery of the Group’s financial targets whilst protecting future financial security.



The main risks arising from the Group’s
financial instruments are interest rate risk, foreign currency risk, credit risk, price risk, and liquidity risk. Primary responsibility
for identification and control of financial risks rests with the Audit Committee under the authority of the Board. The Board reviews
and agrees policies for managing each of the risks identified below.





46







| | 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 2017 (2016: Nil).



At reporting date, the Group had the
following net exposure to variable interest rate risk:



|                          |  | Consolidated
|------------------------- |  | ------------
|                          |  | 2017        
|                          |  | $’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, 2017, the Group had borrowings of $7,615,000 (2016:
$10,977,000). 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 2017 and 2016, 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   |        | AUD   |  | Other 1 |        | Total
|--------------------------- |  | ----- | ------ | ----- |  | ------- | ------ | -----
|                            |  | $’000 |        | $’000 |  | $’000   |        | $’000
|2017                        |  |       |        |       |  |         |        |      
|Cash and cash equivalents   |  |       | 51     |       |  |         | 251    |      
|Trade and other receivables |  |       | 2,235  |       |  |         | 3,399  |      
|Trade and other payables    |  |       | (5,809 | )     |  |         | (3,676 | )    
|Borrowings                  |  |       | (7,412 | )     |  |         | (203   | )    
|                            |  |       |        |       |  |         |        |      
|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 | )    



1 Other comprises of foreign
currencies GBP, EUR and NZD.





47







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                            
|---- |  | ------------------ |  | -------------------------------
|     |  |                    |  | Effect
    on profit before tax
|     |  | Change
    in rate |  | $’000                          
|2017 |  |                    |  | +10                            
|     |  |                    |  | -10                            
|     |  |                    |  |                                
|2016 |  |                    |  | +10                            
|     |  |                    |  | -10                            



The Group does not apply hedge accounting.
At June 30, 2017 and 2016, 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.





48







| | 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 |       | 6-12 months |  | Between 1-2 years |    | Between 2-5 years |  | Total contractual cash flows |        | Carrying amount of liability
|------------------------ |  | ------------------ | ----- | ----------- |  | ----------------- | -- | ----------------- |  | ---------------------------- | ------ | ----------------------------
|                         |  | $’000              |       | $’000       |  | $’000             |    | $’000             |  | $’000                        |        | $’000                       
|2017                     |  |                    |       |             |  |                   |    |                   |  |                              |        |                             
|Trade and other payables |  |                    | 9,681 |             |  |                   | —  |                   |  |                              | —      |                             
|Borrowings               |  |                    | 75    |             |  |                   | —  |                   |  |                              | 7,337  |                             
|Finance leases           |  |                    | 74    |             |  |                   | 58 |                   |  |                              | 43     |                             
|                         |  |                    |       |             |  |                   |    |                   |  |                              |        |                             
|2016                     |  |                    |       |             |  |                   |    |                   |  |                              |        |                             
|Trade and other payables |  |                    | 9,164 |             |  |                   | —  |                   |  |                              | —      |                             
|Borrowings               |  |                    | 592   |             |  |                   | —  |                   |  |                              | 10,161 |                             
|Finance leases           |  |                    | 89    |             |  |                   | 31 |                   |  |                              | 90     |                             



Fair value

The methods for estimating fair value
are outlined in the relevant notes to the financial statements.



| | 24. | Related party disclosures
| | --- | -------------------------



| | a) | Subsidiaries
| | -- | ------------

The consolidated financial statements
include the financial statements of BlueNRGY Group Limited and the material subsidiaries listed in the following table.



|                                                      |  |                          |  |                         |  | % Equity Interest
|----------------------------------------------------- |  | ------------------------ |  | ----------------------- |  | -----------------
|Name                                                  |  | Country of Incorporation |  | Principal Activity      |  | 2017             
|BlueNRGY Group Limited                                |  | Australia                |  | Holding company         |  |                  
|Parmac Air Conditioning & Mechanical Services Pty Ltd |  | Australia                |  | Energy efficiency       |  |                  
|BlueNRGY Renewable Solutions Pty Ltd                  |  | Australia                |  | Solar                   |  |                  
|BlueNRGY LLC 1                                        |  | USA                      |  | Performance analytics   |  |                  
|Green Earth Developers LLC 2                          |  | USA                      |  | Solar                   |  |                  
|Draker Corporation 3                                  |  | USA                      |  | Performance analytics   |  |                  
|Chatham Island Wind Ltd 4                             |  | New Zealand              |  | Special purpose vehicle |  |                  
|IHL Acquisition Co Pty Ltd 5                          |  | Australia                |  | Holding company         |  |                  



1 acquired January 27, 2015

2 acquired July 1, 2014

3 formed September 14, 2015

4 Placed into liquidation
July 20, 2017

5 formed July 2016 to hold
the Group’s investment in the Inaccess Group of companies





49







Transactions between the Company and
its subsidiaries principally arise from the granting of loans and the provision of management and administration services. All
transactions undertaken during the financial year with subsidiaries are eliminated in the consolidated financial statements.



| | b) | Ultimate parent
| | -- | ---------------

BlueNRGY Group Limited is the ultimate Australian parent
entity and the ultimate parent of the Group.



| | c) | Key management personnel
| | -- | ------------------------

Details relating to key management personnel, including transactions
with key management personnel and remuneration paid, are included in Note 25.



| | d) | Terms and conditions of transactions with related parties
| | -- | ---------------------------------------------------------

Sales to and purchases from related
parties are made in arm’s length transactions both at normal market prices and on normal commercial terms unless otherwise
stated.



| | 25. | Key management personnel                 
| | --- | -----------------------------------------
| | a)  | Compensation for key management personnel



|                             |  | Consolidated
|---------------------------- |  | ------------
|                             |  | 2017        
|                             |  | $           
|                             |  |             
|Short-term employee benefits |  |             
|Post-employment benefits     |  |             
|Share-based payments         |  |             
|Total compensation           |  |             





50







| | b) | Shareholdings of key management personnel
| | -- | -----------------------------------------



Ordinary 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
|------------ |  | ----------------- | --------- | ----------------------- |  | ---------------------- | ------- | ---------------- |  | ------------------
|2017         |  |                   |           |                         |  |                        |         |                  |  |                   
|Directors    |  |                   |           |                         |  |                        |         |                  |  |                   
|C. Botto     |  |                   | 19,691    |                         |  |                        | —       |                  |  |                   
|W. Morro2    |  |                   | 355,825   |                         |  |                        | —       |                  |  |                   
|O. Ferrari   |  |                   | —         |                         |  |                        | —       |                  |  |                   
|Y. Cotrel 1  |  |                   | 612,806   |                         |  |                        | —       |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|Executives   |  |                   |           |                         |  |                        |         |                  |  |                   
|E. Cotrel 1  |  |                   | 445,987   |                         |  |                        | 30,000  |                  |  |                   
|R. Pillinger |  |                   | 62,500    |                         |  |                        | —       |                  |  |                   
|P. Maros 1   |  |                   | —         |                         |  |                        | 15,625  |                  |  |                   
|Total        |  |                   | 1,496,809 |                         |  |                        | 45,625  |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|2016         |  |                   |           |                         |  |                        |         |                  |  |                   
|Directors    |  |                   |           |                         |  |                        |         |                  |  |                   
|C. Botto     |  |                   | 19,691    |                         |  |                        | —       |                  |  |                   
|W. Morro     |  |                   | 292,282   |                         |  |                        | 63,543  |                  |  |                   
|Y. Cotrel    |  |                   | 612,806   |                         |  |                        | —       |                  |  |                   
|O. Ferrari   |  |                   | —         |                         |  |                        | —       |                  |  |                   
|J. Donohue1  |  |                   | 19,512    |                         |  |                        | —       |                  |  |                   
|             |  |                   |           |                         |  |                        |         |                  |  |                   
|Executives   |  |                   |           |                         |  |                        |         |                  |  |                   
|E. Cotrel    |  |                   | 407,017   |                         |  |                        | 80,582  |                  |  |                   
|R. Pillinger |  |                   | 62,500    |                         |  |                        | —       |                  |  |                   
|Total        |  |                   | 1,413,808 |                         |  |                        | 144,125 |                  |  |                   



1Changes for Messrs Y. Cotrel,
E. Cotrel, Maros and Donohue relate to their respective resignations / terminations.

2 Mr Morro is an executive
director of the Company. Mr Morro also holds 3,149,452 Class C Preferred Shares at June 30, 2017 (2016: Nil).



| | c) | Loans to key management personnel
| | -- | ---------------------------------

There were no loans to directors or
key management personnel during the year ended June 30, 2017 (2016: None).



| | d) | Other transactions and balances with key management personnel and their related parties
| | -- | ---------------------------------------------------------------------------------------



During the financial year ended June
30, 2017 our Managing Director, William Morro has incurred expenses for travel and made disbursements for operating expenses incurred
on behalf of the Group of A$142,716 (2016: $279,761). With Mr. Morro’s consent, as at June 30, 2017 none of these expenses
have been reimbursed and the amount of A$422,477 remains owing to him and is deemed to be payable on demand.





51







During the financial year ended June
30, 2017, the Group transacted with related entities of directors and key management personnel, other than in their capacity as
director or key management personnel, as follows:



|■ | During
                                         the year ended June 30, 2017 the Company obtained a line of credit with affiliates of
                                         our Managing Director, William Morro under which it drew down A$3,188,000 (US$2,450,000)
                                         (2016: Nil) prior to balance date. Interest of A$147,000 accrued, but was not paid, on
                                         this loan balance to June 30, 2017. The balance of the loan plus accrued interest totaling
                                         A$3,335,000, as unanimously approved by the Company’s Board, was exchanged for
                                         2,563,000 Series C Preferred Shares (refer Note 20) effective June 30, 2017. The balance
                                         on this loan at June 30, 2017 was $Nil.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|■ | During
                                         the financial year ended June 30, 2016 an affiliate of our Managing Director, William
                                         Morro subscribed to Subsidiary Preferred Shares with a face value of A$8,763,000 (US$6,500,000)
                                         issued by two of the Company’s wholly owned subsidiaries: Draker Corporation and
                                         IHL Acquisition Co Pty Ltd. These Subsidiary Preferred Shares were, as unanimously approved
                                         by the Company’s Board, exchanged in full for 6,500,000 Series C Preferred Shares
                                         (refer Note 20) effective June 30, 2017.                                                                                                                            
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|■ | In
                                         April 2015, one of the Group’s subsidiaries, Parmac, secured a line of credit with
                                         an affiliate of our Managing Director, William Morro for up to US$0.5 million. As of
                                         June 30, 2017 and 30 June 2016, the facility was fully drawn. Refer Note 18.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|■ | In
                                         March 2016, two of the Group’s subsidiaries, Parmac and Draker Corp, secured individual
                                         lines of credit with an affiliate of our Managing Director, William Morro for up to US$1.5
                                         million each (US$3 million in aggregate). As of June 30, 2017, interest of A$551,000
                                         (US$ 424,000) (2016: A$166,000 (US$124,000)) had accrued, but not been paid, on the loan
                                         and the facilities were fully drawn. Refer Note 18.                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|■ | The
                                         following salaries and fees payable to the following directors in office at June 30,
                                         2017 have been accrued, but unpaid at that date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



|Director            |  | Nature of amount unpaid |  | Amount unpaid
A$
|------------------- |  | ----------------------- |  | ----------------
|Mr. William Morro   |  | Salary                  |  |                 
|Mr. Carlo Botto     |  | Directors fees          |  |                 
|Mr. Olivier Ferrari |  | Directors fees          |  |                 



| | ■ | Mr
                                         Emmanuel Cotrel exchanged accrued unpaid salary of A$119,000(US$91,000) for 30,000 ordinary
                                         shares at an exchange price of US$3.028 per share under an Exchange Agreement.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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:



|■ | In
                                         April 2015, one of the Group’s subsidiaries, Parmac, secured a line of credit with
                                         an affiliate of our Managing Director, 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 18.                                                                                                                                                                                                                   
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|■ | In
                                         March 2016, two of the Group’s subsidiaries, Parmac and Draker Corp, secured individual
                                         lines of credit with an affiliate of our Managing Director, 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 18.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|■ | The
                                         following Directors and Executives exchanged accrued unpaid salary for ordinary shares
                                         under an Exchange Agreement as follows:                                                                                                                                                                                                                                                                                                                                                                                 





52







|Director            |  | Salary exchange A $ |         | Salary3 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 |                                 



| | ■ | 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 our Managing
                                         Director, William Morro with a total face value of US$6,500,000. Refer Note 20 for the
                                         terms of the Subsidiary Preferred Shares.                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ■ | 495,377
                                         ordinary shares were issued to an affiliate of our Managing Director, William Morro at
                                         a price of US$3.03 per ordinary share for total proceeds of US$1,500,000. As part of
                                         this transaction, one warrant was issued to the subscriber for every ordinary share sold,
                                         being 495,377 warrants in total. The warrants have an exercise price of US$4.54 and an
                                         expiry date of December 31, 2018.



| | 26. | Share-based payments
| | --- | --------------------

| | a) | Recognised share-based payment expenses
| | -- | ---------------------------------------

The expense relating to options is shown
in the table below:



|                                                                               |  | Consolidated
|------------------------------------------------------------------------------ |  | ------------
|                                                                               |  | 2017        
|                                                                               |  | $’000       
|                                                                               |  |             
|Expense arising from equity-settled share-based payment financing transactions |  |             



| | b) | Types of share-based payments
| | -- | -----------------------------

There were no options issued during
the year ended June 30, 2017 (2016: 495,377).



| | 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:





|                                         |  | 2017 |         | 2017 |  | 2016 |       | 2016
|---------------------------------------- |  | ---- | ------- | ---- |  | ---- | ----- | ----
|                                         |  | No.  |         | WAEP |  | No.  |       | WAEP
|                                         |  |      |         | $    |  |      |       | $   
|                                         |  |      |         |      |  |      |       |     
|Outstanding at the beginning of the year |  |      | 500,417 |      |  |      | 10.68 |     
|Granted during the year                  |  |      | —       |      |  |      | —     |     
|Expired during the year                  |  |      | (3,397  | )    |  |      | 41.61 |     
|Outstanding at the end of the year       |  |      | 497,020 |      |  |      | 8.62  |     







53







| | 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.



| | 27. | 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
|------------------------------------------- |  | ------------
|                                            |  | 2017        
|                                            |  | $’000       
|                                            |  |             
|Within one year                             |  |             
|After one year but not more than five years |  |             
|Total minimum lease payments                |  |             





54







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
|------------------------------------------- |  | ------------
|                                            |  | 2017        
|                                            |  | $’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                                       |  |             



| | 28. | Contingent liabilities
| | --- | ----------------------



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’). In July 2017 all
actions against all defendants named in the class action were settled. The settlement was reached in connection with a voluntary
mediation and includes a full release of all defendants in connection with the allegations made in the lawsuit. The settlement
provides for no admission of liability or wrongdoing by any defendant. A settlement payment to the classes, inclusive of all Plaintiffs’
attorneys fees and expenses and settlement costs, was paid solely by the Company’s insurance carrier and the underwriter
of the June 2014 securities offering with no recourse to the Company or any of its subsidiaries.



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 and any such amounts would be non-recourse to the
Company. In July 2017 a liquidator was appointed to CIWL by creditors of the company. The liquidation process is still
ongoing, however, at the date of this report no claims have been made against the Company or its subsidiaries on behalf of
CIWL. It is likely that the liquidation process will result in dissolution of CIWL.





55







Cotrel matters

The Company is a claimant in an
arbitration proceeding against Mr. Emmanuel Cotrel before the American Arbitration Association in New York arising from the
termination of Mr. Cotrel’s employment. Two forms of relief have been sought: (i) a declaratory judgment that Mr.
Cotrel’s termination was proper under the terms of his employment agreement and otherwise; and (ii) monetary damages.
Separately, in response to an objection raised by Mr. Cotrel and his affiliates, referred to as Cotrel Parties, the Company
has sought declarations from the Australian courts that the Board of Directors acted lawfully in connection with various
securities issuances subsequent to January 2015. Certain Cotrel Parties are designated as the counterparties in the
Australian proceeding. In addition, a derivative action, referred to collectively with the other proceedings involving Mr.
Cotrel as the Cotrel Matters, was filed in Florida state court against the Company and its Managing Director in June, 2017 by
Mr. Cotrel alleging wrongful conduct in the management of the Company and in connection its acquisition of BlueNRGY LLC. The
Company believes that the action is without merit and intends to defend it vigorously, if necessary. It is not possible to
estimate the quantum or likelihood of the Company’s financial exposure in connection with any of the Cotrel
Matters.



| | 29. | Events after the balance sheet date
| | --- | -----------------------------------



Liquidation of Chatham Island Wind
Limited

In July 2017 a liquidator was appointed
to the Company’s subsidiary, Chatham Islands Wind Ltd (“CIWL”), by creditors of CIWL. This process is still
ongoing however, at the date of this report the liquidator has not made any claims against the Company or its subsidiaries on
behalf of CIWL and the eventual outcome cannot be determined at this stage.





56







GSE

In August 2017, the Company entered
into a Letter of Intent (LOI) to acquire Green States Energy, Inc. (“GSE”), an owner of PV solar facilities with generation
capacity of 18.7 MWp and valued at more than $60 million. The LOI between the parties includes binding exclusivity provisions,
and completion of the transaction is subject to satisfaction of certain conditions including completion of due diligence acceptable
to both parties, negotiation and execution of a definitive Merger Agreement, requisite board approvals for both parties as well
as approval from the GSE shareholders. The transaction, if consummated in accordance with the LOI,it will be structured as a merger
with a U.S. subsidiary of BlueNRGY (“Merger”). GSE shareholders will receive 34.0 million BlueNRGY ordinary shares
plus warrants to purchase 8.5 million additional BlueNRGY ordinary shares. Up to 4 million additional ordinary shares could be
issuable under the agreement to satisfy GSE liabilities.



Affiliate Loans

Between July 1, 2017 and the date of
this report, affiliates of our Managing Director, William Morro, have loaned the Company the aggregate amount of US$775,000. The
amounts advanced have not been repaid as of the date of this Report.



| | 30. | Parent entity information
| | --- | -------------------------

| | a) | Summary financial information
| | -- | -----------------------------

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



|                                 |  | 2017  |          | 2016 
|-------------------------------- |  | ----- | -------- | -----
|                                 |  | $’000 |          | $’000
|Current assets                   |  |       | 222      |      
|Total assets                     |  |       | 9,464    |      
|Current liabilities              |  |       | (2,392   | )    
|Total liabilities                |  |       | (2,533   | )    
|Net assets                       |  |       | 6,931    |      
|                                 |  |       |          |      
|Issued capital                   |  |       | 166,580  |      
|Accumulated losses               |  |       | (160,114 | )    
|Reserves                         |  |       | 465      |      
|Total shareholders’ equity       |  |       | 6,931    |      
|                                 |  |       |          |      
|Loss of the parent
    entity(1) |  |       | (16,914  | )    



(1) Loss of the parent entity in
2017 includes a provision for impairment of $13,570,000 of loans to its subsidiaries which may not be recoverable.



| | b) | Guarantees entered into by the parent entity
| | -- | --------------------------------------------

As
at June 30, 2017, the parent entity had no financial guarantees in place (2016: Nil).



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

As at June 30, 2017, the parent entity
had no contractual commitments for the acquisition of property, plant or equipment (2016: Nil).





57







| | 31. | Auditors’ remuneration
| | --- | ----------------------



The auditor of BlueNRGY Group Limited is HLB Mann Judd.



|                                                               |  | Consolidated
|-------------------------------------------------------------- |  | ------------
|                                                               |  | 2017        
|                                                               |  | $           
|                                                               |  |             
|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                         |  |             







58







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                      |  | 4.13             
|4.14    |  | Exchange and Compensation Deferral Agreement with Emmanuel Cotrel, dated November 30, 2015.                                                                           |  | 20-F                      |  | 4.14             
|4.15    |  | Exchange and Compensation Deferral Agreement with William Morro, dated November 30, 2015.                                                                             |  | 20-F                      |  | 4.15             
|4.16    |  | Unsecured Convertible Promissory Note with WHI Retirement Savings Plan Trust and WHIRSP – Columbus LLC, dated November 30, 2015 (William Morro).                      |  | 20-F                      |  | 4.16             
|4.17    |  | Warrant held by ESOL, B.V. with Initial Exercise Date of December 31, 2015 (Draker Transaction).                                                                      |  | 20-F                      |  | 4.17             





121







|4.18  |  | Loan and Security Agreement between Draker Corporation and ESOL, B.V. dated February 6, 2016.                                                                                                                              |  | 20-F |  | 4.18 |  | 10/28/2016 |  |  
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | ---- |  | ---------- |  | -
|4.19  |  | Loan
and Security Agreement between Parmac Air-Conditioning & Mechanical Services Pty Ltd and ESOL B.V. dated February 5,
2016.                                                                                            |  | 20-F |  | 4.19 |  | 10/28/2016 |  |  
|4.20  |  | Form of Securities Purchase Agreement dated June 29, 2016.                                                                                                                                                                 |  | 20-F |  | 4.20 |  | 10/28/2016 |  |  
|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 |  | 4.21 |  | 10/28/2016 |  |  
|4.22  |  | Form of Subscription Agreement, dated July 7, 2016 (Inaccess Holdings Ltd).                                                                                                                                                |  | 20-F |  | 4.22 |  | 10/28/2016 |  |  
|4.23  |  | Form of Securities Purchase Agreement, dated July 7, 2016 (Inaccess Holdings Ltd).                                                                                                                                         |  | 20-F |  | 4.23 |  | 10/28/2016 |  |  
|4.24  |  | Inaccess
Holdings Limited Articles of Association as adopted on July 7, 2016.                                                                                                                                              |  |      |  |      |  |            |  | X
|4.25  |  | Equity
Purchase Agreement for the Purchase of Green Earth Developers, dated July 1, 2014.                                                                                                                                  |  |      |  |      |  |            |  | X
|4.26  |  | Form
of Equity Exchange Agreement for the Exchange of Notes for Series C Preferred Shares, dated June 30, 2017.                                                                                                            |  |      |  |      |  |            |  | X
|4.27  |  | Form
of Subscription Agreement between the Company and William Morro, entered into September 2015.                                                                                                                         |  |      |  |      |  |            |  | X
|8.1   |  | For a list of all of our subsidiaries, see Item 4.C., Organization Structure.                                                                                                                                              |  |      |  |      |  |            |  | X
|11.1  |  | Code of Conduct and Ethics.                                                                                                                                                                                                |  | 20-F |  | 11.1 |  | 6/1/2015   |  |  
|12.1  |  | Certification of Principal Executive Officer pursuant to Rule 13a-14(a).                                                                                                                                                   |  |      |  |      |  |            |  | X
|12.2  |  | Certification of Principal Financial Officer pursuant to Rule 13a-14(a).                                                                                                                                                   |  |      |  |      |  |            |  | X
|13.1* |  | Certification of Principal Executive Officer pursuant to 18 U. S. C. Section 1350.                                                                                                                                         |  |      |  |      |  |            |  | X
|13.2* |  | Certification of Principal Financial Officer pursuant to 18 U. S. C. Section 1350.                                                                                                                                         |  |      |  |      |  |            |  | X



*
In accordance with SEC Release 33-8238, Exhibits 13.1 and 13.2 are being furnished and not filed.





122







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 MorroTitle: Managing Director(Principal Executive Officer)          
| |     |                                                                                   
| | By: | /s/ Richard Pillinger                                                             
| |     | Name: Richard PillingerTitle: Chief Financial Officer(Principal Financial Officer)



Date:
October 27, 2017



123