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



| | þ | ANNUAL
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -----------------------------------------------------------------------------------------------------------------------------



For the fiscal year ended June 30, 2016



OR



| |  ̈ | TRANSITION
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------



For the transition period from __________ to _________



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
__________



Commission file number 001-36488



MOKO Social Media Limited






(Exact name of the Registrant as specified
in its charter)



Australia






(Jurisdiction of incorporation or organization)



2221 S. Clark St., 12th Floor
Arlington, VA 22202






(Address of principal executive offices)



Moko.mobi, Inc.
2221 S. Clark St., 12th Floor
Arlington, VA 22202
Attn: Shripal Shah
Tel: (571) 982-3000
Fax: (703) 842-8176






(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:



Title of Each Class



None



Name of each exchange on which registered



N/A



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



Title of Each Class



American Depositary Shares

Ordinary Shares*



* Not for trading, but only in connection
with the quotation of the American Depositary Shares in the OTC Pink Market



Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: None



On June 30, 2016, the registrant had 1,659,796,126 ordinary
shares outstanding.



Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.



| |  ̈
    Yes | x
    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 | x
    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.



| | x
    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).



| | x
    Yes |  ̈
    No
| | --------- | --------



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



| ̈Large
    Accelerated filer |  ̈Accelerated
    filer | xNon-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 | x International
    Financial Reporting  |  ̈Other
|------------ | ---------------------------------------- | ------
|             | Standards as issued by the International |       
|             | Accounting Standards Board               |       



If “Other” has been checked in response to 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 Exchange Act).



| |  ̈Yes | xNo
| | ---- | ---



(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)



Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of the securities under a plan confirmed by a court.



| |  ̈ Yes |  ̈No
| | ----- | ---














TABLE OF CONTENTS



|         |                                                         | Page
|-------- | ------------------------------------------------------- | ----
|PART I  
|        
|Item 1.  | Identity Of Directors, Senior Management And Advisers   | 1   
|         |                                                         |     
|Item 2.  | Offer Statistics and Expected Timetable                 | 1   
|         |                                                         |     
|Item 3.  | Key Information                                         | 1   
|A.       | Selected financial data                                 | 1   
|B.       | Capitalization and indebtedness                         | 3   
|C.       | Reasons for the offer and use of proceeds               | 3   
|D.       | Risk factors                                            | 3   
|         |                                                         |     
|Item 4.  | Information On The Company                              | 15  
|A.       | History and Development of The Company                  | 15  
|B.       | Business overview                                       | 15  
|C.       | Organizational structure                                | 22  
|D.       | Property, plants and equipment                          | 22  
|         |                                                         |     
|Item 4A. | Unresolved Staff Comments                               | 24  
|         |                                                         |     
|Item 5.  | Operating and Financial Review and Prospects            | 24  
|         |                                                         |     
|Item 6.  | Directors, Senior Management And Employees              | 33  
|A.       | Directors and senior management                         | 33  
|B.       | Compensation                                            | 34  
|C.       | Board practices                                         | 36  
|D.       | Employees                                               | 38  
|E.       | Share ownership                                         | 38  
|         |                                                         |     
|Item 7.  | Major Shareholders and Related Party Transactions       | 39  
|A.       | Major shareholders                                      | 39  
|B.       | Related party transactions                              | 39  
|C.       | Interests of experts and counsel                        | 40  
|         |                                                         |     
|Item 8.  | Financial Information                                   | 40  
|A.       | Consolidated Statements and Other Financial Information | 40  
|B.       | Significant Changes                                     | 40  
|         |                                                         |     
|Item 9.  | The Offer and Listing                                   | 40  
|A.       | Offer and listing details                               | 40  
|B.       | Plan of distribution                                    | 40  
|C.       | Markets                                                 | 40  
|D.       | Selling shareholders                                    | 41  
|E.       | Dilution                                                | 41  
|F.       | Expenses of the issue                                   | 41  











|Item 10.   | Additional Information                                                       | 41
|---------- | ---------------------------------------------------------------------------- | --
|A.         | Share capital                                                                | 41
|B.         | Memorandum and articles of association                                       | 41
|C.         | Material contracts                                                           | 41
|D.         | Exchange controls                                                            | 42
|E.         | Taxation                                                                     | 42
|F.         | Dividends and paying agents                                                  | 48
|G.         | Statement by experts                                                         | 48
|H.         | Documents on display                                                         | 48
|I.         | Subsidiary Information                                                       | 49
|           |                                                                              |   
|Item 11.   | Quantitative and Qualitative Disclosures About Market Risk                   | 49
|           |                                                                              |   
|Item 12.   | Description of Securities Other Than Equity Securities                       | 49
|           |                                                                              |   
|PART II   
|           |                                                                              |   
|Item 13.   | Defaults, Dividend Arrearages And Delinquencies                              | 50
|           |                                                                              |   
|Item 14.   | Material Modifications To The Rights Of Security Holders And Use Of Proceeds | 50
|           |                                                                              |   
|Item 15.   | Controls and Procedures                                                      | 50
|           |                                                                              |   
|Item 16    | [Reserved]                                                                   | 50
|           |                                                                              |   
|Item 16A   | — Audit Committee Financial Expert                                           | 51
|           |                                                                              |   
|Item 16B   | — Code of Ethics                                                             | 51
|           |                                                                              |   
|Item 16C   | — Principal Accountant Fees and Services                                     | 51
|           |                                                                              |   
|Item 16D   | — Exemption from the Listing Standards for Audit Committees                  | 51
|           |                                                                              |   
|Item 16E   | —  Purchases of Equity Securities by the Issuer and Affiliated Purchasers    | 51
|           |                                                                              |   
|Item 16F   | — Change in Registrant’s Certifying Accountant                               | 51
|           |                                                                              |   
|Item 16G   | —  Corporate Governance                                                      | 51
|           |                                                                              |   
|Item 16H   | —  Mine Safety Disclosure                                                    | 51
|          
|PART III  
|           |                                                                              |   
|Item 17    | Financial  Statements                                                        | 51
|Item 18.   | Financial  Statements                                                        | 51
|Item 19    | Exhibits                                                                     | 52
|           |                                                                              |   
|Signatures |                                                                              | 53






Table of Contents




CERTAIN INFORMATION



As used in this Annual Report on Form 20-F
(the “Annual Report”), unless otherwise indicated or the context otherwise requires, references to:



| | · | “we,” “MOKO,” “us,” “our,” “the Company,”
    or “our company” are to MOKO Social Media Ltd, including its subsidiaries;
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | “ordinary shares” are to our ordinary shares, no par value;
| | - | -----------------------------------------------------------



| | · | “ADSs” or “American Depositary Shares” are to our American Depositary
    Shares each representing forty ordinary shares;
| | - | -------------------------------------------------------------------------------------------------------------------------



| | · | “ASX” are to the Australian Stock Exchange or ASX;
| | - | --------------------------------------------------



| | · | “NASDAQ” are to the Nasdaq Global Market; and
| | - | ---------------------------------------------



| | · | “OTC Pink” are to the OTC Pink marketplace of OTC Markets.
| | - | ----------------------------------------------------------



In this Annual Report on Form 20-F, references
to “Australia” are to the Commonwealth of Australia and, other than in the audited consolidated financial statements
and notes thereto as of and for fiscal 2016, 2015 and 2014, references to “$,” “USD,” “dollars,”
“USD$” or “U.S. dollars” are to the legal currency of the United States and references to “A$,”
or “Australian Dollars” are to the legal currency of Australia. In the audited consolidated financial statements
and notes thereto as of and for fiscal 2016, 2015 and 2014, references to “$,”are to the legal currency of Australia.



Solely for the convenience of the reader,
this Annual Report on Form 20-F contains translations of certain Australian dollar amounts into U.S. dollars at specified rates.
Except as otherwise stated in this Annual Report on Form 20-F, all translations from Australian dollars to U.S. dollars are based
on the noon buying rate of A$1.00 per $0.7432 in the City of New York for cable transfers of Australian dollars, as certified
for customs purposes by the Federal Reserve Bank of New York on June 30, 2016. No representation is made that Australian dollar
amounts referred to in this Annual Report on Form 20-F could have been or could be converted into U.S. dollars at such rates or
any other rates. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.



The audited consolidated financial statements
and notes thereto as of and for fiscal 2016, 2015 and 2014 included elsewhere in this Annual Report on Form 20-F have been prepared
in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting
Standards Board (“IASB”). References to a particular “fiscal year” are to our fiscal year ended June 30
of that year. Our fiscal quarters end on September 30, December 31 and March 31. References to a year other than a “fiscal”
year are to the calendar year ended December 31.



We also refer in various places within
this Annual Report on Form 20-F to “EBITDA,” which is a non-IFRS measure and is more fully explained in the section
titled “Non-IFRS Financial Measure” in “Operating and Financial Review and Prospects.” The presentation
of this non-IFRS information is not meant to be considered in isolation or as a substitute for our consolidated financial results
prepared in accordance with IFRS as issued by the IASB.



FORWARD-LOOKING STATEMENTS



This Annual Report contains many statements
that are “forward-looking” and uses forward-looking terminology such as “anticipate,” “believe,”
“could,” “estimate,” “expect,” “future,” “intend,” “may,”
“ought to,” “plan,” “possible,” “potentially,” “predicts,” “project,”
“should,” “will,” “would,” negatives of such terms or other similar statements. You should
not place undue reliance on any forward-looking statement due to its inherent risk and uncertainties, both general and specific.
Although we believe the assumptions on which the forward-looking statements are based are reasonable and within the bounds of
our knowledge of our business and operations as of the date of this Annual Report, any or all of those assumptions could prove
to be inaccurate. As a result, the forward-looking statements based on those assumptions could also be incorrect. The forward-looking
statements in this Annual Report include, without limitation, statements relating to:



| | · | our goals and strategies;
| | - | -------------------------



| | · | our future business development, results of operations and financial condition;
| | - | -------------------------------------------------------------------------------



| | · | our ability to protect our intellectual property rights;
| | - | --------------------------------------------------------



| | · | projected revenues, profits, earnings and other estimated financial information;
| | - | --------------------------------------------------------------------------------



| | · | our ability to maintain strong relationships with our customers and suppliers;
| | - | ------------------------------------------------------------------------------



i


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| | · | our planned use of proceeds; and
| | - | --------------------------------



| | · | governmental policies regarding our industry.
| | - | ---------------------------------------------



The forward-looking statements included
in this Annual Report are subject to known and unknown risks, uncertainties and assumptions about our businesses and business
environments. These statements reflect our current views with respect to future events and are not a guarantee of future performance.
Actual results of our operations may differ materially from information contained in the forward-looking statements as a result
of risk factors, some of which are described under the headings “Risk Factors”, “Operating and Financial Review
and Prospects,” “Information on our Company” and elsewhere in this Annual Report, including, among other things:



| | · | failure of our new products to attract a sufficient number of social groups to our mobile
    platforms;
| | - | --------------------------------------------------------------------------------------------------------



| | · | failure of advertisers to use us to reach their target audience even if our mobile social
    platforms are widely adopted by user groups;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | · | risks relating to generating almost all of our revenue from advertising;
| | - | ------------------------------------------------------------------------



| | · | our incurrence of net losses since our inception and our anticipation that we will continue
    to incur net losses in the future;
| | - | ----------------------------------------------------------------------------------------------------------------------------------



| | · | our ability to continue as a going concern;
| | - | -------------------------------------------



| | · | failure to maintain the resources and expertise necessary to keep up with the latest technologies
    in the industries in which we operate;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



| | · | dependence on the continued and unimpeded access to our products and services on the Internet
    by our partner’s users and advertisers;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | failure to identify suitable targets, acquire them on acceptable terms or successfully integrate
    them in accordance with our business strategy of making acquisitions;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | reliance on computer software and hardware systems to manage our operations;
| | - | ----------------------------------------------------------------------------



| | · | our business being subject to complex and evolving laws, regulations and self-regulatory
    principles and frameworks internationally;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | privacy concerns relating to our products and services which could damage our reputation
    and deter current and potential users and advertisers from using our products; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our need for additional capital and whether we may be able to obtain it on acceptable terms,
    or at all.
| | - | -----------------------------------------------------------------------------------------------------------



These risks and uncertainties are not exhaustive.
Other sections of this Annual Report include additional factors which could adversely impact our business and financial performance.
The forward-looking statements contained in this Annual Report speak only as of the date of this Annual Report or, if obtained
from third-party studies or reports, the date of the corresponding study or report, and are expressly qualified in their entirety
by the cautionary statements in this Annual Report. Since we operate in an emerging and evolving environment and new risk factors
and uncertainties emerge from time to time, you should not rely upon forward-looking statements as predictions of future events.
Except as otherwise required by the securities laws of the United States and Australia, we undertake no obligation to update or
revise any forward-looking statements to reflect events or circumstances after the date of this Annual Report or to reflect the
occurrence of unanticipated events.



ii


Table of Contents




PART I



ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



A.   Directors and Senior Management



Not required.



B.   Advisers



Not required.



C.   Auditors



Not required.



ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE



Not required.



ITEM 3. KEY INFORMATION



A.  Selected financial data



The following selected financial data should
be read in conjunction with Item 5 - the “Operating and Financial Review and Prospects” and the Financial Statements
and Notes thereto included elsewhere in this Annual Report.



Certain factors that affect the comparability
of the information set forth in the following table are described in the “Operating and Financial Review and Prospects,”
and the Financial Statements and related notes thereto included elsewhere in this Annual Report.



|                                                                                                           |  | Fiscal
    Year Ended June 30 |            
|---------------------------------------------------------------------------------------------------------- |  | ----------------------------- | -----------
|                                                                                                           |  | 2016                          |            
|                                                                                                           |  | A$                            |            
|Statement of Profit or Loss Data                                                                           |  |                               |            
|Revenue from continuing operations                                                                         |  |                               | 84,830     
|Other income and revenue                                                                                   |  |                               | 1,067,311  
|Fair value gain on deferred consideration                                                                  |  |                               | -          
|Expenses                                                                                                   |  |                               | (21,962,166
|Loss before income tax expense from continuing operations                                                  |  |                               | (20,810,025
|Income tax benefit/(expense)                                                                               |  |                               | 6,889      
|Loss after income tax benefit from continuing operations                                                   |  |                               | (20,803,136
|(Loss)/profit after income tax benefit from discontinued
    operations                                    |  |                               | (738,675   
|Loss after income tax for the year                                                                         |  |                               | (21,541,811
|Other comprehensive income:                                                                                |  |                               |            
|Exchange differences on translation
    of foreign operations                                              |  |                               | 590,423    
|Total comprehensive loss for the year                                                                      |  |                               | (20,951,388
|Total comprehensive loss for the year is attributable to:                                                  |  |                               |            
|Continuing operations                                                                                      |  |                               | (20,212,713
|Discontinued operations                                                                                    |  |                               | (738,675   
|Loss attributable to:                                                                                      |  |                               |            
|Owners of the Company                                                                                      |  |                               | (21,457,299
|Non-controlling interests                                                                                  |  |                               | (84,512    
|Total comprehensive loss attributable
    to:                                                              |  |                               |            
|Owners of the Company                                                                                      |  |                               | (21,457,299
|Non-controlling interests                                                                                  |  |                               | (84,512    
|Earnings per share from continuing operations attributable
    to the owners of MOKO Social Media Limited: |  |                               |            
|Basic / Diluted EPS (“cents”)                                                                              |  |                               | (2.20      



*The restatement of comparatives is related to discontinued
operations. Please refer to Note 8 of our Financial Statements and Notes thereto included elsewhere in this Annual Report.



1


Table of Contents




|                                     |  | As of June 30 |            
|------------------------------------ |  | ------------- | -----------
|                                     |  | 2016          |            
|                                     |  | A$            |            
|Statement of Financial Position Data |  |               |            
|Current assets:                      |  |               |            
|Cash and cash equivalents            |  |               | 2,546,772  
|Trade and other receivables          |  |               | 38,660     
|Other current assets                 |  |               | 326,643    
|Total current assets                 |  |               | 2,912,075  
|Non-current assets                   |  |               |            
|Property, plant and equipment        |  |               | 136,731    
|Intangibles                          |  |               | 100,835    
|Available-for-sale financial assets  |  |               | 560,000    
|Deferred tax assets                  |  |               | -          
|Total non-current assets             |  |               | 797,566    
|Total assets                         |  |               | 3,709,641  
|                                     |  |               |            
|Current liabilities                  |  |               |            
|Deferred consideration               |  |               | -          
|Trade and other payables             |  |               | 1,047,672  
|Borrowings                           |  |               | -          
|Employee benefits                    |  |               | 168,210    
|Provisions                           |  |               | -          
|Income tax provision                 |  |               | -          
|Total current liabilities            |  |               | 1,215,882  
|Non-current liabilities              |  |               |            
|Employee benefits                    |  |               | 11,818     
|Deferred tax liability               |  |               | -          
|Total non-current liabilities        |  |               | 11,818     
|Total liabilities                    |  |               | 1,227,700  
|Net assets                           |  |               | 2,481,941  
|Equity                               |  |               |            
|Issued capital                       |  |               | 69,142,733 
|Reserves                             |  |               | 14,053,478 
|Accumulated losses                   |  |               | (80,669,505
|Non-controlling interest             |  |               | (44,765    
|Total equity                         |  |               | 2,481,941  



The total outstanding ordinary shares at June 30, 2016, is
1,659,796,126 (2015: 755,486,679).



The total Performance Shares outstanding at June 30, 2016 and
2015, is 20,000,000.

2


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The following table sets forth information concerning exchange
rates between the Australian dollar and the U.S. dollar for the periods indicated based on the noon buying rate in the City of
New York for cable transfers of Australian dollars, as certified for customs purposes by the Federal Reserve Bank of New York.
As of September 30, 2016, the noon buying rate was A$0.7667 per $1.00.



|                   |  | A$
    Per USD$1 |       
|------------------ |  | ---------------- | ------
|                   |  | High             |       
|Year Ended         |  |                  |       
|June 30, 2012      |  | A$               | 1.1026
|June 30, 2013      |  |                  | 1.0573
|June 30, 2014      |  |                  | 0.9705
|June 30, 2015      |  |                  | 0.9488
|June 30, 2016      |  |                  | 0.7817
|Quarter Ended      |  |                  |       
|September 30, 2014 |  |                  | 0.9488
|December 31, 2014  |  |                  | 0.8904
|March 31, 2015     |  |                  | 0.8194
|June 30, 2015      |  |                  | 0.8118
|September 30, 2015 |  |                  | 0.7664
|December 31, 2015  |  |                  | 0.7346
|March 31, 2016     |  |                  | 0.7677
|June 30, 2016      |  |                  | 0.7817
|Month Ended        |  |                  |       
|April 2016         |  |                  | 0.7817
|May 2016           |  |                  | 0.7641
|June 2016          |  |                  | 0.7479
|July 2016          |  |                  | 0.7632
|August 2016        |  |                  | 0.7717
|September 2016     |  |                  | 0.7676



B.   Capitalization and Indebtedness



Not required.



C.  Reasons for the Offer and Use of Proceeds



Not required.



D.   Risk factors



Risks Related to Our Business



Our limited operating history may
not serve as an adequate basis to predict our future prospects and results of operations.



Our current level of operations did not
develop until early 2013. As a result, our operating history is limited and, accordingly, the revenue and income potential of
our business and markets are unproven. Our historical operating results do not provide a meaningful basis for evaluating our business,
financial performance and prospects, particularly in view of the fact that the last two years of operations were of businesses
that have since ceased operations or been sold to other companies.



We also face numerous risks, uncertainties,
expenses and difficulties frequently encountered by companies at an early stage of development. Some of these risks and uncertainties
relate to our ability to:



3


Table of Contents




| | · | develop new customers or new business from existing customers;
| | - | --------------------------------------------------------------



| | · | expand the technical sophistication of the products and services we offer;
| | - | --------------------------------------------------------------------------



| | · | respond effectively to competitive pressures; and
| | - | -------------------------------------------------



| | · | attract and retain qualified management and employees.
| | - | ------------------------------------------------------



We may not meet internal or external expectations
regarding our future performance. If we are not successful in addressing these risks and uncertainties, our business, operating
results and financial condition may be materially adversely affected.



Our new products could fail to attract
a sufficient number of social groups to our mobile platforms and we may not be able to retain organizations that are attracted
to our platforms.



In order to create a meaningful level
of activity in our target social groups, we need to attract and retain large user groups interested in our mobile social applications.
Our ability to convince these social groups to adopt our mobile platform will depend in part on our ability to create successful
new products and services. We may also introduce significant changes to our existing products and services or develop and introduce
new and unproven products and services, including technologies with which we have little or no prior development or operating
experience, which could affect users continued use of the products we develop. For example, in 2013, we began to develop REC*IT,
a mobile application that includes a variety of social features and tools including the ability to register for team activities,
check schedules, player standings, scores and individual performances and post photos and other content related to collegiate
intramural sports. There can be no assurance that we will continue to identify and partner with social groups of the size and
demographics that may be attractive to potential advertising customers. Even if we are able to attract groups and organizations
to our platform, there can be no assurance that they will continue to use our platform, which would materially and adversely affect
our financial condition, results of operations and prospects.



Even if our mobile social platforms
are widely adopted by user groups, advertisers may determine not to use us to reach their target audience, which would adversely
affect our financial condition, results of operations and prospects.



Our ability to achieve profitability is
dependent upon the aggregation of significant numbers of users of our mobile social platforms and the attractiveness of the market
they represent to advertisers. Our business model involves our development of mobile social platforms for user groups that we
provide to the groups at no cost in exchange for the right to include advertisements in the content hosted on our platform. If
our new or enhanced products or services fail to engage the targeted social groups, or we fail to attract or retain sufficient
mobile communities to generate sufficient interest with potential advertising customers, we may not generate the revenue or operating
profit to justify our investments, and our business, operating results and prospects could be materially adversely affected. In
the future, we may invest in new products, services and initiatives to generate revenue or profit, but there is no guarantee these
approaches will be successful.



We expect to generate almost all
of our revenue from advertising. The inability to attract advertisers, or a general reduction in spending by advertisers, would
harm our business and prospects.



We expect to generate almost all of our
revenue from third parties advertising on our platforms. As is typical in our industry, we do not expect that we will have long-term
commitments from advertisers, and our advertisers will spend only a relatively small portion of their advertising budget with
us. If our platforms do not deliver ads in an effective manner, advertisers will not do business with us or will not be willing
to pay the rates we anticipate, which would harm our business and prospects. Our ability to generate advertising revenue also
could be adversely affected by numerous other factors, including:



| | · | our inability to attract communities who desire to partner with us;
| | - | -------------------------------------------------------------------



| | · | lower than expected engagement by members of the communities with whom we partner;
| | - | ----------------------------------------------------------------------------------



| | · | our ability to effectively manage advertising inventory for platforms we develop;
| | - | ---------------------------------------------------------------------------------



| | · | the emergence of new competitors in our industry or our inability to effectively compete
    with existing competitors;
| | - | -----------------------------------------------------------------------------------------------------------------------



| | · | adverse legal developments relating to mobile advertising, including legislative and regulatory
    developments and developments in litigation;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



4


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| | · | adverse media reports or other negative publicity involving us, our partners, or other companies
    in our industry;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | · | changes in the way online advertising is priced;
| | - | ------------------------------------------------



| | · | the impact of new technologies that could block or obscure the display of ads we place;
    and
| | - | -----------------------------------------------------------------------------------------------



| | · | the impact of macroeconomic conditions and conditions in the advertising industry generally.
| | - | --------------------------------------------------------------------------------------------



Our legacy operations incurred net
losses since their respective inceptions and we anticipate that we will continue to incur net losses in the future.



Substantially all of our revenue to date
has been derived from the provision of mobile content product and services from businesses we no longer operate and which historically
incurred net losses. We incurred losses of A$21.5 million ($16.0 million) and A$20.3 million, for
the fiscal years ended June 30, 2016 and June 30, 2015, respectively. From our inception in 2004 through June 30, 2015, we have
aggregate accumulated losses of A$80.7 million ($60.0 million). We expect our losses to continue as a result of ongoing project
development, increased selling, marketing and corporate support costs. These losses have decreased our working capital, total
assets and shareholders’ equity. Because of the risks and uncertainties associated with our recent strategic focus on customized
mobile social advertising development and the related commercialization efforts, we are unable to predict whether or not we will
become profitable, and if so, when.



Our independent registered public
accounting firm has taken an emphasis of matter qualification regarding our ability to continue as a going concern.



Our auditors have issued a “going
concern” emphasis of matter qualification regarding their opinion on our June 30, 2016 financial statements, indicating
the existence of a material uncertainty that may cast significant doubt that we can continue as an ongoing business. There
can be no assurance that our current cash reserves and anticipated revenues will be sufficient to enable us to reach a cash-flow
positive position or fully finance our business plan. MOKO is and will, until such time as its profitability is achieved, remain
reliant upon current cash reserves, ongoing funding and may also require additional funding. Such additional funding may not be
available on terms favorable to us, or at all. Our financial statements do not include any adjustments as a result of this uncertainty.
If we cannot continue as a viable entity, our shareholders may lose some or all of their investment in us.



User growth and engagement depend
upon effective interoperation with operating systems, networks, devices, web browsers and standards that we do not control.



We plan to make our products available
across a variety of operating systems and through websites. We will be dependent on the interoperability of our products with
popular devices, mobile operating systems and web browsers that we do not control, such as Mac OS, Windows, Android, iOS, Chrome
and Firefox. Any changes in such systems, devices or web browsers that degrade the functionality of our products and services
or give preferential treatment to competitive products could adversely affect usage of our products. Further, if the number of
platforms for which we develop our product expands, it is likely to result in an increase in our operating expenses. In order
to deliver high quality products, it is important that our products work well with a range of operating systems, networks, devices,
web browsers and standards that we do not control. In addition, because our users access our products and services through mobile
devices, we are particularly dependent on the interoperability of our products and services with mobile devices and operating
systems. We may not be successful in developing relationships with key participants in the mobile industry or in developing products
that operate effectively with these operating systems, networks, devices, web browsers and standards. In the event that it is
difficult for our users to access and use our products and services on their mobile devices, our user growth and engagement could
be harmed, and our business and operating results could be materially adversely affected.



Our failure to maintain the resources
and expertise necessary to keep up with the latest technologies in the industries in which we operate could have a material adverse
effect on our business and results of operations.



The social media industry is characterized
by continuing rapid technological advancement, changes in customer requirements, and evolving product standards. Accordingly,
we devote a substantial amount of resources to product development. To compete successfully, we must develop and market new products
that provide increasingly higher levels of performance and reliability. Product development is highly uncertain and we cannot
guarantee that we will successfully develop new products. Our inability to develop and market these products or to achieve customer
acceptance of these products could limit our ability to compete in the market or to grow revenues at satisfactory rates of growth.



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If the design, manufacturing or marketing
of a product offering is not successful and we must allocate more resources to ensure the product’s success, it could lower
the profitability of the product or affect customer perception as to the quality of the products we offer.



Our business depends on continued
and unimpeded access to our products and services on the Internet by our partner’s users and advertisers. If we or partners
or the users experience disruptions in Internet service or if Internet service providers are able to block, degrade or charge
for access to our products and services, we could incur additional expenses and the possible loss of users and advertisers.



We depend on the ability of our users
and advertisers to access the Internet. Currently, this access is provided by companies that have significant market power in
the Internet access marketplace, including incumbent mobile communications companies, device manufacturers and operating system
providers, any of whom could take actions that degrade, disrupt or increase the cost of user access to our products or services,
which would, in turn, negatively impact our business. The adoption of any laws or regulations that adversely affect the growth,
popularity or use of the Internet, including laws or practices limiting Internet neutrality, could decrease the demand for, or
the usage of, our products and services, increase our cost of doing business and materially adversely affect our operating results.
We also rely on other companies to maintain reliable network systems that provide adequate speed, data capacity and security to
us and our users. As the Internet continues to experience growth in the number of users, frequency of use and amount of data transmitted,
the Internet infrastructure that we and our users rely on may be unable to support the demands placed upon it. The failure of
the Internet infrastructure that we or our users rely on, even for a short period of time, could undermine our operations and
harm our operating results.



Our business strategy contemplates
additional acquisitions and continued integration, and we may fail to identify suitable targets, acquire them on acceptable terms
or successfully integrate them.



We intend to enhance the profitability
of our business by applying our integration strategy to a larger asset base and, towards that end, we need to identify suitable
targets that would fit into our operations, acquire them on acceptable terms and successfully integrate them.



The acquisition and integration of new
companies pose significant risks to our existing operations, including:



| | · | additional demands placed on our senior management, who are also responsible for managing
    our existing operations;
| | - | ----------------------------------------------------------------------------------------------------------------------



| | · | increased overall operating complexity of our business, requiring greater personnel and
    other resources;
| | - | ------------------------------------------------------------------------------------------------------------



| | · | significant, initial cash expenditures to integrate new acquisitions; and
| | - | -------------------------------------------------------------------------



| | · | incurrence of debt to finance acquisitions and higher debt service costs related thereto.
| | - | -----------------------------------------------------------------------------------------



Moreover, despite our conducting the appropriate
pre-acquisition inquiries and due diligence reviews, the successful integration of new businesses may also be difficult for a
variety of reasons, including differing culture or management styles, poor records or internal controls and inability to establish
control over cash flows. Furthermore, even if we are successful in integrating new businesses, expected synergies and cost savings
may not materialize, resulting in lower than expected profit margins. Acquisitions also could include significant goodwill and
intangible assets, which may result in future impairment charges that would reduce our stated earnings.



We rely on computer software and
hardware systems to manage our operations, the failure of which could adversely affect our business, financial condition and results
of operations.



We are dependent upon sophisticated computer
software and hardware systems to support our network and manage and monitor programs on the network and currently rely in large
part on commercial providers for both system capacity and network maintenance. In addition, we rely on this computer hardware
for the storage, delivery and transmission of the data on our network. Any loss of such services or system failure which interrupts
the input, retrieval and transmission of data or increases the service time could disrupt our normal operation. Any failure in
this computer software or the related hardware systems could decrease our revenues and harm our relationships with suppliers and
customers, which in turn could have a material adverse effect on our business, financial condition and results of operations.



Our business is subject to complex and evolving laws,
regulations and self-regulatory principles and frameworks internationally. These laws, regulations and self-regulatory principles
and frameworks are subject to change and uncertain interpretation, and





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could result in claims, changes to our business practices,
monetary penalties, increased cost of operations or declines in user growth, user engagement or ad engagement, or otherwise harm
our business.



We are subject to a variety of laws, regulations
and self-regulatory principles and frameworks in Australia, the United States and other jurisdictions in which we currently or
will operate that involve matters central to our business, including privacy, data security, advertising, rights of publicity,
data protection, content regulation, intellectual property, competition, protection of minors, consumer protection and taxation.



Many of these laws and regulations are
still evolving and being tested in courts and could be interpreted or applied in ways that could harm our business, particularly
in the new and rapidly evolving industry in which we operate. The introduction of new products, services or features may subject
us to additional laws and regulations as well as self-regulatory frameworks, principles and industry guidelines. In addition,
foreign data protection, privacy, consumer protection, content regulation and other laws and regulations of various applicable
jurisdictions are often more restrictive than those in Australia and the United States. In particular, the European Union and
its member states traditionally have taken broader views as to types of data that are subject to privacy and data protection,
and have imposed greater legal obligations on companies in this regard. A number of proposals are pending before federal, state
and foreign legislative and regulatory bodies that could significantly and adversely affect our business. For example, a regulation
relating to the 1995 European Union Data Protection Directive is currently being considered by European legislative bodies that
may affect companies who are not based in Europe but provides services to European citizens, and could include more stringent
operational requirements for entities processing personal information of EU citizens and significant penalties for non-compliance.
Similarly, there have been a number of recent legislative proposals in the United States, at both the federal and state level,
that would impose new obligations in areas such as privacy, online and mobile tracking and geolocation, mobile applications, services
provided to children and liability for copyright infringement by third parties. In particular, the U.S. government, including
the Federal Trade Commission, and the Department of Commerce, has announced that it is reviewing the need for greater regulation
for the collection of information concerning user behavior on the Internet, including regulation aimed at restricting certain
online tracking and targeted advertising practices. Additionally, recent amendments to U.S. patent laws may affect the ability
of companies, including us, to protect their innovations and defend against claims of patent infringement. We currently allow
use of our platform without the collection of extensive personal information. We may expand our collection of personal information,
which may subject us to additional regulation and increase our exposure to security incidents. Further, it is difficult to predict
how existing laws and regulations will be applied to our business and the new laws and regulations to which we may become subject,
and it is possible that they may be interpreted and applied in a manner that is inconsistent with and adverse to our current practices.
These existing and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products
and services, result in negative publicity, significantly increase our operating costs, require significant time and attention
of management and technical personnel and subject us to inquiries or investigations, claims or other remedies, including fines
or demands that we modify or cease existing business practices.



User trust
regarding privacy is important to the growth of users and the increase in user engagement on our partners’ platforms, and
privacy concerns relating to our products and services could damage our reputation and deter current and potential users and advertisers
from using our products.



From time to time, concerns have been
expressed by governments, regulators and others about whether products, services or practices similar to ours compromise the privacy
of users and others. Concerns about governmental or regulatory actions involving our practices or practices in our industry generally
with regard to the collection, use, disclosure or security of personal information or other privacy-related matters, even if unfounded,
could damage our reputation, cause us to lose partners, users and advertisers and materially and adversely affect our operating
results. Any failure or perceived failure by us to comply with data protection laws and regulations or privacy policies may result
in inquiries and other proceedings or actions being threatened or taken against us by governments, regulators or others, as well
as negative publicity and damage to our reputation and brand, each of which could cause us to lose partners, users and advertisers,
which could have a materially adverse effect on our business.



Any systems failure or compromise
of our security that results in the unauthorized access to or release of our users’ or advertisers’ data could significantly
limit the adoption of our products and services, as well as harm our reputation and brand and, therefore, our business. We expect
to continue to expend significant resources to protect against security breaches. The risk that these types of events could seriously
harm our business is likely to increase as we expand the number of products and services we offer, increase the size of our user
base and operate in more countries.



Governments and regulators around the
world are considering a number of legislative and regulatory proposals concerning data protection. In addition, the interpretation
and application of consumer and data protection laws or regulations in Australia, the United States, Europe and elsewhere are
often uncertain and in flux, and in some cases, laws or regulations in one country are inconsistent with, or contrary to, those
of another country. It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent
with our practices. If so, in addition to the possibility of fines, this could result in an order requiring that we change our
practices in the applicable jurisdiction, which could have a material adverse effect on our business and operating results. Complying
with new laws and regulations could cause us to incur substantial costs or require us to change or even terminate our business
practices, at least in the applicable jurisdiction, in a manner materially adverse to our business.



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We are likely to need additional
capital and we may not be able to obtain it at acceptable terms, or at all, which could adversely affect our liquidity and financial
position.



We are likely to need additional cash
resources due to changed business conditions or other future developments. If we need these resources to satisfy our cash requirements,
we may seek to sell additional equity or debt securities or obtain a credit facility. The incurrence of indebtedness would result
in increased debt service obligations and could result in operating and financing covenants that would restrict our operations
and liquidity.



Our ability to obtain additional capital
on acceptable terms is subject to a variety of uncertainties, including:



| | · | investors’ perception of, and demand for, securities of our company and other companies
    which operate in our industries;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | conditions of the U.S. capital and debt markets and other capital and debt markets in which
    we may seek to raise funds;
| | - | ---------------------------------------------------------------------------------------------------------------------------



| | · | our future results of operations, financial condition, cash flow and actual or forecasted
    profitability.
| | - | ------------------------------------------------------------------------------------------------------------



Future issuances of ordinary shares
may cause a dilution in your shareholding or place restrictions on our operations.



If we successfully raise additional capital,
your shareholding may be diluted or we may have significant restrictions placed on our operations. Any capital raised through
issuance of new equity or equity-linked securities may cause a dilution in the percentage ownership of our then existing shareholders
and holders of our ADSs. Our organizational documents do not place any limit on the number of equity securities we may issue.
Alternatively, capital raised by way of additional debt financing may result in restrictions placed on us through such debt financing
arrangements which may:



| | · | limit our ability to pay dividends or require us to seek consents for the payment of dividends;
| | - | -----------------------------------------------------------------------------------------------



| | · | increase our vulnerability to general adverse economic and industry conditions;
| | - | -------------------------------------------------------------------------------



| | · | limit our ability to pursue our business strategies;
| | - | ----------------------------------------------------



| | · | require us to dedicate a substantial portion of our cash flow from operations to service
    our debt, thereby reducing the availability of our cash flow to fund capital expenditure, working capital requirements and
    other general corporate purposes; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | limit our flexibility in planning for, or reacting to, changes in our business and our industry.
| | - | ------------------------------------------------------------------------------------------------



In addition, we may issue additional ordinary
shares for future acquisitions. If we pay for our future acquisitions in whole or in part with additionally issued ordinary shares,
your ownership interests in our company would be diluted and this in turn could have a material adverse effect on the price of
the ordinary shares or our ADSs.



We may become subject to intellectual
property rights claims that are expensive and time consuming to defend, and, if resolved adversely, could have a materially adverse
impact on our business, financial condition or operating results.



Companies operating in the Internet, technology
and media industries typically own large numbers of patents, copyrights, trademarks and trade secrets, and frequently enter into
litigation based on allegations of infringement, misappropriation or other violations of those patents and other intellectual
property rights. Many companies in these industries, including many of our competitors, have substantially larger patent and intellectual
property portfolios than we do, which could make us a target for litigation as we may not be able to assert counterclaims against
parties that sue us for patent, or other intellectual property infringement. We do not currently have any registered patents or
trademarks and rely on a combination of license agreements, copyright, trade secrecy laws and confidentiality agreements to protect
our intellectual property. In addition, various “non-practicing entities” that own patents and other intellectual
property rights often attempt to aggressively assert claims in order to extract value from technology companies. Further, from
time to time we may introduce new products and services, including in areas where we currently do not have an offering, which
could increase our exposure to patent and other intellectual property claims from competitors and non-practicing entities.



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In addition, although our standard terms
and conditions for our products do not provide advertisers and platform partners with indemnification for intellectual property
claims against them, some of our agreements with advertisers, platform partners and data partners require us to indemnify them
for certain intellectual property claims against them, which could require us to incur considerable costs in defending such claims,
and may require us to pay significant damages in the event of an adverse ruling. Such advertisers, platform partners and data
partners may also discontinue use of our products, services and technologies as a result of injunctions or otherwise, which could
result in loss of revenue and materially adversely impact our business.



While we are not currently the subject
of any threatened or actual patent and other intellectual property claims, as we face increasing competition and increase our
profile, the number of such claims against us may grow. There may be intellectual property or other rights held by others, including
issued or pending patents, that cover significant aspects of our products and services, and we cannot be sure that we are not
infringing or violating, and have not infringed or violated, any third-party intellectual property rights or that we will not
be held to have done so or be accused of doing so in the future. Any claim or litigation alleging that we have infringed or otherwise
violated intellectual property or other rights of third parties, with or without merit, and whether or not settled out of court
or determined in our favor, could be time-consuming and costly to address and resolve, and could divert the time and attention
of our management and technical personnel. Some of our competitors have substantially greater resources than we do and are able
to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could.
The outcome of any litigation is inherently uncertain, and there can be no assurances that favorable final outcomes will be obtained
in all cases. In addition, plaintiffs may seek, and we may become subject to, preliminary or provisional rulings in the course
of any such litigation, including potential preliminary injunctions requiring us to cease some or all of our operations. We may
decide to settle such lawsuits and disputes on terms that are unfavorable to us. Similarly, if any litigation to which we are
a party is resolved adversely, we may be subject to an unfavorable judgment that may not be reversed upon appeal. The terms of
such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party
or both. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights.
If we are required, or choose to enter into royalty or licensing arrangements, such arrangements may not be available on reasonable
terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop
or procure alternative non-infringing technology or discontinue use of the applicable technology. The development or procurement
of alternative non-infringing technology could require significant effort and expense or may not be feasible. An unfavorable resolution
of the disputes and litigation referred to above could adversely affect our business, financial condition, and operating results.



Our products contain, and we expect
our future products will contain, open source software, and we license some of our software through open source projects, which
may pose particular risks to our proprietary software, products, and services in a manner that could have a material adverse effect
on our business.



We use open source software in our products
and will use open source software in the future. In addition, we regularly release internal software projects under open source
licenses and we anticipate continuing to do so. In the future we may also contribute software source code to open source projects
under open source licenses. The terms of many open source licenses to which we are subject have not, as far as we are aware, been
interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that
imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally,
we may from time to time face claims from third parties claiming ownership of, or demanding release of, the open source software
or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking
to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make
our software source code freely available, purchase a costly license or cease offering the implicated products or services unless
and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research
and development resources, and we may not be able to complete it successfully. In addition to risks related to license requirements,
use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors
generally do not provide warranties or controls on the origin of software. Additionally, because any software source code we contribute
to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software
source code may be limited or lost entirely, and we are unable to prevent our competitors or others from using such contributed
software source code. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative
effect on our business, financial condition and operating results.



The loss of key management personnel could negatively
affect our business.



Our future success is dependent in large
part on our ability to retain highly qualified managerial and other key personnel. In particular we depend on our Chief Executive
Officer, Shripal Shah. The loss of Mr. Shah or any other key personnel we might hire could have an adverse effect
on our business, results of operations and financial condition.



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Risks Related to the Company



For as long as we are an “emerging
growth company,” we will not be required to comply with certain reporting requirements that apply to other public companies.



We are an “emerging growth company,”
as defined in the JOBS Act, enacted on April 5, 2012. For as long as we continue to be an emerging growth company, we may choose
to take advantage of certain exemptions from reporting requirements applicable to other public companies that are not emerging
growth companies. These include: (1) not being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), (2) not being required to comply with any new requirements
adopted by the Public Company Accounting Oversight Board (the “PCAOB”), requiring mandatory audit firm rotation or
a supplement to the auditor’s report in which the auditor would be required to provide additional information about the
audit and the financial statements of the issuer, (3) not being required to comply with any new audit rules adopted by the PCAOB
after April 5, 2012 unless the SEC determines otherwise, and (4) not being required to provide certain disclosure regarding executive
compensation required of larger public companies. We could be an emerging growth company until June 30, 2019, although if the
market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of any completed
second fiscal quarter, we issue $1 billion in non-convertible debt securities or our revenues exceed $1 billion at any time before
the end of that five- year period, we would cease to be an emerging growth company as of the following June 30. We cannot predict
if investors will find our ordinary shares or ADSs less attractive if we choose to rely on these exemptions. If some investors
find our ordinary shares or ADSs less attractive as a result of any choices to reduce future disclosure, there may be a less active
trading market for our ordinary shares or ADSs and the market price may be more volatile. Further, as a result of these scaled
regulatory requirements, our disclosure may be more limited than that of other public companies and you may not have the same
protections afforded to shareholders of such companies.



We are a foreign private issuer
and, as a result, we are not subject to U.S. proxy rules and are subject to the Exchange Act reporting obligations that,
to some extent, are more lenient and less frequent than those applicable to a U.S. issuer.



We report under the Exchange Act as a
foreign private issuer. Because we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain
provisions of the Exchange Act that are applicable to U.S. public companies, including (i) the sections of the Exchange Act regulating
the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections
of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for
insiders who profit from trades made in a short period of time, and (iii) the rules under the Exchange Act requiring the filing
with the Commission of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current
reports on Form 8-K, upon the occurrence of specified significant events. We intend to furnish quarterly reports to the Commission
on Form 6-K for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Exchange Act, although
the information we furnish may not be the same as the information that is required in quarterly reports on Form 10-Q for U.S.
domestic issuers. In addition, while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required
to file their annual reports on Form 10-K within 90 days after the end of each fiscal year, foreign private issuers are not required
to file their annual report on Form 20-F until 120 days after the end of each fiscal year. Foreign private issuers are also exempt
from the Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. Although
we intend to make interim reports available to our shareholders in a timely manner, you may not have the same protections afforded
to shareholders of companies that are not foreign private issuers.



As a foreign private issuer, we
are permitted to, and intend to, follow certain home country corporate governance practices in lieu of certain U.S. stock exchange
listing requirements applicable to U.S. issuers. This may afford less protection to holders of our ordinary shares.



As a foreign private issuer, we are permitted
to follow certain home country corporate governance practices in lieu of certain requirements of the major U.S. stock exchanges.
A foreign private issuer must disclose in its annual reports filed with the Commission, each such requirement with which it does
not comply followed by a description of its applicable home country practice. As a company incorporated in Australia and listed
on the ASX, we expect to follow ASX Listing Rules and Australian corporations law and practice with respect to executive sessions
of the independent members of our board of directors. Unlike the requirements of most U.S. stock exchanges, the corporate governance
practice and requirements in Australia do not require us to hold regular executive sessions where only independent directors shall
be present. We may also seek exemption from any quorum requirements applicable to meetings of shareholders and from the rules
obligating issuers to obtain shareholder approval prior to the issuance of securities in connection with certain acquisitions,
private placements of securities the establishment or amendment of certain stock option, purchase or other compensation plans,
as we intend to follow applicable Australian law and the ASX Listing Rules in these matters. Such Australian home country practices
may afford less protection to holders of our ordinary shares.



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We may be subject to arbitrage risks.



Investors may seek to profit by exploiting
the difference, if any, between the price of our ordinary shares on the ASX and the price of our ADSs on the OTC Pink. Such arbitrage
activities could cause our share price in the market with the higher value to decrease to the price set by the market with the
lower value and could also in certain circumstances affect the volatility in the price of our ordinary shares and our ADSs.



There is a risk that we may be classified
as a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences
to U.S. investors.



In general, we will be treated as a PFIC
for any taxable year in which either (1) at least 75% of our gross income (including our pro rata share of the gross income of
our 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50% of the average value of our assets (including
our pro rata share of the assets of our 25% or more-owned corporate subsidiaries) is attributable to assets that produce, or are
held for the production of, passive income. Passive income generally includes dividends, interest, rents, royalties, and gains
from the disposition of passive assets. If we are determined to be a PFIC for any taxable year (or portion thereof) that is included
in the holding period of a U.S. Holder (as defined in the section titled “Taxation — U.S. Federal Income Taxation
— General”) of our ADSs or ordinary shares, the U.S. Holder may be subject to increased U.S. federal income tax liability
upon a sale or other disposition of our ADSs or ordinary shares or the receipt of certain excess distributions from us and may
be subject to additional reporting requirements. Based on the composition (and estimated values) of the assets and the nature
of the income of us and our subsidiaries for our taxable year ended June 30, 2016, we do not believe that we will be treated
as a PFIC for such taxable year. However, because we have not performed a definitive analysis as to our PFIC status for our 2016
fiscal year, there can be no assurance with respect to our status as a PFIC for such taxable year. U.S. Holders are urged to consult
their own tax advisors regarding the possible application of the PFIC rules. For more information, see “Taxation —
U.S. Federal Income Taxation — U.S. Holders — Passive Foreign Investment Company Rules.”



If we are unable to establish appropriate
internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations, result in the
restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction, cause investors
to lose confidence in our reported financial information and have a negative effect on the market price of our ADSs.



Effective internal controls are necessary
for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control over financial
reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal
financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles.



As a public company in the U.S., we are
subject to significant additional requirements for enhanced financial reporting and internal controls. We are required to document
and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002,
which requires annual management assessments of the effectiveness of our internal controls over financial reporting starting with
this annual report on Form 20-F. In addition, an independent registered public accounting firm will be required to attest to the
effectiveness of our internal control over financial reporting beginning with our annual report on Form 20-F following the date
on which we cease to qualify as an emerging growth company if we become an accelerated filer or large accelerated filer. The process
of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes
in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal
controls that is adequate to satisfy our reporting obligations as a public company.



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We cannot assure you that we will not,
in the future, identify areas requiring improvement in our internal control over financial reporting. We cannot assure you that
the measures we will take to remediate any areas in need of improvement will be successful or that we will implement and maintain
adequate controls over our financial processes and reporting in the future as we continue our growth. If we are unable to establish
appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations,
result in the restatement of our financial statements, harm our operating results, subject us to regulatory scrutiny and sanction,
cause investors to lose confidence in our reported financial information and have a material adverse effect on the market price
of the ordinary shares and ADSs.



Lack of experience as officers of
U.S. publicly-traded companies of our management team may hinder our ability to comply with the Sarbanes-Oxley Act.



It may be time-consuming, difficult and
costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may
need to hire additional financial reporting, internal controls and other finance staff or consultants in order to develop and
implement appropriate internal controls and reporting procedures. If we are unable to comply with the Sarbanes-Oxley Act’s
internal controls requirements, we may not be able to obtain the independent auditor certifications that the Sarbanes-Oxley Act
requires publicly-traded companies to obtain to the extent applicable to us.



Risks Related to our Securities



The market price of our ordinary shares and our ADSs
could be subject to volatility.



The market price of our ordinary shares
and our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors such as:



| | · | variations in our actual and perceived operating results;
| | - | ---------------------------------------------------------



| | · | announcements of new products or services by us or our competitors;
| | - | -------------------------------------------------------------------



| | · | technological breakthroughs by us or our competitors;
| | - | -----------------------------------------------------



| | · | news regarding gains or losses of customers or partners by us or our competitors;
| | - | ---------------------------------------------------------------------------------



| | · | news regarding gains or losses of key personnel by us or our competitors;
| | - | -------------------------------------------------------------------------



| | · | announcements of competitive developments, acquisitions or strategic alliances in our industry
    by us or our competitors;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | · | changes in earnings estimates or buy/sell recommendations by financial analysts;
| | - | --------------------------------------------------------------------------------



| | · | potential litigation;
| | - | ---------------------



| | · | general market conditions or other developments affecting us or our industry; and
| | - | ---------------------------------------------------------------------------------



| | · | the operating and stock price performance of other companies, other industries and other
    events or factors beyond our control.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



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In addition, the securities markets have
from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular
companies. These market fluctuations may also materially and adversely affect the market price of the ordinary shares and our
ADSs.



We may not be able to pay any dividends on our ordinary
shares and, correspondingly, our ADSs.



Under Australian law, we may only pay
dividends subject to our ability to service our debts as they become due and provided that our assets will exceed our liabilities
after the dividend. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits.



We can give no assurance that we will
declare dividends of any amounts, at any rate or at all in the future. Our historical dividend payments are not indicative of
the amount or timing of the payment of dividends that may be payable in the future and should not be used as a reference or basis
to determine the amount of such dividends. The declaration of future dividends, if any, will be at the discretion of our board
of directors and will depend upon our future operations and earnings, capital requirements, general financial conditions, legal
and contractual restrictions and other factors that our board of directors may deem relevant.



Risks Relating 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.



We are incorporated in Australia and are
subject to the takeovers laws of Australia. Among other things, we are subject to the Australian Corporations Act 2001 (the “Corporations
Act”). Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest
in our issued voting shares if the acquisition of that interest will lead to a person’s aggregate voting power in us 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 of directors 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.
See Item 10.B. and “Description of Shares and Governing Documents” incorporated by reference therein.



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



As an Australian incorporated 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 particular to us as an Australian company.
These requirements operate differently than from the equivalent legislation that is applicable to many U.S. incorporated companies
and may limit or otherwise adversely affect our ability to take actions that could be beneficial to our shareholders. You should
carefully review the summary of these matters set forth under the Item 10.B. and ‘Description of Shares and Governing Documents’
incorporated by reference therein, as well as our Constitution, which is included as an exhibit to this Annual Report, prior to
investing in our ordinary shares.



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You will have limited ability to
bring an action against us or against our directors and officers, or to enforce a judgment against us or them, because we are
incorporated in Australia, and the majority of our directors and officers reside outside the United States.



We are incorporated in Australia and certain
of our directors and officers reside outside the United States and substantially all of the assets of those persons are located
outside the United States. As a result, it may be impracticable or at least more expensive for you to bring an action against
us or against these individuals in Australia in the event that you believe that your rights have been infringed under the applicable
securities laws or otherwise. For more information regarding the relevant laws of Australia, see “Enforceability of Civil
Liabilities.”



You may not have the same voting
rights as the holders of our ordinary shares and must act through the depositary to exercise your rights.



Except as described in the deposit agreement
related to our ADSs (the “Deposit Agreement”), holders of our ADSs will not be able to exercise voting rights attaching
to the shares represented by our ADSs on an individual basis. Holders of our ADSs are entitled to instruct the depositary how
to exercise the voting rights attaching to the ordinary shares represented by our ADSs. You may not receive voting materials in
time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers
or other third parties, will not have the opportunity to exercise a right to vote. Upon our written request, the depositary will
mail to you a shareholder meeting notice which contains, among other things, a statement as to the manner in which your voting
instructions may be given, including an express indication that such instructions may be given or deemed given to the depositary
to give a discretionary proxy to a person designated by us if no instructions are received by the depositary from you on or before
the response date established by the depositary. However, no voting instruction shall be deemed given and no such discretionary
proxy shall be given with respect to any matter as to which we inform the depositary that (i) we do not wish such proxy given,
(ii) substantial opposition exists, or (iii) such matter materially and adversely affects the rights of shareholders. We will
make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but you may not receive
the voting materials in time to ensure that you can instruct the depositary to vote. Furthermore, the depositary and its agents
will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for
the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if the
ordinary shares are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call,
attend or speak at a shareholders’ meeting.



You may not be able to participate
in rights offerings and may experience dilution of your holdings as a result.



We may from time to time distribute rights
to our shareholders, including rights to acquire our securities. However, we may not, and under the Deposit Agreement for our
ADSs, the depositary will not, offer those rights to ADS holders unless both the rights and the underlying securities to be distributed
to ADS holders are registered under the Securities Act, or the distribution of them to ADS holders is exempted from registration
under the Securities Act with respect to all holders of ADSs. We are under no obligation to file a registration statement with
respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective.
In addition, we may not be able to rely on an exemption from registration under the Securities Act to distribute such rights and
securities. Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution
in their holdings as a result.



You may be subject to limitations
on transfer of our ADSs.



Our ADSs are transferable on the books
of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient
in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers
of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deem it advisable
to do so because of any requirement of law or of any government or governmental body, or under any provision of the Deposit Agreement,
or for any other reason.



Your ability to protect your rights
as shareholders through the U.S. federal courts may be limited because we are incorporated under Australian law.



Australian companies may not have standing
to initiate a derivative action in a federal court of the United States. As a result, your ability to protect your interests if
you are harmed in a manner that would otherwise enable you to sue in a United States federal court may be limited.



Anti-takeover provisions in our
Constitution and our right to issue preference shares could make a third-party acquisition of us difficult.



Some provisions of
our Constitution may discourage, delay or prevent a change in control of our company or management that shareholders may consider
favorable, including provisions that require one-third of our board of directors to be elected annually and authorize our board
of directors to issue an unlimited number of shares of capital stock and preference shares in one or more series and to designate
the price, rights, preferences, privileges and restrictions of such preference shares by amending the Constitution.



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ITEM 4. INFORMATION ON THE COMPANY



A.  History and Development of the Company.



Corporate History and Operating Segment Evolution



We began as a company engaged in the development
of proprietary mobile social community platforms and mobile content sales, delivering proprietary mobile social services and content
to users within Australia, the United Kingdom, the Philippines, and Malaysia. Monetization historically occurred via user subscription
models connecting MOKO’s billing platform with the billing capabilities of our telephony or billing aggregator partners.
This monetization and revenue stream is what MOKO identifies as the Social operating segment. The Social operating segment forms
part of continuing operations in the historical financial statements although its significance has diminished measurably in the
reported periods such that its continuing business operations are insignificant to MOKO’s forward intentions.



Our current business model is to develop,
manage, and commercialize online mobile social communities for high schools and college student athletics that need to
share content and interact efficiently with their members. We plan to monetize these platforms with premium and targeted mobile
advertising. Our perception is that our highly tailored mobile community applications differentiate MOKO from other generic mobile
applications that do not offer such customized products.



From the fourth quarter of fiscal 2013,
MOKO has been actively de-emphasizing and divesting non-core businesses and assets that do not fit within the revised strategy
of monetizing its mobile communities within the U.S. See “Operating and Financial Review and Prospects.”



Corporate Offices



Our principal executive offices are located
at 2221 S. Clark St. Suite 1208, Arlington, VA 22202. Our registered office is Suite 5, 442-446 Beaufort Street, Highgate,
Western Australia, 6003, Australia. Our phone number is Telephone +61 (08) 9227 7100.



B.  Business Overview



Overview



MOKO began as a company engaged in the
development of proprietary mobile social community platforms and mobile content sales in Australia in 2004. During the following
eight years, we expanded beyond Australia to the United Kingdom, United States and parts of South-East Asia, leveraging our platform’s
proprietary network architecture with a range of capabilities, including Customer Relationship Management (CRM), Data Mining,
Moderation (censorship), Billing, Advertising Placement, Performance Monitoring, and Content Management. We believe that our current
platform, which was built both through in-house development and by means of acquisition and integration of complementary intellectual
property, represents technology that is potentially applicable to numerous social communities while being scalable within those
communities.



In 2012, we made a strategic shift away
from accessing a user base via third parties (involving revenue sharing agreements and other factors that rendered our business
model unprofitable) to providing customized mobile social community platforms to large organized groups that need to share content
and to interact efficiently with their members on a regular basis. These customized mobile platform solutions are developed entirely
by us and then distributed at no charge to these groups and their members, in return for certain exclusive access and for advertising
rights. We plan to commercialize these products with premium targeted mobile advertising, ecommerce and paid subscriptions.



We believe that we are different from traditional
online social media because we build highly tailored mobile community applications that generic social networks generally do not.
Our technology platform has been designed to enable a high degree of flexibility, permitting us to design and build customized
applications.



We have entered into contractual relationships
to serve a number of social communities, including those of U.S. university intramural sports participants and U.S. high school
students. MOKO is at a turning point as we move from our first stage of establishing a critical mass of users and gaining product
acceptance within a targeted group. Our current stage has us extending the product range to include paid apps to help us entrench
our products at colleges with the goal of getting them “mandated” by administrators on campus. We are also making
a strong push towards monetization with a focus on revenue generation while we continue to reduce our monthly burn and operating
costs.



In the past year we have
evolved from a single app targeting college students into a suite of complimentary mobile products “REC*IT Mobile
Suite”. This features REC*IT the official mobile app for students who play intramural sports across over 1250 colleges,
REC*IT Fitness the official mobile app for student who participate in group fitness classes across over 150 colleges, and
REC*IT Plus our first paid product which is a custom white label product catered to a single university recreational sports
program. We also continue to maintain and expand upon our BigTeams powered by REC*IT app for high school student athletes,
coaches and parents.



Thus the REC*IT Suite of Mobile Products
now consists of the following:



REC*IT.REC*IT is a mobile application
we designed as a student tool for U.S. colleges and universities. REC*IT represents our most mature application, having been launched
in August 2014 in time for the 2014/2015 academic year. In October 2013, we entered an exclusive three-year agreement (with the
possibility of extension) with IM Leagues (“IML”) which operates the imleagues.com sports website used by recreational
and intramural sports departments. Today, more than 1250 colleges and universities across the U.S. use the IML sports software
for intramural sports, group fitness and club sports by university recreational departments. Pursuant to this agreement,
we have secured the exclusive mobile rights to IML’s data, including student and team schedules, fixtures, standings, statistics
and news feeds for the purposes of populating the REC*IT App. The significance of the exclusive mobile rights to IML’s information
relating to intramural activities on the campuses covered by IML is that REC*IT will be the only mobile App that will provide
students with this information. In January 2015, we entered into an amended agreement with IML. This amended agreement automatically
renews for an unlimited number of additional one year terms until we elect to terminate with the effect of providing us with exclusive
rights in perpetuity, subject to us meeting the conditions of advance payments and standard operational responsibilities. The
amended agreement also changes the commercial terms from a flat license fee to a minimum guarantee against a 10% revenue share
on the net revenues from REC*IT. In August 2016, we signed a second amendment, which spread out the payments due to IMLeagues
from September 2016 to April 2017 to assist MOKO with our monthly cashflow and burn.



The REC*IT mobile application has been
expanded from initially developed for students interested in intramural sports, fitness, and other leisure activities on
campus to now also includes features tailored to administrators and directors of the individual college recreational centers.
The goal is to provide enough features and functionality to the administrators so that they may start “mandating”
or requiring that students download REC*IT to participate in their programs similar to what is being done with our partners IML.
However we have continued to service the students and provided a variety of social features and tools, such as the ability
to check team activities, schedules, player standings, scores and individual performances.



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As of October 2016, REC*IT reaches more
than 1250 US colleges, providing potential access to more than 7 million university students who go through their
campus recreation centers (‘gyms’) each semester. This confirms REC*IT’s position as the mobile app leader
in college sports and recreational activities. For the period from August 1 to October 27, 2016, REC*IT had been “first
launched” just over 221,000 times, a 20% increase over the same period of 2015.



In the past six months Moko has
launched a series of updates to REC*IT, to provides a number of improvements for both the students
and administrators:



• Game Cancellations



• Remove Players From Roster



• Full School Message Center Blasts



• Statistics Implementation



• On The Fly Player Check-In



• League Payments



• Playoff Schedule



• Upload Videos



• Sportsmanship Ratings



• Scores and Marks implementation



• Game Cancellations



• Magic Button Single Sign On Login



• Additional features and functionality are
being developed to enable administrators to more efficiently manage their programs with features such as offline scoring and playoff
tournament management are currently in development. These are key features towards our goal of getting to our admin “mandate”
or our mobile apps on campus.



• Access to in-app discovery of teams, events
and activities, including what’s on at users’ campus gym.



BigTeams powered by REC*IT.In April
2015, we announced an exclusive agreement with U.S. group BigTeams, under which we will expand into the U.S. high school market.
The deal will enable us to launch a version of our REC*IT app to students and their parents in more than 4,000 U.S. high schools.
BigTeams provides these schools with online tools and data for sports team administration, event management and fundraising and
will provide the data for the new REC*IT app.



The BigTeams Powered by REC*IT app
has achieved over 18,000 downloads since its release in December 2015. The initial usage statistics of the app prove it to be
an informative utility for users with over 6.4 million page views already, indicating deep usage by those who have the
product installed.



Our development team is working closely
with the BigTeams tech team to build interactive functionality within the app. Initial features we are looking to incorporate
include login/registration, uploading photos, exploring photo galleries, and capturing video in-app. We believe the inclusion
of content creation is essential to the long-term success of the product and we are targeting a late summer rollout of these features.



Under the agreement, we have acquired an
effective 10% interest in BigTeams for $1 million.



REC*IT Fitnesss. REC*IT
Fitness, Leverages the REC*IT platform to help college recreation directors and students organize, browse and share on-campus
personal fitness classes and activities. It is a free app which caters to the management of group fitness classes at the college
recreational centers across over 150 colleges in the US who use IML software to manage their fitness programs. Group Fitness classes
tend to be more female dominated vs. intramural sports being more male dominated in enrollment, thus this product is meant to
bring balance into our user group.



The REC*IT FITNESS app had over 35,000
unique first launches since its launch in late Q4 of 2015. Over 150 colleges and universities use IML software to manage the scheduling
and registration for their fitness programs, and are currently promoting or developing a process for promoting the app to their
students.



In the last six (6) months we have added
the following features to the initial version of the REC*IT Fitness app based on user feedback:



• Update Profile In App



• Optimized Sign In Flow



• Waitlist



• Waitlist Notifications



• Class Instructions



• Join Class Sessions



• Participations Tips



• Rec Center Opening Hours



• Magic Button Single Sign On Login



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We are prioritizing upcoming app features
based on feedback from users and administrators. These features include sending messages directly to students, additional push
notifications, checking in students to classes, among others. We have also developed an in-app process to drive REC*IT users to
download the REC*IT FITNESS app when searching or registering for campus group fitness classes in REC*IT. This deep linking solution
will allow for a more streamlined user experience and more downloads of the REC*IT FITNESS product are expected.



REC*IT Plus. REC*IT Plus, a “white
label” subscription product targeted at recreation center administrators, to help them manage recreational facilities and
programs.



The features of REC*IT Plus will include



• Functionality to manage any recreation
center activity or service



• Complete customization with individual
school colors and logos



• Searchability within app stores
by university and/or recreation center name



• Ability for administrators to
communicate seamlessly and in real-time with all recreation center users



• Direct links to REC*IT and REC*IT
Fitness



As part of a shift towards a mix of
free and paid products for the colleges, REC*IT Plus will be a paid product. A beta version will be ready for the start of the
new college year with a number of colleges already expressing strong interest in the product. We currently have a handful of colleges
who have signed contracts to be part of our “beta” period. The colleges are given discounted pricing in return for
insight, feedback and testing of the new features as they are rolled out. We plan to officially launch this product at the annual
NIRSA Conference in 2016 where the majority of college recreational directors gather each year to allow us to begin adding new
paid clients for the 2017-2018 semester.



Pricing will be between $500-$2500 annually
based on the user/student size at each college. The annual subscription price is being subsidized by a revenue share agreement,
which is built into each contract. This will allow MOKO to be able to sell targeted mobile advertisements into the official rec
sports mobile applications for individual colleges and universities in the US. We believe that since these apps will be the official
apps promoted by the colleges themselves, the CPM or CPA ad rates that MOKO will be able to charge advertisers will be at a premium
compared to REC*IT. We also plan to introduce a “REC*IT Premium” product which will be a higher-end paid product that
we hope to upsell the REC*IT Plus customers into. It will be a more robust custom white-label app which unifies the functionality
between REC*IT, REC*IT Fitness and REC*IT Plus.



Industry Background and Market Opportunity



The college and high school markets
present a significant opportunity for MOKO. The US college market has an annual discretionary spend of US$163 billion
and the US high school market US$91.1 billion.



MOKO’s exclusive agreement
with IMLeagues gives it access to more than 10 million students at 1,250 colleges, reaching more than 50% of the US college
student population. Typically, more than 70% of a college’s student population visits the recreation center building
every week and 75% of all college students participate in recreation center sponsored and organized activities. MOKO’s
exclusive agreement with Big Teams gives it access to over 3,400 of the 26,957 public and private high schools in the US or
13% of the high school population.



Mobile digital advertising is a large and
growing industry. The industry is predicated on a very simple value proposition: mobile advertising pays for the development and
implementation of tools and games that mobile device users desire, while providing advertisers access to potential customers.



Because different tools and games (applications
or “apps”) may be used by populations with distinct demographic characteristics, advertisers or their agents can broadly
direct their message to the people they hope to reach, essentially in the same manner that, for example, a manufacturer of cutlery
may choose to advertise in a cooking magazine. The unprecedented level of direct consumer access now available through
mobile devices is transitioning traditional advertising dollars, including print, radio, and TV, to the mobile channel. According
to emarketer.com, total mobile advertising spend in the U.S. alone is expected to reach $40 billion in 2016 and projected
to be over $49 billion in 2017. Several factors are expected to contribute to this growth, including the following:



| | · | There has been a dramatic increase in the number and functionality of mobile devices.Increased functionality, efficiency, and economic feasibility continue to drive user adoption of connected mobile devices.
    Smartphones and tablets, in particular, offer users perpetual Internet access and greatly influence the way users consume
    media.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Users spend an increasing portion of their time on mobile platforms at the expense of
    time spent on traditional personal computer, print, radio, and TV-based channels, which will likely lead to an increase in
    the mobile advertising spend.Digital content is becoming increasingly accessible via mobile devices. Entertainment, e-commerce,
    and personal finance, among other activities, are all available at a click of a button. According to eMarketer, in 2016,
    users spent 3 hours and 15 minutes per day using apps via their mobile. We believe that continued adoption of smart
    devices, coupled with increasing accessibility of mobile data and time spent on mobile devices, will lead to overall growth and more evenly distributed advertising expenditures.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | · | There has been a general increase both in the number of applications for mobile devices
and in the number of developers of such applications.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



Some electronic platforms such as Facebook
have positioned themselves as tools for social communities, in most cases by providing a service that organizes and defines a
previously diverse and unorganized array of community relationships. However, many social communities exist that are already tightly
defined and have needs that are not adequately met by current mobile platforms. Such predefined social communities represent the
target audience for us and our custom mobile applications.



These existing social communities have
certain recognizable characteristics, which include the following:



| | · | The community possesses essential information that all members of the group need, which
    often, but not always, is disseminated from a central node;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Typically, the group currently uses web-based systems that are not designed to be portable
    and thus are inconvenient to use on mobile devices;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Group members are united by an interest in a particular activity or pursuit, for example, a sporting activity, and thus naturally represent a definable demographic audience for advertisers;
    and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Group members likely would value enhanced social features, such as chatting, peer-to-peer
    and member-to-group postings, which are not provided by current web-based systems and could be included in a mobile app.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Strategy



Our strategy is to be identified as a community
builder through providing mobile community platforms catered to high school and college verticals targeting groups within those
verticals that need to share content and interact efficiently with their users on a regular basis. We then plan to
commercialize these platforms with premium targeted mobile advertising.



Our monetization strategy is to maximize
the value of its asset – its exclusive market reach to advertisers and brand marketers based on the following key criteria:



| | · | Using free products to build a substantial user base in a clearly defined market
| | - | --------------------------------------------------------------------------------



| | · | Creating supplementary paid subscription products that generate revenue and result in
    mandated use
| | - | ------------------------------------------------------------------------------------------------------



| | · | Leveraging off these products to provide multilayered marketing campaigns to to advertisers
    and brand marketers
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | Launching an integrated ecommerce storefront within our suite mobile products with either
    a leading online retailer as a partner or for us to build and manage ourselves.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Revenue sharing with the colleges/universities to entrench products and boost value
| | - | -----------------------------------------------------------------------------------



| | · | Integrating mobile payments into all the mobile products to become a payment processor
    between students & the college/universities
| | - | --------------------------------------------------------------------------------------------------------------------------------------



MOKO plans to generates revenue from
advertisers and brand marketers by integrating their marketing into MOKO products, through:



| | o | Sponsorship
| | - | -----------



| | o | Rewards
| | - | -------



| | o | Social Engagement
| | - | -----------------



| | · | Students can earn points for engaging with sponsor on social media
| | - | ------------------------------------------------------------------



| | o | Data Capture
| | - | ------------



| | · | Acquisition of email/SMS data for a sponsor’s targeted audience
| | - | ---------------------------------------------------------------



| | o | Advertisements
| | - | --------------



| | · | Native/Premium mobile ad units
| | - | ------------------------------



| | · | Retargeting of students on third-party websites or social media platforms for sponsored campaign
| | - | ------------------------------------------------------------------------------------------------



| | o | Ecommerce
| | - | ---------



| | o | Mobile Payment
| | - | --------------



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| | o | A recent example of a paid advertising relationship with a brand:
| | - | -----------------------------------------------------------------



| | · | July 2016 - first integrated marketing partnership with – a major global franchise restaurant group:
| | - | ----------------------------------------------------------------------------------------------------



| | · | Paid marketing campaign drove awareness and purchase of the group’s products and included in-app promotions
and discounts as well as on-site events at select colleges
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | REC*IT’s in-app click-through rate was four times higher than campaigns conducted through other similar
digital media platforms
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | MOKO is currently in direct talks with brands across categories including athletic apparel, consumer packaged
goods, isotonic drinks, entertainment and insurance
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Finalizing the contract for a renewal of the integrated marketing sponsorship for Q4 of calendar 2016 and
Q1 of 2017. Many of the marketing elements are live with this brand with the understanding that the contract will be signed imminently.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We do not have any plans in the near
future to expand our products beyond the high school and college markets. However if we were to expand the product set in the
current high school and college verticals but beyond high school or college student athletics or rec sports we would not expand
our product set to a new audience or partner unless we can confirm that we can satisfy several key criteria:



| | · | Target partners must possess a large membership or user-base that has coalesced around a
    specific suite of information or content;
| | - | --------------------------------------------------------------------------------------------------------------------------------------



| | · | Information or content is needed by members of the group for participation in the group,
    which motivates them to access this information or content frequently;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Ideally the information or content is not available elsewhere;
| | - | --------------------------------------------------------------



| | · | Members of the group want or need to share this information or to interact with other members
    of the peer group; and
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | There is a parent body or central administrator that we can engage to define the organization’s
    needs and to enter into contractual relationships giving us exclusivity with respect to mobile applications within the community.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Once these factors have been reviewed and
deemed to satisfy the core criteria, we must also be in a position to secure exclusivity to access the content and the right to
advertise to the membership via our mobile app. We refer to our activities centered on the identification, engagement, and partnering
of a social organization as business development, and we have a dedicated team focused on such activities. The executive management
team, in concert with representatives of the social group, will assess the specific needs of the organization and will outline
the minimal specifications of the bespoke app required. The following points summarize the structure of the app that we would
then develop:



| | · | A high degree of customization to suit the needs of the partner and its audience/membership;
| | - | --------------------------------------------------------------------------------------------



| | · | Integration of social features and tools;
| | - | -----------------------------------------



| | · | Potential to be repurposed in whole or part to other sub-groups; and
| | - | --------------------------------------------------------------------



| | · | Capability to be wrapped in custom “skin” when the partner’s social group
    represents a constellation of component subgroups, such as different universities within a multi-university consortium.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



After the specifications of an app are
defined, our technical and product development team creates the app using our proprietary network architecture to facilitate development.
After building a critical audience mass, our sales team can then monetize the new customized mobile app via a blend of mobile
advertising models, including:



| | · | The sale of advertising on a sponsorship basis within sections or across a whole application;
    and
| | - | -----------------------------------------------------------------------------------------------------



| | · | The sale of advertising across a hybrid of the existing marketplace ad types, including:
| | - | ----------------------------------------------------------------------------------------



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CPM — cost per thousand page views
(most common for basic banner ads); and



CPA — performance-based ad placement
such as “cost-per-click” or “cost-per-acquisition/action.”



Our sales team sells or intends to sell
the advertising either directly to the advertising client or through agencies or brokers. We
anticipate advertising will represent our principal source of revenue in future periods, and we expect in some circumstances we
will share revenue with the contracted social organization in exchange for exclusivity. However, in all current contractual arrangements,
we maintain all or a great majority of advertising revenue, and we intend to do so in future contracts.



We believe that these highly segmented
and profiled audiences that are using the customized mobile apps will command premium pricing because of the transparent composition
of the audience and its relevancy to a particular advertiser. Moreover, due to the nature of the content and the app itself functioning
as a tool rather than as a toy, we believe the users will be considered a premium audience, compared to random users that might
be viewing ads within a game or news app.



In September 2015, MOKO made a strategic
decision to focus the Company’s resources on its products aimed at the student market, and reduce cash
burn from the Company’s other platforms. This decision has been made on the basis that the U.S. student audience is among
the most valuable to brands and advertisers and provides huge potential for future monetization and the current state of the securities
markets which has posed some challenges to raising additional capital.



Business Development Structure and Pipeline



We have a dedicated business development
executive operating under the direction of our Chief Executive Officer. We currently are in discussions with multiple
national and global brands about a paid integrated marketing campaign for Q4 of calendar 2016, and Q1 of calendar 2017.



Our Technology Platform



The MOKO Social Media platform is a base
set of proprietary source code, services, infrastructure and administrative tools that allows us to build customized applications
for each project. The platform has been built with extensibility and customization in mind to reduce maintenance requirements
and to shorten development timelines for new projects.



As our new custom “white label”
paid products grows within the college vertical, the platform will allow us to efficiently roll out new features and
services to other applications or to the entire suite of products.



Currently all services are hosted at Rackspace
datacenters using a hybrid of cloud and dedicated servers. Rackspace also provides support for all of our server infrastructure
(both cloud and dedicated).



The cloud segment allows rapid deployment
to permit on demand capacity and a more cost effective solution (as compared to dedicated hardware). Most of our services are
hosted in the cloud and we expect to scale our operations in the cloud as we require increased capacity.



The dedicated segment contains networking,
database and storage facilities. This arrangement gives us full control over networking and security aspects of the environment.
Both segments are able to communicate based on security policies set by us. Database and storage facilities are shared between
our products to maximize cost effectiveness.



We are party to Rackspace’s standard
Hosting Services Agreement regarding these facilities on a month-to-month basis, pursuant to which Rackspace is obligated to provide
the hosting services in accordance with an agreed service description, service level guarantees and other technological specifications.
Under the standard terms, we are required to use reasonable security precautions in connection with our use of Rackspace’s
services and to cooperate with Rackspace’s reasonable investigation of service outages, security problems and any suspected
breach of the Hosting Services Agreement, including any violation of Rackspace’s Acceptable Use Policy, which mandates Rackspace’s
networks or services not be used to engage in, foster, or promote illegal, abusive or irresponsible behavior. Rackspace may terminate
the standard Hosting Services Agreement for breach if we fail to make timely payments or if we violate the Acceptable Use Policy
more than once (even if we cure each violation).



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Competition



| | · | MOKO’s products don’t compete with other social media sites
| | - | -----------------------------------------------------------



| | · | MOKO’s products are complementary to Facebook, Google etc
| | - | ---------------------------------------------------------



| | · | MOKO’s products are useful utilities – provide information and essential
    organization tools for students
| | - | ------------------------------------------------------------------------------------------------------------



| | · | MOKO’s products are aligned – used by administrators and students
| | - | -----------------------------------------------------------------



| | · | No other major operator in these markets
| | - | ----------------------------------------



We are focused on specific
and exclusive agreements to develop our apps and mobile community platforms, and we do not know of any direct competitor with
a similar with close to the scale that we provide. Any of the other mobile apps targeting intramural sports or group
fitness have less than 20 colleges compared to the over 1250 colleges we have using us for intramural sports and the over 150
colleges using our products for group fitness. We are, however, aware that there are other companies looking to enter the
college intramural mobile App space, although these other companies typically seek to sell schools an
“enterprise solution” for a fee, rather than MOKO’s model of providing the App and platform for free with
compensation in the form of mobile advertising or our new paid products which have “subsidized” subscription
fees due to the revenue share components built into the contracts with the colleges. For those colleges and universities
covered by the IM Leagues agreement, we also enjoy an exclusive grant of rights during the duration of that agreement with
respect to the data feeds that would be necessary to make any similar intramural sports App functional.



In addition, we face indirect competition
from social networking platforms generally, such as Facebook, Twitter or Snapchat.



With respect
to advertising sales, our indirect competitors and others may solicit the same or similar advertisers that we might also seek,
and therefore they will be in competition with us for the advertiser’s marketing spend. Many of these competitors are better
capitalized than we are, which could give them a competitive advantage.



Corporate Organization and History



We have been a publicly traded company
on the ASX since 2007. As of September 30, 2016, MOKO has one operating subsidiary: MOKO.mobi, Inc. (“MOKO US”).



MOKO US is 100% owned by us and its current
business is the business strategy and marketing operations of the Customized Mobile Social Advertising (CMSA) projects within
the Mobile Advertising operating segment. It is our single U.S. corporate vehicle and as such employs and administers all U.S.
staff.





Sales, Marketing and Key Customers



Our sales, marketing and business development
teams are principally based in New York, NY and our Arlington, VA offices and are headed by our Chief Executive Officer
(“CEO”).



Our key existing brands include
the REC*IT suite of mobile applications (REC*IT, REC*IT Fitness, REC*IT Plus, and Bigteams Powered by REC*IT), and
our primary operational team has offices in Arlington, Virginia. Our key partners for the REC*IT app are IML and BigTeams.



IML



On October 10, 2013, we entered into an
exclusive agreement with IML. IML operates the imleagues.com sports website used by recreational and intramural sports departments.
Over 950 colleges and universities across the U.S. use IML’s website as of October 2015. The IML website offers a suite
of tools from online signup to comprehensive scheduling required to manage college intramural leagues. Pursuant to the agreement,
we have secured the exclusive mobile rights to IML’s data, including student and team schedules, fixtures, standings, statistics
and news feeds in exchange for fees that vary generally based on the number of participants in the IML portfolio that implement
REC*IT. The agreement includes an initial three-year term of exclusivity, which may be extended at the option of IML for an additional
term of a duration to be mutually agreed upon, and obligates us to maintain, to develop, and with the assistance of IML, to promote
REC*IT free of charge to all the colleges and universities in the IML portfolio. We are also responsible for the development,
pricing and inclusion of mobile digital advertising, which we plan to manage through our U.S. mobile advertising division. IML
is entitled to a minority share of the revenue generated from the IML portfolio colleges.



In January 2015, we entered into an amended
agreement with IML. This amended agreement automatically renews for an unlimited number of additional one year terms until we
elect to terminate with the effect of providing us with exclusive rights in perpetuity, subject to us meeting the conditions of
advance payments and standard operational responsibilities. The amended agreement also changes the commercial terms from a flat
license fee to a minimum guarantee against a 10% revenue share on the net revenues from REC*IT. In August 2016, we signed a
second amendment with IML which spread the single annual license fee payments into monthly installments spread-out between September
2016 through April 2017 to assist with MOKO’s monthly cash flow and burn.



Research and Development



Our Technical and Product Development teams
perform our research and development. These teams comprise seventeen full time employees located in Perth, Western Australia.
They are led by our Senior Mobile Developer & Technical Lead. Since 2007, we have expanded our research and development
effort to focus on designing, building and commercializing our core mobile internet platform. Historically and principally, this
activity has consisted of internal labor efforts and technological expenditures. Our accounting policy has always been to expense
such expenditures. The research and development activity has historically been supported by Australian federal government grants
and by concessional income taxation treatment under the Income Tax Act, 1936 (Cth) in Australia (the Act), which has provided
cash rebates to us through its annual income taxation filings. In October 2015, we received A$905,747 as a cash rebate



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for our 2015 fiscal year and we have submitted an application
in respect of our 2016 fiscal year that is expected to result in a cash rebate of A$829,674.



We expect our future research and development
activities to relate to leveraging our core mobile platform through development of specific community platforms for common interest
groups in the U.S. and commercializing and monetizing these developments via customized mobile social advertising.



The ongoing availability of Australian
government financial support for research and development activities is subject to various tests and legislative change, and there
can be no assurance that such financial support will be available to support our expected future research and development activities.



C. Organizational Structure



We have been a publicly traded company
on the ASX since 2007. The organizational structure of our operating entities is set forth below:







D. Property, plant and equipment



We currently lease the following properties:



|Location                            |  | Use of Property           |  | Area    
|----------------------------------- |  | ------------------------- |  | --------
|New York, New York                  |  | University Relations      |  | 150sq ft
|                                    |  |                           |  |         
|Perth, Western Australia, Australia |  | R&D and Registered Office |  | 100 sq m
|                                    |  |                           |  |         
|Arlington, VA                       |  | HQ                        |  | 400sq ft



In November 7, 2014, we entered into a three-year lease in
New York City for a property to serve as our Sales & Operations center. In May 2016, we entered into a termination of the
lease in New York City by having a new lease agreement between the landlord and the tenant to whom MOKO was subleasing the office
space too. Since November 2015, we have entered into a monthly lease with WeWork, a shared office space based in New York City.



On August 26, 2014, we entered into a three-year
lease in Alexandria, VA for a property to serve as our corporate headquarters. In addition, the Virginia office houses our business
development function as well as project operations, including the operational teams for REC*IT. In April 2016, we entered into
a sub-lease for our lease in Alexandria, VA through September 30, 2017 to coincide with the lease termination. Subsequently we
entered into a monthly lease with WeWork, a shared office space based in Arlington, VA. T



The Perth office is on a monthly agreement
with the landlord as a long-standing arrangement. The Perth facility houses personnel focused on research and technology development.



Government Regulation



We are subject to a number of U.S. federal
and state and foreign laws and regulations that involve matters central to our business. These laws and regulations may involve
privacy, data security, advertising, rights of publicity, data protection, content regulation, intellectual property, competition,
protection of minors, consumer protection, taxation or other subjects. Many of these laws and regulations are still evolving and
being tested in courts and could be interpreted in ways that could harm our business. In



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addition, the application and interpretation of these laws
and regulations often are uncertain, particularly in the new and rapidly evolving industry in which we operate.



We are also subject to federal, state and
foreign laws regarding privacy and the protection of user data. Foreign data protection, privacy, consumer protection, content
regulation and other laws and regulations are often more restrictive than those in the United States. There are also a number
of legislative proposals pending before the U.S. Congress, various state legislative bodies and foreign governments concerning
data protection, tracking, behavioral advertising and consumer protection that could affect us.



In recent years, other social media companies,
to resolve investigations into various incidents, have entered into settlement agreements and consent decrees with the Federal
Trade Commission that, among other things, require them to establish an information security program designed to protect non-public
consumer information and also require that they obtain periodic independent security assessments. Violation of any regulatory
orders, settlements, or consent decrees that we may be required to enter into could subject us to substantial monetary fines and
other penalties that could negatively affect our financial condition and results of operations.



For additional information, see the section
titled “Risk Factors — Our business is subject to complex and evolving laws, regulations and self-regulatory principles
and frameworks internationally. These laws, regulations and self-regulatory principles and frameworks are subject to change and
uncertain interpretation, and could result in claims, changes to our business practices, monetary penalties, increased cost of
operations or declines in user growth, user engagement or ad engagement, or otherwise harm our business.”



Intellectual Property Rights



We protect our intellectual property through
a combination of license agreements, copyright, trade secrecy laws, and other methods of restricting disclosure and transferring
title. We developed most of our intellectual property internally by our employees and under work for hire arrangements with third
parties. We enter into confidentiality agreements with our employees, consultants, vendors, and partners. We also enter into license
agreements with third parties and generally seek to control access to and distribution of our technology, documentation, and other
proprietary information. You should be aware that the legal status of intellectual property on the internet is currently subject
to various uncertainties.



We currently have neither patents nor any
pending patent applications in either Australia or the U.S. for our current mobile services. We presently rely on copyright protection
for our various trade names including “REC*IT.” We are seeking trademark protection for certain trade names
that we believe are important to our business, and we intend to seek trademark protection in the future for new brands and products
as we develop them.



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ITEM 4A. UNRESOLVED STAFF COMMENTS



None.



ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS



You should read the following discussion and analysis of
our financial condition and results of operations in conjunction with our consolidated financial statements and related notes
included in this Annual Report beginning on page F-1. The following discussion and analysis contain forward- looking statements
that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those
anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”
and elsewhere in this Annual Report.



Overview



We began as a company engaged in the development of proprietary
mobile social community platforms and mobile content sales, delivering proprietary mobile social services and content to users
within Australia, the United Kingdom, the Philippines, and Malaysia. Monetization historically occurred via user subscription
models connecting MOKO’s billing platform with the billing capabilities of our telephony or billing aggregator partners.
This monetization and revenue stream is what MOKO identifies as the Social operating segment. The Social operating segment forms
part of continuing operations in the historical financial statements although its significance has diminished measurably in the
reported periods such that its continuing business operations are insignificant to MOKO’s forward intentions.



Our current business model is to develop, manage, and commercialize
online mobile social communities for large organized groups that need to share content and interact efficiently with their members.
We plan to monetize these platforms with premium and targeted mobile advertising. Our perception is that our highly tailored mobile
community applications differentiate MOKO from other generic social networks that do not offer such customized products. We are
in the process of pursuing customized mobile community application opportunities with large common interest groups in the college
and high school market.



During 2014, 2015 and 2016 we expanded
the reach of our platform to support intended global growth across four main business lines and revenue streams:



• Mobile Social



• Mobile Advertising



• Mobile Content; and



• Mobile Commerce.



Mobile Social — MOKO’s proprietary
mobile social networks and community and chat within Australia, the U.K. and U.S. MOKO’s revenues are generated through
monthly user subscriptions that are typically billed directly to a user’s mobile phone account which enables them to access
and participate in mobile chat and share communities.



The flag-ship social product that MOKO
has offered in this operating segment is ‘MOKO Chat and Share’, which is a proprietary community offering developed
by the Company and launched in 2007. This product has accounted for the majority of revenue in the Mobile Social segment in all
reported periods although the Mobile Social business represents legacy activities of MOKO’s initial platform monetization
efforts and is of less significance and priority than it has been historically.



Mobile Advertising — MOKO’s
proprietary performance based, U.S. mobile ad network which more recently has been transitioning its business strategy to work
directly with advertisers to allow it to provide advertisers with direct opportunities to place ads in MOKO properties such as
REC*IT, REC*IT Fitness, Big Teams and others. This segment represents MOKO’s core operating segment and contains the mobile
community development business to be monetized via customized mobile social advertising.



“MOKO Performance Network”
(formerly referred to as “OfferMobi”) which was acquired in August 2012 and historically worked with other adnetworks
to obtain advertising offers for performance based advertisers seeking specific audiences for their offers and with publishers
in identifying the right advertisement/offers for the audiences they had, rather than directly with the advertisers themselves.
This is commonly referred to as “rebrokering” and creates a situation where advertisers are unaware of the locations
that their ads are placed, called “blind” advertising. The operations of MOKO Performance Network were discontinued
on October 31, 2015.



Tagroom Pty Ltd. a subsidiary
in which MOKO acquired an 80% controlling interest in October 2014 was also discontinued on October 31, 2015.







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The Mobile Advertising operating segment
is significant to MOKO’s business, financial results and intentions. The results from Mobile Advertising form a part of
continuing operations.



Mobile Content —This operating segment
is discontinued and trailing business activity has ceased.



Mobile Commerce — MOKO’s Australian
based online, flash sales and aspiring e-commerce product sales business, Deals-I-Love (Australia) Pty Ltd (“DIL”),
of which MOKO had a controlling economic interest of 51%, which sells merchant product to customers across the internet via pc’s
and mobile interfaces through its website, www.dealsilove.com.au. This business was acquired in July 2013 and was significant
to MOKO’s financial results for the six months ended December 31, 2013. Before the DIL acquisition, there was no activity
in this segment. The results from Mobile Commerce no longer form a part of continuing operations from and after March 2016.



This segmentation reflects the underlying
revenue and cash generating units within MOKO and reflects the internal reports that are reviewed and used by the chief operating
decision makers with MOKO, in assessing performance and in determining the allocation or resources.



For the 2014 fiscal year, operating segment
revenues were as follows:



|                                 |  | Mobile
    Social |         |  | Mobile
    Advertising |  |        | Mobile
    Content |  |  | Mobile Commerce |  |  | Total |  
|-------------------------------- |  | ----------------- | ------- |  | ---------------------- |  | ------ | ------------------ |  |  | --------------- |  |  | ----- | -
|Sales to external customers A$   |  |                   | 802,812 |  |                        |  | 79,580 |                    |  |  | —               |  |  |       | —
|Sales to external customers USD$ |  |                   | 618,487 |  |                        |  | 61,309 |                    |  |  | —               |  |  |       | —



For the 2015 fiscal year, operating segment
revenues were as follows:



|                                 |  | Mobile
    Social |         |  | Mobile
    Advertising |  |         | Mobile
    Content |  |  | Mobile Commerce |  |  | Total |  
|-------------------------------- |  | ----------------- | ------- |  | ---------------------- |  | ------- | ------------------ |  |  | --------------- |  |  | ----- | -
|Sales to external customers A$   |  |                   | 723,690 |  |                        |  | 869,244 |                    |  |  | —               |  |  |       | —
|Sales to external customers USD$ |  |                   | 557,531 |  |                        |  | 669,666 |                    |  |  | —               |  |  |       | —



For the 2016 fiscal year, operating segment
revenues were as follows:



|                                 |  | Mobile
    Social |        |  | Mobile
    Advertising |  |        | Mobile
    Content |  |  | Mobile Commerce |  |  | Total |  
|-------------------------------- |  | ----------------- | ------ |  | ---------------------- |  | ------ | ------------------ |  |  | --------------- |  |  | ----- | -
|Sales to external customers A$   |  |                   | 27,806 |  |                        |  | 57,024 |                    |  |  | —               |  |  |       | —
|Sales to external customers USD$ |  |                   | 20,665 |  |                        |  | 42,380 |                    |  |  | —               |  |  |       | —



Strategic Transition



For the fiscal years ended June 30, 2014,
2015 and 2016, MOKO was unprofitable and a net user of cash and cash equivalents in the absence of ongoing sources of financing.
MOKO has needed to rely on its ability to successfully raise cash proceeds from issuing new equity or debt financing to sustain
its operations and ensure the business remains a going concern. Historically, the capital has been sourced primarily from within
Australia and to a lesser extent internationally including more recently equity funding from within the U.S. as a result of our
NASDAQ listing in 2014. MOKO, as of the date of this annual report, has no outstanding indebtedness, other than trade creditors
and as otherwise disclosed in the financial statements and related notes included elsewhere in this annual report.



On March 6, 2013, MOKO secured an agreement
with American Intramural Sports Group LLC and on October 10, 2013, MOKO secured an agreement with IMLeagues LLC. Under these agreements,
MOKO gained the exclusive mobile rights for intermural sport, fitness and recreational activity data for more than 700 colleges
and universities across the U.S. with a combined enrolled population of approximately 10 million students. The number of colleges
and universities has since increased to over 1,250. MOKO
intends to commercialize this platform with premium and targeted mobile advertising. This customized mobile social advertising
project is branded REC*IT. The REC*IT brand and the REC*IT mobile community platform and its respective device applications (“Apps”)
are owned by MOKO.



To date, MOKO has not generated significant
revenue from REC*IT. It should be noted that the strategic focus on projects such as REC*IT and the recently discontinued operations
reduces the revenues being generated within MOKO and necessitates development expenditure in advance of commercialization and
the realization of new revenue and cash inflows. It is expected that in the immediate future, the historical revenue streams within
Mobile Advertising and Mobile Commerce will continue at approximate rates to those reported for the most recent fiscal year and
that Mobile Social will continue to generate revenue in a reduced and insignificant capacity in the future. The Mobile Content
segment has been ceased and will not generate revenue in future periods. As such, to pursue this business strategy MOKO requires
funding sources in advance of accepting additional projects.



Factors Affecting Comparability of Our Historical Results



Our historical results of operations for
the periods presented may not be comparable with prior periods or to our results of operations in the future for the reasons discussed
above and below.



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From the fourth quarter of fiscal 2013,
MOKO has been actively de-emphasizing and divesting non-core businesses and assets that do not fit within the revised strategy
of monetizing its mobile communities within the U.S. To this end, MOKO divested itself of the Paper Tree Limited Group (including
Antiphany Management Holding Limited and its operating subsidiaries) on April 29, 2013 and the net assets and financial performance
results of which are reported as discontinued operations for fiscal 2013. MOKO has ceased operation of All Night Media Limited,
its second and smaller Mobile Content business in the United Kingdom. In addition in August 2013, the Mobile Social assets of
mBuzzy were also divested.



MOKO also acquired a 51% controlling interest
in Deals-I-Love (Australia) Pty Ltd (“DIL”), a Sydney, Australia based online, flash sales and aspiring e-commerce
product sales business, and an 80% controlling interest in Tagroom. DIL sold merchant product to customers that is sourced internationally
and domestically across the internet via pc’s and mobile interfaces through its website, www.dealsilove.com.au in Australia
while Tagroom was an infotainment channel serving millenials. MOKO purchased DIL and Tagroom to expand its market share within
Australia and to investigate the possible application to the REC*IT user base.



MOKO sold DIL to Hedgeabelli Pty Ltd on
March 30, 2016. As a condition to the occurrence of Completion, MOKO advanced A$37,500 to DIL as part of the completion loan.
On the completion date, MOKO released DIL from any outstanding loan balances amounting to A$1,092,084. On October 30, 2015, MOKO
purchased additional 14.2% shareholdings from previous Tagroom shareholders and employees. MOKO released Tagroom from any outstanding
loan balances amounting to $711,390 after its operation was discontinued from October 31, 2015.



On August 16, 2016, MOKO entered into an
asset sales agreement with Competitor Group, Inc. (“CGI”), under which CGI will acquire RunHaven, MOKO’s running
website and social media assets for an undisclosed amount.



Non-IFRS Financial Measure



In evaluating our business, we consider and use EBITDA, a non-IFRS
measure as a supplemental measure to review and assess our operating performance. The presentation of this non-IFRS financial
measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented
in accordance with IFRS. We define EBITDA as Earnings (being Net Profit or Loss from continuing operations), Before Interest,
Tax, Depreciation and Amortization. We use EBITDA as a measure of operating performance to assist in comparing performance from
period to period on a consistent basis, as measures for planning and forecasting overall expectations and for evaluating actual
results against such expectations and as performance evaluation metrics, including as part of assessing and administering our
executive and employee incentive compensation programs.



We believe that the use of this non-IFRS measure facilitates
investors’ assessment of our operating performance from period to period and from company to company by backing out potential
differences caused by variations in items such as capital structures (affecting relative finance or interest expenses), the book
amortization of intangibles (affecting relative amortization expenses), the age and book value of property and equipment (affecting
relative depreciation expenses) and other non-cash expenses (affecting one-time transition charges). We also present this non-IFRS
measure because we believe this non-IFRS measure is frequently used by securities analysts, investors and other interested parties
as measures of the financial performance of companies in our industry.



This non-IFRS financial measure is not defined under IFRS and
is not presented in accordance with IFRS. This non-IFRS financial measure has limitations as an analytical tool, and when assessing
our operating performance, investors should not consider it in isolation, or as a substitute for profit (loss) or other consolidated
statements of operation data prepared in accordance with IFRS. Some of these limitations include, but are not limited to:



| | · | it does not reflect our cash expenditures or future requirements for capital expenditures
    or contractual commitments;
| | - | -------------------------------------------------------------------------------------------------------------------------



| | · | it does not reflect changes in, or cash requirements for, our working capital needs;
| | - | ------------------------------------------------------------------------------------



| | · | it does not reflect the finance or interest expenses, or the cash requirements necessary
    to service interest or principal payments, on our debt;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | · | it does not reflect income taxes or the cash requirements for any tax payments;
| | - | -------------------------------------------------------------------------------



| | · | although depreciation and amortization are non-cash charges, the assets being depreciated
    and amortized often will have to be replaced in the future, and EBITDA do not reflect any cash requirements for such replacements;
    and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | other companies may calculate EBITDA differently than we do, limiting the usefulness of
    this non-IFRS measure as a comparative measure.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------



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We compensate for these limitations by
relying primarily on our IFRS results and using EBITDA only as a supplemental measure. The following is a reconciliation of profit
for the year to EBITDA:



|                                                         |  | Fiscal Year Ended June 30 |            
|-------------------------------------------------------- |  | ------------------------- | -----------
|                                                         |  | 2016                      |            
|                                                         |  | A$                        |            
|Statement of Profit or Loss Data                         |  |                           |            
|Loss after income tax benefit from continuing operations |  |                           | (20,803,136
|Interest expense /(income)                               |  |                           | 47,371     
|Tax expense/(benefit)                                    |  |                           | (6,889     
|Depreciation and Amortization expense                    |  |                           | 443,876    
|Goodwill and Intangible assets impairment                |  |                           | 4,253,634  
|EBITDA                                                   |  |                           | (16,065,144



Results of Operations



Comparison of Twelve Months Ended June 30, 2016 to Twelve
Months Ended June 30, 2015 as restated



MOKO earned revenue of A$84,830 for the year (2015: A$1,592,934),
a decrease of 95%. The decrease was largely due to a re-positioning of the Mobile Advertising operations to focus on building
users and market share rather than short-term revenues in order to better position the business to maximise its future monetization
potential. Ongoing revenues in Mobile Advertising are expected to be earned from the monetization of MOKO's student products,
including REC*IT, Big Teams powered by REC*IT and REC*IT Fitness. As these products are not yet commercialized, there remains
uncertainty over this expectation. During the year, MOKO continued to invest in R&D and platform development. For 2016, MOKO’s
received a Research & Development tax refund A$905,747 from the Australian Taxation Office (2015: A$947,845).



The loss for the 2016 year was A$21,541,811 compared with the
loss of A$20,294,007 in 2015. This include the results of Discontinued operations for Mobile Performance Network, Moko Door Foundation,
Tagroom Pty Ltd and Deals I Love (Australia) Pty Ltd, which contributed Revenue and a Net loss of A$1,099,346 and A$738,675 for
the year, respectively. The loss also includes the impairment of intangible assets of A$3,513,823 in Mobile Advertising Cash Generating
Unit, A$179,828 of Mobile Commerce Cash Generating Unit (2015: Nil) and the impairment of Available-for-sale financial assets
(Big Teams LLC) of A$737,811.



For 2016, MOKO’s expenses excluding impairment expenses
decreased by 19% to A$17,708,532 (2015: A$21,890,522) resulting from a reduction in marketing expenses (decreased by A$1,753,018
or 53%), employee benefit expenses (decreased by A$1,133,280 or 15%), share based payments (decreased by A$612,146 or 33%) and
other operating overhead such as depreciation and amortization (decreased by A$570,647 or 56%).









Comparison of Twelve Months Ended June 30, 2015 as restated
to Twelve Months Ended June 30, 2014 as restated



As restated, MOKO earned revenue of A$1,592,934 for the year
(2014: A$882,393), an increase of 80.5%. The increase was largely due to increased revenue from the Mobile Advertising segment,
reflecting a re-positioning by the Board to focus Mobile Performance Network (MPN) as a service provider to customized mobile
social advertising projects such as REC*IT. During the year, MOKO continued to invest in R&D and platform development. For
2015, MOKO’s received a Research & Development tax refund A$947,845 from the Australian Taxation Office (2014: A$1,082,953).



The loss for the 2015 year was A$20,294,007 compared with the loss of A$13,596,459 in 2014, each as restated.
This include the results of discontinued operations, which contributed a net loss of A$1,298,072 for the year. The loss also includes
employee benefits expenses of A$7,333,024 (2014: A$2,920,985) due to a large increase in average headcount as a result of the
expansion in the Mobile Advertising segment (particularly in the US) and marketing expenses of A$3,293,889 (2014: A$600,549),
mostly due to an increase in Mobile Advertising User acquisition costs for the customized mobile social advertising business.





Liquidity and Financial Position



MOKO’s June 30, 2016 reporting date
cash and cash equivalents (‘cash’) was A$2,546,772 (2015: A$7,219,908) and the net assets were A$2,481,941 (2015:
A$11,080,576). Working capital, (defined as current assets less current liabilities) decreased to A$1,696,193 (2015: A$5,758,246)
and pertained largely to the decrease in balance date cash.



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On July 14, 2015, the Company filed a Form
F-3 Registration Statement with the United States Securities and Exchange Commission for a maximum aggregate public offering of
up to $40,000,000. The Form F-3 is used by foreign private issuers in the U.S. to register offerings of securities and can be
utilized in stages over three years. This provides MOKO with additional flexibility to approach the U.S. market for capital over
the medium term.



Our cash and cash equivalents at June 30,
2016 were held for working capital purposes. We do not enter investments for trading or speculative purposes. Accordingly,
our cash and cash equivalents are primarily invested in demand deposit accounts with high-grade financial institutions and currently
provide only minimal returns.



Outlook



MOKO has made a strategic decision to focus
the Company’s resources on the student market. The results from the monetization of MOKO’s student focused products,
REC*IT and SPEAKIESY, are not yet reflected in MOKO’s operating results or cashflows. MOKO’s decision to focus on
the student market has been made on the basis that the U.S. student audience is among the most valuable to brands and advertisers
and provides huge potential for future monetization. As these products are not yet commercialized there remains uncertainty over
this expectation.



In September 2015, MOKO made a strategic
decision to focus the Company’s resources on its products aimed at the student market, REC*IT and SPEAKIESY and reduce
cash burn from the Company's other platforms. This decision has been made on the basis that the U.S. student audience
is among the most valuable to brands and advertisers and provides huge potential for future monetization and the current state
of the securities markets which has posed some challenges to raising additional capital.



Sources of Liquidity



To date, we have funded our operations
principally through:



| | · | an initial public offering in Australia on the ASX;
| | - | ---------------------------------------------------



| | · | private placements or rights issues of our fully paid ordinary shares;
| | - | ----------------------------------------------------------------------
| |   |                                                                       
| | · | issuing equity-linked securities such as convertible notes;           



| | · | taking unsecured loans including from related parties;
| | - | ------------------------------------------------------



| | · | having a revolving credit facility for our U.S. operations; and
| | - | ---------------------------------------------------------------



| | · | an initial public offering in United States of America on NASDAQ.
| | - | -----------------------------------------------------------------



We have also benefited to a limited extent
from the exercise of share options although we expect to do more in the future, as such securities are exercised by holders.



Since our inception and to June 30, 2016
we have raised a total of A$69,142,733 million, net of costs and expenses, from the issuance of fully paid ordinary shares through
an initial public offering in Australia and numerous subsequent private placements or rights issues.



Going concern



The June 30, 2016 financial report has
been prepared on a going concern basis which contemplates continuity of normal business activities and the realisation of
assets and settlement of liabilities in the ordinary course of business.  This is not withstanding that the
Consolidated Entity generated a loss from continuing activities of A$20,803,136 (2015: loss of A$18,995,935) and continues to
experience constraints around cash flow, with a net cash outflow from operations for the full year of A$14,309,124 (2015:
A$18,231,444).



In order to continue as a going concern, the
Consolidated Entity needs to raise additional funds. The directors acknowledge that the requirement to raise additional funding
represents a material uncertainty which may cast significant doubt over the ability of the Consolidated Entity to continue as a
going concern.



On August 26, 2016, the Consolidated
Entity announced it is undertaking a review of strategic options for the future of the Consolidated Entity and has appointed
District Capital Partners (“DCP”) to advise on alternatives and assist with the process. DCP is a financial advisory firm that
specialises in M&A transaction execution and corporate finance services. DCP are reviewing all possibilities including
straight equity investments and the potential sale of the Consolidated Entity and are currently seeking proposals from a
number of interested parties.



The Consolidated Entity has received written
confirmation from a substantial shareholder of their current intention to provide additional working capital to the Consolidated
Entity to enable a potential transaction from the DCP process to be completed.



The Consolidated Entity also expects to
receive a Research & Development tax refund from the Australian Taxation Office. The Consolidated Entity has submitted a
Research & Development Tax Incentive Application for the financial year ended June 30, 2016 which results in a refund of
A$829,674. This is subject to review by the Australian Tax Office and AusIndustry.



The directors are confident that additional
funds can be raised and the Consolidated Entity can continue to meet its debts as and when they become due and payable. The financial
report has therefore been prepared on a going concern basis.



Should the Consolidated Entity be unable to continue as a going
concern it may be required to realise its assets and discharge its liabilities other than in the normal course of business and
at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the amount of liabilities that might result should the Consolidated
Entity be unable to continue as a going concern and meet its debts as and when they fall due.



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Operating and capital expenditure requirements



Our future working capital requirements
will depend on many factors, including the rate at which new projects are activated, and the commercialization and monetization
success of existing projects within the Customized Mobile Social Advertising strategy. The corresponding amount and timing of
our investments in personnel, operating infrastructure and capital equipment as well as the timing and extent of our introduction
of new products and product enhancements will further vary our working capital requirements. If our cash and cash equivalents
balances and cash flows from operating activities are insufficient to satisfy our liquidity requirements, we may need to raise
additional funds through equity, equity-linked or debt financings to support our operations, and such financings may not be available
to us on acceptable terms, or at all. We may also need to raise additional funds in the event we determine in the future to effect
one or more acquisitions of businesses, technologies, assets or products. If we are unable to raise additional funds when needed,
our operations and ability to execute our business strategy could be adversely affected. If we raise additional funds through
the incurrence of indebtedness, such indebtedness would have rights that are senior to holders of our equity securities and could
contain covenants that restrict our operations. Any additional equity financing will be dilutive to our shareholders.



Historical cash flows



The following table sets forth our cash flows for fiscal 2016,
2015 and 2014:



|                                                  |  | Year ended
    June 30 |            
|------------------------------------------------- |  | ---------------------- | -----------
|                                                  |  | 2016                   |            
|Cash flows used in operating activities           |  | A$                     | (14,309,124
|Cash (used in) / provided by investing activities |  | A$                     | (1,103,017 
|Cash provided by financing activities             |  | A$                     | 10,722,121 



Cash Flows from Operating Activities



Cash flows used in operating activities
is primarily influenced by the number of customers or users engaging with our products or services and by the amount of cash we
invest in pursuit of growth, personnel and infrastructure to support the anticipated growth of our business. Cash used in operating
activities has typically resulted from net losses and from changes in our operating assets and liabilities, particularly in the
areas of accounts receivable and accounts payable and accrued expenses, adjusted for non-cash and non-operating expense items
such as depreciation and amortization, goodwill impairment, gains or losses on acquisitions and disposals and share-based compensation.



The operating cash outflow for fiscal 2016
improved from A$18,231,444 in 2015 to A$14,309,124 in 2016, reflecting the decreased losses before impairment expenses.



In fiscal 2015, operating cash outflow
for the year decreased by 21.5% to A$14,309,124 (2015: A$18,231,444) reflecting the ongoing losses in MOKO’s Customized
Mobile Social Advertising business.



In fiscal 2014, net cash used in operating
activities was A$(7,067,727) and consisted of a net loss of A$(13,596,459), A$5,926,031 in adjustments for non-cash and non-operating
items, a disposal gain of A$109,493 on the sale of the mBuzzy business and A$712,194 provided by working capital. Adjustments
for non-cash and non-operating items consisted of depreciation and amortization expense of A$1,224,238, share-based payments and
related costs expense of A$5,144,969, a partial offset for non-cash revenue items of A$475,460, which were predominantly fair
value gains on deferred acquisition consideration where a liability value that was previously recognized was no longer required,
and foreign exchange differences of A$32,284. The working capital cash provided was primarily the result of an increase in payables
and provisions of A$1,395,046, and an increase in receivables and other assets of A$682,852).



The trend for MOKO to have a net use of
cash as a result of its operating activities is expected to remain and may increase while the Company pursues the goals of its
Customized Mobile Social Advertising business plan. In the short term, it is expected to be necessary to increase project expenditures
on technical development resources and sales and marketing resources particularly, which will result in larger operating cash
outflows. In addition, customer receipts may trail the expenditure outflows for the development and implementation of the mobile
community project applications (which MOKO typically expects to provide for free to its community partners) by periods of between
six to twelve months, and this may result in future operating cash flow usage being larger than historical results.



Furthermore, given
the realization of customer receipts will reflect MOKO’s successes across multiple business risks in the new business stream
of Customized Mobile Social Advertising, the historical results may not reflect future outcomes. Receipts from customers may differ
adversely to the historical results and anticipated outcomes, which may further increase the size of operating cash flow usage.



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Cash Flows from Investing Activities



Investing cash outflows increased by 42%
to A$1,103,017 (2015: A$775,134) due to payments related to the acquisition of a 10% interest in BigTeams LLC (2016: A$1,042,142
vs 2015: A$256,813).



In the twelve months ended June 30, 2014,
net cash used in investing activities was A$699,506 and consisted of payments for the deferred consideration for the acquisition
of the OfferMobi business of A$406,997, payments for disposal of the AMH Group of A$339,996, payments for property, plant and
equipment of A$62,006 and a partial offset from proceeds received via the sale of mBuzzy, of A$109,493.



Historically, given the high rate of internal
asset generation, investing expenditures on assets has been relatively low, other than by acquisition. This trend may discontinue
as MOKO’s customized mobile social advertising business plan gains traction as increased headcount and volumes of data under
management are expected to mandate larger capital investment expenditures, particularly on information technology infrastructure.



Conversely, where historically investing
activity expenditures for acquisition consideration has been relatively high, this trend may discontinue if no new acquisition
activity is undertaken by MOKO as a result of focusing the available cash and cash equivalent resources on the intended execution
of the customized mobile social advertising business plan.



Cash Flows from Financing Activities



In November 2015, we completed the placement
of 500,000 ADSs and 1 million ordinary shares in the United States and Australia, resulting in gross proceeds of $2.25 million.
In April 2016, MOKO received Applications for Entitlements and Shortfall Securities pursuant to a rights offering conducted in
Australia totaling 412,825,840 ordinary shares, together with 206,412,920 attaching Class A Unlisted Options and 206,412,920 attaching
Class B Unlisted Options, raising A$4,128,258 before costs. The shortfall securities of 405,060,839 ordinary shares, together
with 202,530,420 attaching Class A Unlisted Options and 202,530,420 attaching Class B Unlisted Options, were fully placed pursuant
to back-stop underwriting arrangements, resulting in final proceeds from the rights issue of A$8,178,867 before costs.



In April 2016, Moko also issued securities
on the same terms as the rights offering in satisfaction of underwriting and sub-underwriting fees and broker commissions payable
on completion of the offer and interest and fees payable on a short-term loan.



In fiscal 2016, the financing cash inflows
decreased by 33.9% to A$10,722,121 (2015: A$16,219,370) as a result of net share issue proceeds of A$11,778,867 as compared to
A$16,219,370 in 2015.



In fiscal 2015, the financing cash inflows
increased by 7% to A$16,219,370 (2014: A$15,151,403) as a result of net share issue proceeds of A$16,219,370 (2014: A$16,269,600)
and net debt repayment of nil (2014: A$1,118,197)



Contractual Obligations



As of June 30, 2016, our contractual obligations and other
commitments were as follows:



|                |  | Payments
    due by period |        
|--------------- |  | -------------------------- | -------
|                |  |                            |        
|                |  |                            |        
|                |  | Total                      |        
|Premises leases |  | A$                         | 273,153



Effects of Inflation



Inflation generally affects us by increasing costs of raw materials,
labor and equipment. We do not believe that inflation had any material effect on our results of operations in the periods presented
in our financial statements.



Critical Accounting Estimates and Judgments



Our consolidated financial statements are prepared in accordance
with IFRS. The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that
affect the reported amounts of revenue, assets, liabilities, costs and expenses. We base our estimates and assumptions on historical
experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions
on an ongoing basis. Our actual results may differ from these estimates.



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Our most critical accounting policies are summarized below.
See note 1 to our consolidated financial statements beginning on page F-1 for a description of our other significant accounting
policies.



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 by
using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were
granted. 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 but may impact profit or loss and equity.



Provision for impairment of receivables



The provision for impairment of receivables assessment requires
a degree of estimation and judgment. The level of provision is assessed by taking into account the recent sales experience, the
ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.



Fair value and hierarchy of financial instruments



We are required to classify financial instruments, measured
at fair value, using a three level hierarchy, being:



Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities;



Level 2: Inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); and



Level 3: Inputs for the asset or liability that are not based
on observable market data (unobservable inputs).



An instrument is required to be classified in its entirety
on the basis of the lowest level of valuation inputs that is significant to fair value. Considerable judgment is required to determine
what is significant to fair value and therefore which category the financial instrument is placed in can be subjective.



The fair value of financial instruments classified as level
3 is determined by the use of valuation models. These include discounted cash flow analysis or the use of observable inputs that
require significant adjustments based on unobservable inputs.



Estimation of useful lives of assets



We determine the estimated useful lives and related depreciation
and amortization charges for our property, plant and equipment and finite life intangible assets. The useful lives could change
significantly as a result of technical innovations or some other event. The depreciation and amortization charge will increase
where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.



Goodwill and other indefinite life intangible assets



We test annually, or more frequently if events or changes in
circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment,
in accordance with the accounting policy stated in note 1 to our consolidated financial statements beginning on page F-1. The
recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require
the use of assumptions, including estimated discount rates based on the current cost of capital and growth rates of the estimated
future cash flows. All cash generating units have been deemed recoverable and not at risk.



Long service leave provision



As discussed in note 1 to our consolidated
financial statements beginning on page F-1, the liability for long service leave is recognized and measured at the present value
of the estimated future cash flows to be made in respect of all employees at the reporting date. In determining the present value
of the liability, estimates of attrition rates and pay increases through promotion and inflation have been taken into account.



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Business combinations



As discussed in note 1 to our consolidated financial statements
beginning on page F-1, business combinations are initially accounted for on a provisional basis. The fair value of assets acquired,
liabilities and contingent liabilities assumed are initially estimated by the consolidated entity taking into consideration all
available information at the reporting date. Fair value adjustments on the finalization of the business combination accounting
is retrospective, where applicable, to the period the combination occurred and may have an impact on the assets and liabilities,
depreciation and amortization reported.



Recent Accounting Pronouncements



As discussed in Note 1 to our consolidated financial statements
beginning on page F-1, the financial statements included in this annual report have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) and the Corporations
Act 2001, as appropriate for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IASB”).



Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not yet mandatory, have not been early adopted by MOKO for the annual reporting
period ended 30 June 2016, unless noted in the notes to our consolidated financial statements beginning on page F-1. MOKO’s
assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to MOKO, are set out
below.



AASB 15: Revenue from Contracts with Customers



This standard is applicable to annual
reporting periods beginning on or after January 1, 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards
– Effective Date of AASB 15.



When effective, this Standard will replace
the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of
exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary
exchanges between entities in the same line of business to facilitate sales to customers and potential customers.



The core principle of the Standard is
that an entity will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective,
AASB 15 provides the following five-step process:



| | - | identify the contract(s) with a customer;
| | - | -----------------------------------------



| | - | identify the performance obligations in the contract(s);
| | - | --------------------------------------------------------



| | - | determine the transaction price;
| | - | --------------------------------



| | - | allocate the transaction price to the performance obligations
in the contract(s); and
| | - | -------------------------------------------------------------------------------------



| | - | recognize revenue when (or as) the performance obligations
are satisfied.
| | - | -------------------------------------------------------------------------



The transitional provisions of this Standard
permit an entity to either: restate the contracts that existed in each prior period presented per AASB 108: Accounting Policies,
Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or recognize the cumulative effect
of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure requirements
regarding revenue.



Although MOKO anticipates that the adoption
of AASB 15 may have an impact on the Group’s financial statements, it is impracticable at this stage to provide a reasonable
estimate of such impact.



AASB 16: Leases



This standard is applicable to annual reporting periods beginning
on or after January 1, 2019.



When effective, this Standard will replace
the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a
single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.



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The main changes introduced by the new
Standard include:



| | - | recognition of a right-to-use asset and liability for all
leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | depreciation of right-to-use assets in line with AASB 116:
Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | variable lease payments that depend on an index or a rate
are included in the initial measurement of the lease liability using the index or rate at the commencement date;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | by applying a practical expedient, a lessee is permitted
to elect not to separate non-lease components and instead account for all components as a lease; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | additional disclosure requirements.
| | - | -----------------------------------



The transitional provisions of AASB 16
allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognize the cumulative
effect of retrospective application as an adjustment to opening equity on the date of initial application.



Although MOKO anticipates that the adoption
of AASB 16 will impact the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of
such impact.



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



A. Directors and senior management



The following discussion sets forth information
regarding our directors and executive officers as of October 15, 2016. Our board of directors is comprised of only one class.
All of the directors will serve until the next annual meeting of shareholders at which one third of the directors (or if their
number is not divisible by three, then the number nearest to one third), other than the Managing Director, are required to submit
for re-election in accordance with the terms of our Constitution and the applicable provisions of the Corporations Act, or until
their earlier death, retirement, resignation or removal. Mr. Shah is currently our Managing Director. Provided below is a brief
description of our directors’ and executive officers’ business experience during the past five years.



|Name            |  | Age |  | Position                                     
|--------------- |  | --- |  | ---------------------------------------------
|Malcolm James   |  | 60  |  | Non-Executive Chairman                       
|                |  |     |  |                                              
|Shripal Shah    |  | 39  |  | Chief Executive Officer and Managing Director
|                |  |     |  |                                              
|Emma Waldon     |  | 40  |  | Executive Director and Company Secretary     
|                |  |     |  |                                              
|Edward Bralower |  | 55  |  | Non-Executive Director                       
|                |  |     |  |                                              
|James Ross      |  | 55  |  | Non-Executive Director                       



Malcolm James has been our non-executive Chairman since 7th
October 2016. Mr. James is a highly experienced public company Non-Executive Chairman and currently is Non-Executive Chairman
of Algae.Tec Ltd and Anova Metals Ltd and a Non-Executive Director of Vimy Resources Ltd. Mr. James received his Bachelor
of Business degree from RMIT University Melbourne. Mr. James is a Fellow of the Australian Institute of Company Directors
and an Associate of the Australasian Institute of Mines and Metallurgy.



Shripal Shah has been the Chief Operating Officer of MOKO since
March 2015 and CEO and Managing Director since May 2016. Mr. Shah has more than sixteen years’ experience in digital strategy,
development and execution. He joins MOKO after seven years as Chief Strategy Officer with the Washington Redskins, one of the
top NFL professional football teams and the third highest grossing team in the NFL behind the Dallas Cowboys and the New England
Patriots. Mr. Shah reported to Mitch Gershman, Chief Marketing Officer of the Redskins where he was tasked with maximizing the
team’s strategic and business prospects and overseeing the organization’s marketing strategy and digital and social
media platforms. He played an instrumental role in bringing various digital and social media platforms to the Redskins, resulting
in a significantly improved brand profile for the team. Prior to the Redskins, Mr. Shah was with Catalyst Public Relations, where
he was the architect of multiple award-winning digital marketing programs. This included one for Dick’s Sporting Goods Foundation,
which earned “Best Cause Related Marketing Campaign of the Year” honors at the 2012 SABRE Awards. He also developed
digital marketing strategies for Kenneth Cole, Seagram’s, Bank of New York and Morgan Stanley, among others.



Emma Waldon has been MOKO’s Company Secretary since 1st
January 2015 and a director since October 1, 2015. Ms. Waldon also holds the role of Company Secretary of Hazer Group Limited.
Ms. Waldon has over 18 years global corporate experience and has diverse financial, corporate advisory and risk management skills
from previous roles at Ernst & Young (Perth) where she qualified as a Chartered Accountant in 2000, Euroz Securities, Lloyds
Banking Group (London) and as a Director within Deloitte’s advisory services division in Perth. Ms. Waldon holds a Bachelor
of Commerce degree from the University of Western Australia majoring in accounting and finance, is a Member of the Australian
Institute of Chartered Accountants, a Fellow of the Financial Services Institute of Australasia and a Certificated Member of the
Governance Institute of Australia.



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Edward Bralower has been a non-executive director since June
2016. Mr. Bralower spent nearly twenty-five years at Jefferies & Co. in New York City, where he held various senior level
equity sales and trading roles. Additionally, Mr. Bralower was the co-head of Jefferies' Stamford, CT office, and sat on numerous
committees. He was the Global Head of hedge fund relationship management. Following his career at Jefferies, Mr. Bralower spent
two years at Pali Capital and was a founding partner of Riverbank Advisors, LLC. Most recently he was a managing director at Sword,
Rowe & Company. Mr Bralower is currently associated with Wonderama Holdings, LLC., the producer of a family television show
that encompasses all media distribution platforms to reach its target audience. He is presently a member of the advisory group
at Formation Group, a leading Silicon Valley Venture Capital firm. Mr. Bralower earned his B.A. from Franklin and Marshall College.



James Ross has been a non-executive director since 7thOctober 2016. Mr. Ross has extensive experience in sports management at senior levels in the US with a strong focus
on driving sales and revenue growth through innovative management across a range of marketing channels. Mr. Ross has held senior
positions with teams in the NFL (National Football League) and the MLB (Major League Baseball) as well as leading roles at sports
entertainment companies, and key experience across national and international events.



B. Compensation



Employment Agreements



The compensation we paid to all current and former directors
and executive officers (including the Company Secretary) who served as such during the year ended June 30, 2016 was A$1,845,535
and on an individual basis in A$ is set forth in the tables below:



|            |  | SHORT-TERM |         |  | POST-EMPLOYMENT |  |         | SHARE-BASED | 
|----------- |  | ---------- | ------- |  | --------------- |  | ------- | ----------- | 
|            |  | Salary &   |         |  |                 |  |         |             | 
|Fiscal 2016 |  | Fees       |         |  | Termination     |  |         | Bonus       | 
|(A$’s)      |  |            |         |  |                 |  |         |             | 
|S Shah1     |  |            | 151,447 |  |                 |  | —       |             | 
|G McCann2   |  |            | 102,740 |  |                 |  | —       |             | 
|M Hauser3   |  |            | 75,665  |  |                 |  | —       |             | 
|J White4    |  |            | 12,177  |  |                 |  | —       |             | 
|L Hindery5  |  |            | 43,708  |  |                 |  | —       |             | 
|I Rodwell 6 |  |            | 361,047 |  |                 |  | 204,523 |             | 
|E Waldon    |  |            | 71,969  |  |                 |  | —       |             | 
|D Rhoten7   |  |            | 29,922  |  |                 |  | —       |             | 
|TOTAL       |  |            | 848,675 |  |                 |  | 204,523 |             | 



| | 1. | S Shah’s remuneration is from his appointment as
Interim Chief Executive Officer on February 18, 2016. STI bonus of US$25,000 was paid on the completion of a capital raise and
options were issued in April 2016 per service agreement.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | G McCann’s remuneration was paid in his capacity
as a Non-Executive Director and did not change during his temporary occupation as Executive Chairman in 2014 for the purposes
and completion of the NASDAQ listing. Mr. McCann resigned on October 7, 2016.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Mark Hauser was appointed as a Non-Executive Director on February
                                         1, 2014 and prior to which, he provided consulting services to MOKO for two years until
                                         January 31, 2014. The consulting contract between MOKO and Mark Hauser was based on normal
                                         commercial terms and this remuneration is not included. Mr. Hauser resigned on May 24,
                                         2016.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | Mr. White resigned on November 17, 2015.
| | -- | ----------------------------------------

| | 5. | Mr. Hindery resigned on April 14, 2016.
| | -- | ---------------------------------------

| | 6. | I Rodwell was CEO and Managing Director up until February
18, 2016. Other amounts include rental assistance and health related insurance. Termination amounts include salary payments during
a 6 month notice period and accrued annual leave and long service leave entitlements.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 7. | Ms. Rhoten resigned on April 14, 2016.
| | -- | --------------------------------------



Summary of the Key Terms of the Service Agreement between
MOKO and Mr. Shah



Compensation



| | · | Salary. MOKO
                                         shall pay Mr. Shah a salary at an initial rate equivalent to US$300,000 per annum;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | · | Stock Options.
                                         Long term incentives in the form of options over ordinary shares or ADSs or Performance
                                         Shares may be provided subject to approval by shareholders in a general meeting; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Compensation
                                         Review. Compensation terms (including salary, option grants and and/or other bonuses)
                                         will be reviewed annually.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Severance



If the Agreement is terminated by MOKO on or before July 31,
2016 for any reason other than Cause (as defined) MOKO shall continue to pay Mr. Shah’s Salary for a period of four (4)
months from the date of termination.



If the Agreement is terminated by MOKO on or after August 1,
2016 for any reason other than Cause, MOKO shall continue to pay Mr. Shah’s Salary for a period of six (6) months from the
date of termination.



If Mr. Shah has been employed for more than two (2) years,
MOKO shall continue to pay Mr. Shah’s salary for one month for each full year in which Mr. Shah has been employed, but in
no event for more than twelve (12) months. In any event, the maximum amount payable is the Mr. Shah’s average Salary over
the year up until termination.



Share Based Compensation



We use two practices for granting share based compensation
to executive directors, senior executives and employees. Share options (listed and unlisted) to purchase our ordinary shares are
issued periodically at the board’s discretion and Performance Shares may also be issued under a Performance Share Plan.
No Performance Shares were granted to directors and other key management personnel as part of compensation during the year ended
June 30, 2016.



Option Compensation



The terms and conditions of each grant of options during this
financial year affecting remuneration of directors and any other key management personnel in this financial year or future reporting
years are as follows:



Ordinary Share Options



|Option  series |  | Numbers 
    of options  issued |           |  | Grant date |           | Vesting date and  exercisable
    date |                       | Expiry date |           | Exercise 
    Price |   |      | Fair value per
     option at grant  date | 
|-------------- |  | ------------------------------- | --------- |  | ---------- | --------- | -------------------------------------- | --------------------- | ----------- | --------- | ------------------- | - | ---- | ----------------------------------------- | 
|Director       |  |                                 | 2,000,000 |  |            | 1-Oct-15  |                                        | 27-Nov-15             |             | 27-Nov-18 |                     | $ | 0.15 |                                           | 
|Interim CEO    |  |                                 | 1,000,000 |  |            | 28-Apr-16 |                                        | 28-Apr-16             |             | 28-Apr-18 |                     | $ | 0.02 |                                           | 
|Interim CEO    |  |                                 | 1,000,000 |  |            | 28-Apr-16 |                                        | Vesting condition (1) |             | 28-Apr-18 |                     | $ | 0.03 |                                           | 
|Total          |  |                                 | 4,000,000 |  |            |           |                                        |                       |             |           |                     |   |      |                                           | 



(1) The options shall vest upon the earlier of the nine (9)
month anniversary of the Interim CEO Commencement Date or a change of control and shall expire on the twenty-four (24) month anniversary
of the Interim CEO Commencement Date.



Options granted carry no dividend or voting rights.



American Depositary Share Options



|Optionseries |  | Numbers 
    of options  issued |            |  | Numbers of 
    ADS option  issued |  |         | Grant  date |  | Vesting date  and 
    exercisable  date |  | Expiry  date  |  | Exercise 
    Price per  ADS |  |     | Fair value 
    per option  at grant  date | 
|------------ |  | ------------------------------- | ---------- |  | ---------------------------------- |  | ------- | ----------- |  | ---------------------------------------- |  | ------------- |  | ---------------------------- |  | --- | ------------------------------------------ | 
|Director     |  |                                 | 6,000,000  |  |                                    |  | 150,000 |             |  | 1-Sep-15                                 |  | 27-Nov-16 (2) |  | 27-Nov-19                    |  | US$ | 5.35                                       | 
|Director     |  |                                 | 6,000,000  |  |                                    |  | 150,000 |             |  | 1-Sep-15                                 |  | 27-Nov-17 (2) |  | 27-Nov-20                    |  | US$ | 5.35                                       | 
|Director     |  |                                 | 6,000,000  |  |                                    |  | 150,000 |             |  | 1-Sep-15                                 |  | 27-Nov-15     |  | 27-Nov-18                    |  | US$ | 3.55                                       | 
|Director     |  |                                 | 2,000,000  |  |                                    |  | 50,000  |             |  | 1-Oct-15                                 |  | 27-Nov-15     |  | 27-Nov-18                    |  | US$ | 3.55                                       | 
|Total        |  |                                 | 20,000,000 |  |                                    |  | 500,000 |             |  |                                          |  |               |  |                              |  |     |                                            | 



(2) Vesting share price hurdle of ADS price performance hurdle:
options will only vest if the volume weight average price (VWAP) of the Company’s ADSs over a 30 Trading Day period exceeds
US$8.00.



35


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Options granted carry no dividend or voting rights.



C. Board Practices



Board Committees and Practices



Our Board has an audit committee and compensation
committee, a copy of the relevant charters of which are available on MOKO’s website.



Audit Committee



The audit committee oversees and monitors
the company’s accounting and financial reporting processes and the audit and integrity of the Company’s financial
statements.



The audit committee has had the following
three members: Ms. Waldon who is the chairman and a non-independent Executive Director, Mr. Shah
(non-independent Executive Director) and Mr. James (independent Non-Executive Director).
The audit committee is responsible for, among other things:



| | · | Selecting the independent auditors and pre-approving all auditing and non-auditing services
    permitted to be performed by the independent auditors;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Reviewing and approving all proposed related-party transactions;
| | - | ----------------------------------------------------------------



| | · | Discussing the annual audited financial statements with management and the independent auditors;
| | - | ------------------------------------------------------------------------------------------------



| | · | Reviewing the adequacy and effectiveness of the Company’s internal control policies
    and procedures;
| | - | -------------------------------------------------------------------------------------------------------



| | · | Reviewing and discuss guidelines and policies with respect to risk assessment and risk management;
| | - | --------------------------------------------------------------------------------------------------



| | · | Annually reviewing and reassessing the adequacy of our audit committee charter;
| | - | -------------------------------------------------------------------------------



| | · | Meeting separately and periodically with management and the independent auditors;
| | - | ---------------------------------------------------------------------------------



| | · | Reviewing such other matters that are specifically delegated to our audit committee by our
    Board of Directors from time to time; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| | · | Reporting regularly to the full Board of Directors.
| | - | ---------------------------------------------------



Compensation Committee



The compensation (remuneration) committee
assists the Board in reviewing and approving the compensation forms and structure of MOKO’s Directors and officers.



The compensation committee has had
the following three members: chairman Mr. James (independent Non-Executive Director), Mr. Shah
(non-independent Executive Director) and Ms. Waldon (non-independent Executive Director). Our
compensation committee assists our board in reviewing and approving the compensation structure of our directors and officers,
including all forms of compensation to be provided to our directors and officers.



The compensation committee is responsible for, among other
things:



| | · | Reviewing and determining the compensation package for our senior executives;
| | - | -----------------------------------------------------------------------------



| | · | Reviewing and making recommendations to our board with respect to the compensation of our
    directors;
| | - | --------------------------------------------------------------------------------------------------------



| | · | Reviewing and approving officer and director indemnification and insurance matters;
| | - | -----------------------------------------------------------------------------------



| | · | Reviewing and approving any employee loan in an amount equal to or greater than A$20,000;
| | - | -----------------------------------------------------------------------------------------



| | · | Reviewing periodically and approving any long term incentive compensation or equity plans,
    and
| | - | --------------------------------------------------------------------------------------------------



| | · | Programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.
| | - | ---------------------------------------------------------------------------------------------



Code of Ethics



We adopted a Code of Business Conduct and Ethics in accordance
with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S- K that constitutes our code of ethics for our
principal executive officer, our principal financial and accounting officer and our other senior financial officers. The Code
of Business Conduct and Ethics is intended to promote honest and ethical conduct, full and accurate reporting, and compliance
with laws as well as other matters. A printed copy of the Code of Business Conduct and Ethics may be obtained free of charge by
writing to Ms. Emma Waldon, Company Secretary MOKO Social Media Limited, Suite 5, 442-446 Beaufort Street, Highgate, Western Australia,
6003, Australia, and is available on our website.



36


Table of Contents




Duties of Directors



Under Australian law, our directors have a duty to act honestly,
in good faith and in the best interests of all shareholders. Our directors also have a duty to exercise the care, diligence and
skills that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their fiduciary duty to the
shareholders of MOKO, our directors must ensure compliance with our Constitution. MOKO shareholders may have the right to seek
damages from either MOKO, the directors personally, or both, if a duty owed by our directors is breached.



The functions and powers of our board of directors include,
among others:

| | · | appointing officers and determining the term of office of the officers;
| | - | -----------------------------------------------------------------------



| | · | exercising the borrowing powers of the company and mortgaging the property of the company;
| | - | ------------------------------------------------------------------------------------------



| | · | executing checks, promissory notes and other negotiable instruments on behalf of the company;
| | - | ---------------------------------------------------------------------------------------------



| | · | maintaining or registering a register of mortgages, charges or other encumbrances of the
    company; and
| | - | ---------------------------------------------------------------------------------------------------------



| | · | authorizing the payment of donations to religious, charitable, public or other bodies, clubs,
    funds or associations as deemed advisable.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------



Interested Transactions



Provided that a director has fully disclosed his or her material
personal interest to all of our other directors and received the necessary approval or authorization of the majority of disinterested
directors, such director may vote, attend a board meeting or sign a document in respect of any contract or transaction in which
he or she is interested.



Remuneration and Borrowing



The directors may receive such remuneration as our board of
directors may determine from time to time up to the aggregate limit that is approved by shareholders from time to time. That limit
currently is A$650,000, but excludes any remuneration payable to a director who is employed by the Company in an executive role,
such as Mr. Shah. In addition, each director is entitled to be repaid or prepaid for all traveling, hotel and incidental expenses
reasonably incurred or expected to be incurred in attending meetings of our board of directors or committees of our board of directors
or shareholder meetings or otherwise in connection with the discharge of his or her duties as a director.



Our board of directors may exercise all
the powers of the company to borrow money and to mortgage or charge our undertakings and property or any part thereof, to issue
debentures, debenture shares and other securities whenever money is borrowed or as security for any debt, liability or obligation
of the company or of any third party.



Qualification



A director is not required to hold shares as a qualification
to office.



37


Table of Contents




Limitation on Liability and Other Indemnification Matters



Under our Constitution, we may indemnify our directors, officers
and liquidators against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and
reasonably incurred in connection with civil, criminal, administrative or investigative proceedings to which they are party or
are threatened to be made a party by reason of their acting as our director, officer or liquidator. To be entitled to indemnification,
these persons must have acted honestly and in good faith with a view to the best interest of the company and, in the case of criminal
proceedings, they must have had no reasonable cause to believe their conduct was unlawful.



Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable.



We pay our directors annual fees fixed at no more than A$650,000
per annum. We may also from time to time issue options to purchase ordinary shares (or ADSs as applicable), in amounts and on
terms to be determined by our board of directors or a committee thereof.



Other than non-employee directors, we do not compensate directors
for serving on our board of directors or any of its committees. We do, however, intend to reimburse each member of our board of
directors for out-of-pocket expenses incurred by each director in connection with attending meetings of the board of directors
and its committees.



The following table sets forth the cash compensation for future
services expected to be paid to our non-employee directors.



|                                | Compensation      
|------------------------------- | ------------------
|Annual Stipend                  |                   
|Director – (U.S. residents)     | $50,000 per annum 
|Director – (non U.S. residents) | A$25,000 per annum
|Chairman                        | A$48,000 per annum



D. Employees



As of June 30, 2016, we had 33
full time equivalent employees, including independent contractors. Our employees are all contracted to us through individual employment
agreements. Management considers labor relations to be good. At each date shown, we had the following employees, broken out by
department and geography:



|                                      |  | At June 30, |   
|------------------------------------- |  | ----------- | --
|                                      |  | 2016        |   
|Function:                             |  |             |   
|Technical and product development     |  |             | 14
|Sales, Marketing and operations       |  |             | 11
|Corporate, Finance and administration |  |             | 8 
|Total:                                |  |             | 33
|Geography:                            |  |             |   
|Australia                             |  |             | 16
|United States of America              |  |             | 17
|Total:                                |  |             | 33



E. Share Ownership



See Item 6.A and 6.B above.

38


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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A. Major shareholders



The following table sets forth information
with respect to the beneficial ownership of the Ordinary Shares as of September 30, 2016 by each person who beneficially owns
more than 5% of Ordinary Shares and each officer, each director and all officers and directors as a group.



Ordinary Shares which an individual or
group has a right to acquire within 60 days pursuant to the exercise or conversion of options, warrants or other similar convertible
or derivative securities are deemed to be outstanding for the purpose of computing the percentage ownership of such individual
or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown
in the table.



The address of each director and executive
officer shown in the table below is Suite 5, Level 1, 442-446 Beaufort Street, HIGHGATE West Australia, 6003, Australia.



|                                                            |  | Beneficial                     |             |  | Percentage of | 
|----------------------------------------------------------- |  | ------------------------------ | ----------- |  | ------------- | 
|                                                            |  | Ownership                      |             |  | Class         | 
|Name of Beneficial Owner                                    |  | of our Ordinary
    Shares (1) |             |  | (1)           | 
|Malcolm James                                               |  |                                | —           |  |               | 
|                                                            |  |                                |             |  |               | 
|Shripal Shah(2)                                             |  |                                | 6,893,040   |  |               | 
|                                                            |  |                                |             |  |               | 
|Edward Bralower                                             |  |                                | 200,000     |  |               | 
|                                                            |  |                                |             |  |               | 
|James Ross                                                  |  |                                | 0           |  |               | 
|                                                            |  |                                |             |  |               | 
|Emma Waldon(3)                                              |  |                                | 4,300,000   |  |               | 
|                                                            |  |                                |             |  |               | 
|All directors and executive officers as a group
(5 persons) |  |                                |             |  |               | 
|                                                            |  |                                |             |  |               | 
|Trevor Douglas Nairn(4)                                     |  |                                | 144,915,905 |  |               | 
|                                                            |  |                                |             |  |               | 
|Peter Yates(4)                                              |  |                                | 50,163,402  |  |               | 






| | * | less than 1%
| | - | ------------

| | (1) | On                                          September 30, 2016, MOKO’s ordinary shares on
                                                                                                issue total 1,659,796,126                                          and ordinary shares issuable upon the exercise of
                                                                                                outstanding options are 906,959,510 and upon exercise of outstanding performance shares are 20,000,000.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes 6,700,000 ordinary shares issuable upon the exercise
of outstanding options.
| | --- | -------------------------------------------------------------------------------------

| | (3) | Includes 2,000,000 ordinary shares issuable upon the exercise
of outstanding options.
| | --- | -------------------------------------------------------------------------------------

| | (4) | Share ownership as reported to MOKO in a notice of substantial
shareholding under ASX rules. The shareholders have not filed substantial shareholding notices on the ASX since the completion
of MOKO’s pro-rata non-renounceable rights offering pursuant to a Prospectus filed on March 1, 2016.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



B. Related Party Transactions



We have not during the most recently completed
financial year entered into transactions or loans with any (a) enterprises that are directly or indirectly controlled by or under
common control with us; (b) our associates; (c) individuals directly or indirectly owning voting right which give them significant
influence over us or close members of their respective families, (d) our directors, senior management or close members of their
respective families or (e) enterprises in which a substantial interest in the voting power is held or significantly influenced
by any of the foregoing individuals (a “Related Party”), except as indicated below:



39


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Greg McCann, former non-executive Chairman,
is an associate of Consortio Pty Limited (“Consortio”) who leases office space in Sydney to MOKO. The lease agreement
between MOKO and Consortio was based on normal commercial terms and terminated on August 1, 2015. A total of A$1,664, A$20,047
and A$13,368 was received by Consortio in fiscal 2016, 2015 and 2014 in relation to this agreement.



C. Interests of Experts and Counsel



Not Applicable.



ITEM 8. FINANCIAL INFORMATION



A. Consolidated Statements and Other Financial Information.



The Company’s consolidated financial
statements are stated in Australian dollars and are prepared in accordance with IFRS.



Audited Financial Statements



Our consolidated financial statements for
the 2016, 2015 and 2014 fiscal years ended June 30th as required under Item 17 are included immediately following the text of
this Annual Report. The audit reports of the Company are included herein immediately preceding the financial statements.



Legal/Arbitration Proceedings



The directors and the management of the Company do not know
of any material, active or pending, legal proceedings against them; nor is the Company involved as a plaintiff in any material
proceeding or pending litigation.



Policy on Dividend Distributions



The Company has not paid any dividends
on its outstanding ordinary shares since its incorporation and does not anticipate that it will do so in the foreseeable future.
The payment of dividends in the future, if any, is within the discretion of the Board of Directors of Dynasty and will depend
upon our earnings, our capital requirements and financial condition and other relevant factors. We do not anticipate declaring
or paying any dividends in the foreseeable future.



B. Significant
Changes



None.



ITEM 9. THE OFFER AND LISTING



A. Offer and Listing Details



Not Applicable.



B. Plan of Distribution



Not Applicable.



C. Markets



Our American Depositary Shares are traded
in the OTC Pink market under the symbol MOKOY. The closing price for the ADSs on September 30, 2016 on OTC Pink was $0.13 per
ADS.



The principal trading market for our ordinary
shares is the ASX in Australia, where the ordinary shares have been listed since June 2007. The following table sets forth, for
the periods indicated, the reported high and low closing prices on the ASX for our ordinary shares in Australian dollars. See
“Exchange Rate Information” for the exchange rates applicable to the periods set forth below.



|                   |  | High               |      |  | Low               |  |      | High |  |  | Low  | 
|------------------ |  | ------------------ | ---- |  | ----------------- |  | ---- | ---- |  |  | ---- | 
|Year Ended         |  | (A$ per
    share) |      |  | (US$ per
    ADS) | 
|June 30, 2012      |  |                    | 0.05 |  |                   |  | 0.02 |      |  |  |      | 
|June 30, 2013      |  |                    | 0.05 |  |                   |  | 0.02 |      |  |  |      | 
|June 30, 2014      |  |                    | 0.33 |  |                   |  | 0.04 |      |  |  |      | 
|June 30, 2015      |  |                    | 0.20 |  |                   |  | 0.11 |      |  |  | 7.79 | 
|June 30, 2016      |  |                    | 0.14 |  |                   |  | 0.01 |      |  |  | 3.85 | 
|Quarter Ended      |  |                    |      |  |                   |  |      |      |  |  |      | 
|September 30, 2014 |  |                    | 0.20 |  |                   |  | 0.15 |      |  |  | 7.79 | 
|December 31, 2014  |  |                    | 0.17 |  |                   |  | 0.13 |      |  |  | 6.05 | 
|March 31, 2015     |  |                    | 0.17 |  |                   |  | 0.14 |      |  |  | 5.80 | 
|June 30, 2015      |  |                    | 0.18 |  |                   |  | 0.11 |      |  |  | 5.94 | 
|September 30, 2015 |  |                    | 0.14 |  |                   |  | 0.10 |      |  |  | 3.85 | 
|December 31, 2015  |  |                    | 0.11 |  |                   |  | 0.03 |      |  |  | 3.01 | 
|March 31, 2016     |  |                    | 0.03 |  |                   |  | 0.01 |      |  |  | 0.91 | 
|June 30, 2016      |  |                    | 0.02 |  |                   |  | 0.01 |      |  |  | 0.50 | 
|Month Ended        |  |                    |      |  |                   |  |      |      |  |  |      | 
|January 2016       |  |                    | 0.03 |  |                   |  | 0.01 |      |  |  | 0.91 | 
|February 2016      |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.34 | 
|March 2016         |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.38 | 
|April 2016         |  |                    | 0.02 |  |                   |  | 0.01 |      |  |  | 0.50 | 
|May 2016           |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.41 | 
|June 2016          |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.25 | 
|July 2016          |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.19 | 
|August 2016        |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.15 | 
|September 2016     |  |                    | 0.01 |  |                   |  | 0.01 |      |  |  | 0.29 | 



40


Table of Contents




Status of Outstanding Ordinary Shares.As
of September 30, 2016, we had a total of 1,659,796,126 ordinary shares issued and outstanding.



Options and Warrants.See Item 6.B
above.



Holders.Based upon information
available from the ASX, as of September 30, 2016, we had 3,789 holders of record of the ordinary shares, of which 8
had registered addresses in the U.S. and held a total of 8,668,880 ordinary shares. The principal Melbourne office
of National Australia Bank, as custodian, is the registered holder for the holders of ADSs representing ordinary shares. According
to the principal Melbourne office of National Australia Bank’s registry, there was one registered holder of ADSs representing
75,260,320 ordinary shares as of September 30, 2016. Holders of record of having registered addresses in the U.S., together
with the registered holders of ADSs representing ordinary shares in the principal Melbourne office of National Australia Bank’s
registry, held an aggregate of approximately 5% of the total number of ordinary shares outstanding on such date. The above
numbers may not be representative of the actual number of U.S. beneficial holders or the number of ordinary shares beneficially
held by U.S. persons.



D. Selling Shareholders



Not Applicable.



E. Dilution



Not Applicable.



F. Expenses of the Issue



Not Applicable.



ITEM 10. ADDITIONAL INFORMATION



A. Share Capital



Not applicable.



B. Memorandum and Articles of association



The description of certain terms and provisions
of our Constitution is incorporated by reference to our Registration Statement filed on Form F-1 (File No. 333-196073) filed with
the SEC and as declared effective on June 26, 2014.



C. Material Contracts



During the fiscal years ended
June 30, 2016, 2015 and 2014, the Company entered into the material contracts listed below, the material provisions of which are
described under Item 4.B. above:



Letter of Agreement between American Intramural
Sports Group LLC and the Registrant dated March 4, 2013



Amended and Restated License and Services
Agreement between IMLeagues LLC and the Registrant dated January 26, 2015



First Amendment to Amended and Restated
License and Services Agreement between IMLeagues LLC and the Registrant dated August 26, 2016



Share Purchase Agreement (Series B-2) dated
April 24, 2015 between Big Teams LLC and the Registrant



License and Services Agreement dated April
24, 2015 between Big Teams LLC and the Registrant



41


Table of Contents






D. Exchange controls



Not applicable.



E. Taxation



Australian Tax Consequences



In this section we discuss the material Australian tax considerations
that apply to non-Australian tax residents with respect to the acquisition, ownership and disposal of the absolute beneficial
ownership of ADSs, which are evidenced by ADRs. This discussion is based upon existing Australian tax law as is currently in effect,
which is subject to change, possibly retrospectively. This discussion does not address all aspects of Australian income tax law
which may be important to particular investors in light of their individual investment circumstances, such as ADSs or ordinary
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 our ADSs or ordinary shares.



References to “MOKO” in this section headed “Australian
Tax Consequences” refer to MOKO Social Media Limited.



Nature of ADSs for Australian Taxation Purposes



Holders of our ADSs are treated as the owners of the underlying
ordinary shares for Australian income tax and capital gains tax purposes. Therefore, dividends paid on the underlying ordinary
shares will be treated for Australian tax purposes as if they were paid directly to the owners of ADSs that represent those underlying
ordinary shares, and the disposal of ADSs will be treated for Australian tax purposes as the disposal of the underlying ordinary
shares. In the following analysis we discuss the application of the Australian income tax and capital gains tax rules to non-Australian
resident holders of ADSs.



Taxation of Dividends



Australia operates a dividend imputation system under which
dividends may be declared to be ‘franked’ to the extent of tax already paid on company profits. Fully franked dividends
are not subject to dividend withholding tax. Dividends that are not franked or are partly franked and are paid to non-Australian
resident shareholders may (subject to the relevant tax treaties — see below) be subject to dividend withholding tax, but
only to the extent the dividends are not franked. Unfranked dividends paid to a non-Australian resident shareholder are subject
to withholding tax at 30%, unless the shareholder is a resident of a country with which Australia has a double taxation agreement.
In accordance with the provisions of the Double Taxation Convention between Australia and the United States, the maximum rate
of Australian tax on unfranked dividends to which a resident of the United States is beneficially entitled, is 15%, where the
U.S. resident is not a company or holds less than 10% of the voting rights in the applicable company, or 5% where the U.S. resident
is a company and holds 10% or more of the voting rights in the applicable company. The Double Taxation Convention between Australia
and the United States does not apply to limit the tax rate on dividends where our ADSs are effectively connected to a permanent
establishment or a fixed base carried on by the holder of our ADSs in Australia and through which that holder carries on business.



Tax on Sales or other Dispositions of Shares — Capital
Gains Tax (CGT)



Australian capital gains derived by non-Australian residents
in respect of the disposal of capital assets that are not taxable Australian property will be disregarded. A non-Australian resident
shareholder will not be subject to Australian capital gains tax on the capital gain made on a disposal of our ADSs or ordinary
shares, unless it, together with associates, holds 10% or more of MOKO’s issued capital, tested either at the time of disposal
or over any continuous 12 month period in the 24 months prior to disposal, and the value of those ADSs or shares at the time of
disposal are wholly or principally attributable to Australian real property assets.



Australian capital gains tax applies to net capital gains at
a taxpayer’s marginal tax rate. Previously, certain shareholders, such as individuals were entitled to a discount of 50%
for capital gains on shares held for greater than 12 months. However, as part of the 2012 – 2013 Federal Budget measures,
the Australian Government announced changes to the application of the CGT discount for foreign resident individuals on taxable
Australian assets, including shares. These changes became effective on June 29, 2013.



The effect of these changes is to:



| | · | Retain access to the full CGT discount for discount capital gains of non-Australian resident
    individuals in respect of the increase in the value of a CGT asset that occurred before May 9, 2013; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Remove the CGT discount for discount capital gains for non-Australian resident individuals
    that arise after May 8, 2013.
| | - | ----------------------------------------------------------------------------------------------------------------------------



Non-Australian resident individuals will still have access
to a discount on discount capital gains accrued prior to May 8, 2012 provided they choose to obtain a market valuation for their
assets as at that date.



Net capital gains are calculated after reduction for capital
losses, which may only be offset against capital gains.



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



Some non-Australian resident shareholders may hold shares or
ADSs on revenue rather than on capital account, for example, share traders. These



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shareholders may have the gains or losses made on the sale
or other disposal of the shares or ADSs included in their assessable income under the ordinary income tax provisions of the income
tax law, if the gains or losses are sourced in Australia.



Non-Australian resident shareholders assessable under these
ordinary income provisions in respect of gains made on shares or ADSs 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 non- Australian resident
individuals. Some relief from the Australian income tax may be available to such non-Australian resident shareholders under the
Double Taxation Convention between the United States and Australia, for example, because the shareholder does not have a permanent
establishment in Australia.



To the extent an amount would be included in a non-Australian
resident 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 was 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.



Conduit Foreign Income (CFI)



CFI is that part of MOKO’s earnings which are derived
from operations located outside Australia. Australian withholding tax is not payable on unfranked dividends to non-Australian
resident shareholders, to the extent that those dividends represent CFI. To the extent that MOKO’s revenues are earned from
operations located outside Australia, no franking credits will be available.



Stamp Duty



A transfer of shares or ADSs of a company listed on the ASX
— as is MOKO — is not subject to Australian stamp duty except in some circumstances where one person, or their associate,
acquires 90% or more of the shares.



Australian Death Duty



Australia does not have estate or death duties. No capital
gains tax liability is realized upon the inheritance of a deceased person’s shares or ADSs. The disposal of inherited shares
or ADSs by beneficiaries may, however, give rise to a capital gains tax liability.



Goods and Services Tax



The issue or transfer of shares or ADSs will not incur Australian
goods and services tax and does not require a shareholder to register for Australian goods and services tax purposes.



U.S. Federal Income Taxation



General



The following is a summary of the material U.S. federal income
tax consequences of the acquisition, ownership and disposition of our ADSs or ordinary shares. As used in this discussion, references
to “we,” “us” or “our” refer to MOKO Social Media Limited.



The discussion below of the U.S. federal income tax consequences
to “U.S. Holders” will apply to a beneficial owner of our ADSs or ordinary shares that is for U.S. federal income
tax purposes:



| | · | an individual citizen or resident of the United States;
| | - | -------------------------------------------------------



| | · | a corporation (or other entity treated as a corporation) that is 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 whose income is includible in gross income for U.S. federal income tax purposes
    regardless of its source; or
| | - | --------------------------------------------------------------------------------------------------------------------------



| | · | a trust if (i) a U.S. court can exercise primary supervision over the trust’s administration
    and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (ii) it has a valid election
    in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A beneficial owner of our ADSs or ordinary shares that is described
above is referred to herein as a “U.S. Holder.” If a beneficial owner of our ADSs or ordinary shares is not described
as a U.S. Holder and is not an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes,
such owner will be considered a “Non-U.S. Holder.” The material U.S. federal income tax consequences applicable specifically
to Non-U.S. Holders are described below under the heading “Non-U.S. Holders.”



This discussion is based on the Internal
Revenue Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations promulgated thereunder,
published rulings and court decisions, all as currently in effect. These authorities are subject to change or differing interpretations,
possibly on a retroactive basis.



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This discussion does not address all aspects
of U.S. federal income taxation that may be relevant to any particular holder based on such holder’s individual circumstances.
In particular, this discussion considers only holders that own and hold our ADSs or ordinary shares as capital assets within the
meaning of Section 1221 of the Code, and does not address the potential application of the alternative minimum tax or the U.S.
federal income tax consequences to holders that are subject to special rules, including:



| | · | financial institutions or financial services entities;
| | - | ------------------------------------------------------



| | · | broker-dealers;
| | - | ---------------



| | · | persons that are subject to the mark-to-market accounting rules under Section 475 of the
    Code;
| | - | --------------------------------------------------------------------------------------------------



| | · | tax-exempt entities;
| | - | --------------------



| | · | governments or agencies or instrumentalities thereof;
| | - | -----------------------------------------------------



| | · | insurance companies;
| | - | --------------------



| | · | regulated investment companies;
| | - | -------------------------------



| | · | real estate investment trusts;
| | - | ------------------------------



| | · | certain expatriates or former long-term residents of the United States;
| | - | -----------------------------------------------------------------------



| | · | persons that actually or constructively own 5% or more of our voting shares (including as
    a result of ownership of our ADSs);
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | persons that acquired our ADSs or ordinary shares pursuant to an exercise of employee options,
    in connection with employee incentive plans or otherwise as compensation;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | persons that hold our ADSs or ordinary shares as part of a straddle, constructive sale,
    hedging, conversion or other integrated transaction;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | · | persons whose functional currency is not the U.S. dollar;
| | - | ---------------------------------------------------------



| | · | passive foreign investment companies; or
| | - | ----------------------------------------



| | · | controlled foreign corporations.
| | - | --------------------------------



The discussion below assumes that the representations
contained in the Deposit Agreement are true and that the obligations in the Deposit Agreement and any related agreement will be
complied with in accordance with their terms. This discussion also assumes that our ADSs will represent only ordinary shares in
us and will not represent cash or any other type of property. For U.S. federal income tax purposes, a holder of our ADSs will
be treated as the beneficial owner of the underlying ordinary shares represented by such ADSs. Accordingly, deposits or withdrawals
of ordinary shares for ADSs will not be subject to U.S. federal income tax.



The U.S. Treasury has expressed concerns
that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming, by U.S. Holders of ADSs,
of foreign tax credits for U.S. federal income tax purposes. Such actions also would be inconsistent with the claiming of the
reduced rate of tax applicable to dividends received by certain non-corporate U.S. Holders, as described below. Accordingly, the
availability of foreign tax credits or the reduced tax rate for dividends received by certain non-corporate U.S. Holders could
be affected by actions that may be taken by parties to whom ADSs are pre-released, or by future actions of the U.S. Treasury Department.



This discussion does not address any aspect
of U.S. federal non-income tax laws, such as gift or estate tax laws, or state, local or non-U.S. tax laws or, except as discussed
herein, any tax reporting obligations applicable to a holder of our ADSs or ordinary shares. This discussion also does not address
the tax treatment of any taxes, fees or expenses that may be payable by an ADS holder pursuant to the Deposit Agreement. Additionally,
this discussion does not consider the tax treatment of partnerships or other pass-through entities or persons who hold our ADSs
or ordinary shares through such entities. If a partnership (or other entity classified as a partnership for U.S. federal income
tax purposes) is the beneficial owner of ADSs or ordinary shares, the U.S. federal income tax treatment of a partner in the partnership
generally will depend on the status of the partner and the activities of the partnership. This discussion also assumes that any
distribution made (or deemed made) to a holder in respect of our ADSs or ordinary shares and any consideration received (or deemed
received) by a holder in connection with the sale or other disposition of our ADSs or ordinary shares will be in U.S. dollars.



We have not sought, and will not seek,
a ruling from the Internal Revenue Service (the “IRS”) or an opinion of counsel as to any U.S. federal income tax
consequence described herein. The IRS may disagree with the description herein, and its determination may be upheld by a court.
Moreover, there can be no assurance that future legislation, regulations, administrative rulings or court decisions will not adversely
affect the accuracy of the statements in this discussion.



THIS DISCUSSION IS ONLY A SUMMARY OF THE
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR ADSs OR ORDINARY SHARES. EACH
HOLDER OF OUR ADSs OR ORDINARY SHARES IS URGED TO CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES
TO SUCH HOLDER OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR ADSs OR ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL, AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND ANY APPLICABLE TAX TREATIES.



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U.S. Holders



Taxation of Cash Distributions Paid
on ADSs or Ordinary Shares



Subject to the passive foreign investment
company (“PFIC”) rules discussed below, a U.S. Holder generally will be required to include in gross income as ordinary
income the amount of any cash dividend paid in respect of our ADSs or ordinary shares. A cash distribution on our ADSs or ordinary
shares generally will be treated as a dividend for U.S. federal income tax purposes to the extent the distribution is paid out
of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). Such dividend generally
will not be eligible for the dividends- received deduction generally allowed to U.S. corporations in respect of dividends received
from other U.S. corporations. The portion of such cash distribution, if any, in excess of such earnings and profits will be applied
against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in our ADSs or ordinary shares. Any remaining
excess generally will be treated as gain from the sale or other taxable disposition of such ADSs or ordinary shares.



With respect to non-corporate U.S. Holders,
any such cash dividends may be subject to U.S. federal income tax at the lower applicable regular long-term capital gains tax
rate (see “— Taxation on the Disposition of ADSs or Ordinary Shares” below) provided that (a) our ADSs or ordinary
shares are readily tradable on an established securities market in the United States or we are eligible for the benefits of the
Double Taxation Convention between Australia and the United States (the “U.S.-Australia Tax Treaty”), (b) we are not
a PFIC, as discussed below, for either the taxable year in which the dividend was paid or the preceding taxable year, and (c)
certain holding period requirements are met. Therefore, if our ADSs and ordinary shares are not readily tradable on an established
securities market in the United States, and we are not eligible for the benefits of the U.S.-Australia Tax Treaty, then cash dividends
paid by us to non-corporate U.S. Holders will not be subject to U.S. federal income tax at the lower regular long term capital
gains tax rate. Under published IRS authority, shares (including ADSs) are considered for purposes of clause (a) above to be readily
tradable on an established securities market in the United States only if they are listed on certain exchanges, which presently
does not include the OTC Pink market. Because our ADSs are currently traded only on the OTC Pink market, any dividends paid on
our ADSs are not expected to qualify for the lower rate unless we are eligible for the benefits of the U.S.-Australia Tax Treaty.
U.S. Holders should consult their own tax advisors regarding the availability of the lower rate for any cash dividends paid with
respect to our ADSs or ordinary shares.



If an Australian withholding tax applies
to cash dividends paid to a U.S. Holder on our ADSs or ordinary shares, as discussed in “Australian Tax Consequences”
above, such tax may be treated as a foreign tax eligible for a deduction from such holder’s U.S. federal taxable income
or a foreign tax credit against such holder’s U.S. federal income tax liability (subject to applicable conditions and limitations).
In addition, if such Australian tax applies to any such dividends, a U.S. Holder may be entitled to certain benefits under the
U.S.-Australia Tax Treaty, if such holder is considered a resident of the United States for purposes of, and otherwise meets the
requirements of, the U.S.-Australia Tax Treaty. U.S. Holders should consult their own tax advisors regarding the deduction or
credit for any such Australian tax and their eligibility for the benefits of the U.S.-Australia Tax Treaty.



Taxation on the Disposition of ADSs
or Ordinary Shares



Upon a sale or other taxable disposition
of our ADSs or ordinary shares, and subject to the PFIC rules discussed below, a U.S. Holder generally will recognize capital
gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in
our ADSs or ordinary shares.



The regular U.S. federal income tax rate
on capital gains recognized by U.S. Holders generally is the same as the regular U.S. federal income tax rate on ordinary income,
except that long term capital gains recognized by non-corporate U.S. Holders generally are subject to U.S. federal income tax
at a maximum regular rate of 20%. Capital gain or loss will constitute long-term capital gain or loss if the U.S. Holder’s
holding period for our ADSs or ordinary shares exceeds one year. The deductibility of capital losses is subject to various limitations.



If an Australian capital gains or income
tax applies to any gain from the disposition of our ADSs or ordinary shares by a U.S. Holder, as discussed in “Australian
Tax Consequences” above, such tax may be treated as a foreign tax eligible for a deduction from such holder’s
U.S. federal taxable income or a foreign tax credit against such holder’s U.S. federal income tax liability (subject to
applicable conditions and limitations). In addition, if such Australian tax applies to any such gain, a U.S. Holder may be entitled
to certain benefits under the U.S.-Australia Tax Treaty, if such holder is considered a resident of the United States for purposes
of, and otherwise meets the requirements of, the U.S.-Australia Tax Treaty. U.S. Holders should consult their own tax advisors
regarding the deduction or credit for any such Australian tax and their eligibility for the benefits of the U.S.-Australia Tax
Treaty.



Additional Taxes



U.S. Holders that are individuals, estates
or trusts and whose income exceeds certain thresholds generally will be subject to a 3.8% Medicare contribution tax on unearned
income, including, without limitation, dividends on, and gains from the sale or other taxable disposition of, our ADSs or ordinary
shares, subject to certain limitations and exceptions. Under applicable Treasury Regulations, in the absence of a special election,
such unearned income generally would not include income inclusions under the qualified electing fund (“QEF”) rules
discussed below under “— Passive Foreign Investment Company Rules,” but would include distributions of earnings
and profits from a QEF. U.S. Holders should consult their own tax advisors regarding the effect, if any, of such tax on their
ownership and disposition of our ADSs or ordinary shares.



Passive Foreign Investment Company Rules



A foreign (i.e., non-U.S.) corporation
will be a PFIC if either (a) at least 75% of its gross income in a taxable year of the foreign corporation, including its pro
rata share of the gross income of any corporation in which it is considered to own at least 25% of the shares by value, is passive
income, or (b) at least 50% of its assets in a taxable year of the foreign corporation, ordinarily determined based on fair market
value and averaged quarterly over the year, including its pro rata share of the assets of any corporation in which it is considered
to own at least 25% of the shares by value, are held for the production of, or produce, passive income. Passive income generally
includes dividends, interest, rents and royalties (other than certain rents or royalties derived from the active conduct of a
trade or business), and gains from the disposition of passive assets.



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Based on the composition (and
estimated values) of the assets and the nature of the income of us and our subsidiaries for our taxable year ended
June 30, 2016, we do not expect to be treated as a PFIC for such taxable year. However, because we have not performed a
definitive analysis as to our PFIC status for our 2016 fiscal year, there can be no assurance with respect to our status as a
PFIC for such taxable year.



If we are determined
to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. Holder of our ADSs or
ordinary shares, and the U.S. Holder did not make a timely QEF election for our first taxable year as a PFIC in which the U.S.
Holder held (or was deemed to hold) our ADSs or ordinary shares, a QEF election along with a purging election, or a mark-to-market
election, each as described below, such holder generally will be subject to special rules for regular U.S. federal income tax
purposes with respect to:



| | · | any gain recognized by the U.S. Holder on the sale or other disposition of its ADSs or ordinary
    shares; and
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | any “excess distribution” made to the U.S. Holder (generally, any distributions
    to such U.S. Holder during a taxable year of the U.S. Holder that are greater than 125% of the average annual distributions
    received by such U.S. Holder in respect of our ADSs or ordinary shares during the three preceding taxable years of such U.S.
    Holder or, if shorter, such U.S. Holder’s holding period for our ADSs or ordinary shares).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Under these rules,



| | · | the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S.
    Holder’s holding period for our ADSs or ordinary shares;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized
    the gain or received the excess distribution or to the period in the U.S. Holder’s holding period before the first day
    of our first taxable year in which we qualified as a PFIC will be taxed as ordinary income;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and
    included in its holding period will be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder;
    and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the interest charge generally applicable to underpayments of tax will be imposed in respect
    of the tax attributable to each such other taxable year of the U.S. Holder.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In general, if we are determined to be
a PFIC, a U.S. Holder may avoid the PFIC tax consequences described above with respect to our ADSs or ordinary shares by making
a timely QEF election (or a QEF election along with a purging election). Pursuant to the QEF election, a U.S. Holder generally
will be required to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings
and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S.
Holder in which or with which our taxable year ends if we are treated as a PFIC for that taxable year. A U.S. Holder may make
a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any
such taxes will be subject to an interest charge.



The QEF election is made on a shareholder-by-shareholder
basis and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching
a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund),
including the information provided in a PFIC annual information statement, to a timely filed U.S. federal income tax return for
the taxable year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement
with such return and if certain other conditions are met or with the consent of the IRS.



In order to comply with the requirements
of a QEF election, a U.S. Holder must receive certain information from us. Upon request from a U.S. Holder, we will endeavor to
provide to the U.S. Holder no later than 90 days after the request such information as the IRS may require, including a PFIC annual
information statement, in order to enable the U.S. Holder to make and maintain a QEF election. However, there is no assurance
that we will have timely knowledge of our status as a PFIC in the future or of the required information to be provided.



If a U.S. Holder has made a QEF election
with respect to our ADSs or ordinary shares, and the special tax and interest charge rules do not apply to such ADSs or ordinary
shares (because of a timely QEF election for our first taxable year as a PFIC in which the U.S. Holder holds (or is deemed to
hold) such ADSs or ordinary shares or a QEF election, along with a purge of the PFIC taint pursuant to a purging election, as
described below), any gain recognized on the sale or other taxable disposition of such ADSs or ordinary shares generally will
be taxable as capital gain and no interest charge will be imposed. As discussed above, for regular U.S. federal income tax purposes,
U.S. Holders of a QEF generally are currently taxed on their pro rata shares of the QEF’s earnings and profits, whether
or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously included in income
generally should not be taxable as a dividend to such U.S. Holders. The adjusted tax basis of a U.S. Holder’s ADSs or ordinary
shares in a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as
dividends, under the above rules. Similar basis adjustments apply to property if by reason of holding such property the U.S. Holder
is treated under the applicable attribution rules as owning ADSs or ordinary shares in a QEF.



Although a determination as to our PFIC
status will be made annually, an initial determination that we are a PFIC generally will apply for subsequent years to a U.S.
Holder who held (or was deemed to hold) our ADSs or ordinary shares while we were a PFIC, whether or not we meet the test for
PFIC status in those subsequent years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as
a PFIC in which the U.S. Holder holds (or is deemed to hold) our ADSs or ordinary shares, however, will not be subject to the
PFIC tax and interest charge rules discussed above with respect to such ADSs or ordinary shares. In addition, such U.S. Holder
will not be subject to the QEF inclusion regime with respect to such ADSs or ordinary shares for any of our taxable years that
end within or with a taxable year of the U.S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is
not effective for each of our taxable years in which we are a PFIC and during which the U.S. Holder holds (or is deemed to hold)
our ADSs or ordinary shares, the PFIC rules discussed above will continue to apply to such ADSs or ordinary shares unless the
holder files on a timely filed U.S. income tax return (including extensions) a QEF election and a “purging election”
to recognize under the rules of Section 1291 of the Code any gain that the U.S. Holder would otherwise recognize if the U.S. Holder
had sold our ADSs or ordinary shares for their fair market value on the “qualification date.” The qualification date
is the first day of our tax year in which we qualify as a



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QEF with respect to such U.S. Holder. The purging election
can only be made if such U.S. Holder held our ADSs or ordinary shares on the qualification date. A purging election generally
creates a deemed sale of such ADSs or ordinary shares at their fair market value. The gain recognized by the purging election
generally will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described
above. As a result of the purging election, the U.S. Holder generally will increase the adjusted tax basis in its ADSs or ordinary
shares by the amount of gain recognized and will also have a new holding period in its ADSs or ordinary shares for purposes of
the PFIC rules.



Alternatively, if a U.S. Holder, at the
close of its taxable year, owns (or is deemed to own) ADSs or ordinary shares in a PFIC that are treated as marketable stock,
the U.S. Holder may make a mark-to-market election with respect to such ADSs or ordinary shares for such taxable year. If the
U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which the U.S. Holder holds
(or is deemed to hold) our ADSs or ordinary shares and for which we are determined to be a PFIC, such holder generally will not
be subject to the PFIC rules described above with respect to its ADSs or ordinary shares as long as such ADSs or ordinary shares
continue to be treated as marketable stock. Instead, in general, the U.S. Holder will include as ordinary income for each year
that we are treated as a PFIC the excess, if any, of the fair market value of its ADSs or ordinary shares at the end of its taxable
year over the adjusted tax basis in its ADSs or ordinary shares. The U.S. Holder also will be allowed to take an ordinary loss
in respect of the excess, if any, of the adjusted tax basis of its ADSs or ordinary shares over the fair market value of its ADSs
or ordinary shares at the end of its taxable year (but only to the extent of the net amount of previously included income as a
result of the mark-to-market election). The U.S. Holder’s adjusted tax basis in its ADSs or ordinary shares will be adjusted
to reflect any such income or loss amounts, and any further gain recognized on a sale or other taxable disposition of our ADSs
or ordinary shares in a taxable year in which we are treated as a PFIC will be treated as ordinary income. Special tax rules may
also apply if a U.S. Holder makes a mark-to-market election for a taxable year after the first taxable year in which the U.S.
Holder holds (or is deemed to hold) our ADSs or ordinary shares and for which we are determined to be a PFIC.



The mark-to-market election is available
only for stock that is regularly traded on a national securities exchange that is registered with the Securities and Exchange
Commission, which does not include the OTC Pink market, or on a foreign exchange or market that the IRS determines has rules sufficient
to ensure that the market price represents a legitimate and sound fair market value. Because our ADSs are currently traded only
on the OTC Pink market, our ADSs are not expected to be treated as marketable stock for purposes of the election. U.S. Holders
should consult their own tax advisors regarding the availability and tax consequences of a mark-to-market election with respect
to our ADSs or ordinary shares under their particular circumstances.



If we are a PFIC and, at any time, have
a foreign subsidiary that is classified as a PFIC, a U.S. Holder of our ADSs or ordinary shares generally should be deemed to
own a portion of the shares of such lower-tier PFIC, and generally could incur liability for the deferred tax and interest charge
described above if we receive a distribution from, or dispose of all or part of our interest in, or the U.S. Holder were otherwise
deemed to have disposed of an interest in, the lower-tier PFIC. Upon request, we will endeavor to cause any lower-tier PFIC to
provide to a U.S. Holder no later than 90 days after the request the information that may be required to make or maintain a QEF
election with respect to the lower-tier PFIC. However, there is no assurance that we will have timely knowledge of the status
of any such lower-tier PFIC or that we will be able to cause the lower-tier PFIC to provide the required information. A mark-to-market
election generally would not be available with respect to such a lower-tier PFIC. U.S. Holders are urged to consult their own
tax advisors regarding the tax issues raised by lower-tier PFICs.



A U.S. Holder that owns (or is deemed
to own) ADSs or ordinary shares in a PFIC during any taxable year of the U.S. Holder may have to file an IRS Form 8621 (whether
or not a QEF election or mark-to-market election is or has been made) with such U.S. Holder’s U.S. federal income tax return
and provide such other information as may be required by the U.S. Treasury Department.



The rules dealing
with PFICs and with the QEF and mark-to-market elections are very complex and are affected by various factors in addition to those
described above. Accordingly, U.S. Holders of our ADSs or ordinary shares should consult their own tax advisors concerning the
application of the PFIC rules to our ADSs or ordinary shares under their particular circumstances.



Non-U.S. Holders



Cash dividends paid or deemed paid to
a Non-U.S. Holder with respect to our ADSs or ordinary shares generally will not be subject to U.S. federal income tax unless
such dividends are effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States
(and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base that such holder
maintains or maintained in the United States).



In addition, a Non-U.S. Holder generally
will not be subject to U.S. federal income tax on any gain attributable to a sale or other taxable disposition of our ADSs or
ordinary shares unless such gain is effectively connected with its conduct of a trade or business in the United States (and, if
required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base that such holder maintains
or maintained in the United States) or the Non-U.S. Holder is an individual who is present in the United States for 183 days or
more in the taxable year of such sale or other disposition and certain other conditions are met (in which case, such gain from
U.S. sources generally is subject to U.S. federal income tax at a 30% rate or a lower applicable tax treaty rate).



Cash dividends and gains that are effectively
connected with the Non-U.S. Holder’s conduct of a trade or business in the United States (and, if required by an applicable
income tax treaty, are attributable to a permanent establishment or fixed base that such holder maintains or maintained in the
United States) generally will be subject to regular U.S. federal income tax at the same regular U.S. federal income tax rates
as applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income
tax purposes, may also be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.



Backup Withholding and Information Reporting



In general, information reporting for
U.S. federal income tax purposes should apply to cash distributions made on our ADSs or ordinary shares within the United States
to a U.S. Holder (other than an exempt recipient) and to the proceeds from sales and other dispositions of our ADSs or ordinary
shares by a U.S. Holder (other than an exempt recipient) to or through a U.S. office of a broker. Payments made (and sales and
other dispositions effected at an office) outside the United States will be subject to information reporting in limited circumstances.
In addition, certain information concerning a U.S. Holder’s adjusted tax basis in its ADSs or ordinary shares and adjustments
to that tax basis and whether any gain or



47


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loss with respect to such ADSs or ordinary shares is long-term
or short-term also may be required to be reported to the IRS, and certain holders may be required to file an IRS Form 8938 (Statement
of Specified Foreign Financial Assets) to report their interest in our ADSs or ordinary shares.



Moreover, backup
withholding of U.S. federal income tax at a rate of 28% generally will apply to cash dividends paid on our ADSs or ordinary shares
to a U.S. Holder (other than an exempt recipient) and the proceeds from sales and other dispositions of our ADSs or ordinary shares
by a U.S. Holder (other than an exempt recipient), in each case who:



| | · | fails to provide an accurate taxpayer identification number;  
| | - | --------------------------------------------------------------
| |   |                                                               
| | · | is notified by the IRS that backup withholding is required; or



| | · | in certain circumstances, fails to comply with applicable certification requirements.
| | - | -------------------------------------------------------------------------------------



A Non-U.S. Holder generally may eliminate
the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties
of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.



Backup withholding is not an additional
tax. Rather, the amount of any backup withholding will be allowed as a credit against a U.S. Holder’s or a Non-U.S. Holder’s
U.S. federal income tax liability and may entitle such holder to a refund, provided that certain required information is timely
furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and
the availability of and procedures for obtaining an exemption from backup withholding in their particular circumstances.



F. Dividends and paying agents



Not applicable.



G. Statement by experts



Not applicable.



H. Documents on display



Documents concerning us that are referred
to in this document may be inspected at our registered office at Suite 5, 442-446 Beaufort Street, Highgate, Western Australia
6003, Australia.



In addition, we will file annual reports
and other information with the Securities and Exchange Commission. We will file annual reports on Form 20-F and submit other information
under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange
Act and our officers, directors and principal shareholders will be exempt from the insider short-swing disclosure and profit recovery
rules of Section 16 of the Exchange Act. Annual reports and other information we file with the Commission may be inspected at
the public reference facilities maintained by the Commission at Room 1024, 100 F. Street, N.E., Washington, D.C. 20549, and at
its regional offices located at 233 Broadway, New York, New York 10279 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661, and copies of all or any part thereof may be obtained from such offices upon payment of the prescribed fees. You may call
the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms and you can request copies
of the documents upon payment of a duplicating fee, by writing to the Commission. In addition, the Commission maintains a web
site that contains reports and other information regarding registrants (including us) that file electronically with the Commission
which can be assessed at http://www.sec.gov.



ENFORCEABILITY OF CIVIL LIABILITIES



We are incorporated under the laws of Australia
with limited liability. We are incorporated in Australia because of certain benefits associated with being an Australian company,
such as political and economic stability, an effective judicial system, the absence of foreign exchange control or currency restrictions
and the availability of professional and support services. However, Australia has a less developed body of securities laws as
compared to the United States and provides protections for investors to a lesser extent. In addition, Australian companies may
not have standing to sue before the federal courts of the United States.



Our constituent documents do not contain
provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers,
directors and shareholders be arbitrated.



We conduct a significant portion of our
current operations in Australia and a substantial portion of our assets are located in Australia. We have appointed MOKO.Mobi,
Inc. as our agent upon whom process may be served in any action brought against us under the securities laws of the United States.
A majority of our directors and officers are nationals or residents of jurisdictions outside the United States and a substantial
portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service
of process within the United States upon these persons or to enforce against us or them judgments obtained in United States courts,
including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in
the United States.



Any final and conclusive monetary judgment
obtained against us in United States courts, for a definite sum, may be treated by the courts of Australia as a cause of action
in itself so that no retrial of the issues would be necessary prior to the enforcement of that judgment in Australia, provided
that an Australian court was satisfied that:



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| | · | the United States court issuing the judgment had jurisdiction in the matter and we either
    submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the judgment given by the United States court was not in respect of penalties, taxes, fines
    or similar fiscal or revenue obligations of us;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------



| | · | in obtaining judgment there was no fraud on the part of the person in whose favor judgment
    was given or on the part of the court;
| | - | -------------------------------------------------------------------------------------------------------------------------------------



| | · | recognition or enforcement of the judgment in Australia would not be contrary to public
    policy; and
| | - | -------------------------------------------------------------------------------------------------------



| | · | the proceedings pursuant to which judgment was obtained were not contrary to natural justice.
| | - | ---------------------------------------------------------------------------------------------



I. Subsidiary Information



Not required.



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK



MOKO’s activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The overall risk
management strategy focuses on the unpredictability of the finance markets and seeks to minimize the potential adverse effects
on the financial performance. MOKO uses different methods to measure different types of risk to which it is exposed. These methods
include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit
risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried out under the
direction of the Board. Please see note 2 to our audited consolidated financial statements for further information with respect
to certain of these risks.



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Fees and Expenses Payable Under the Deposit Agreement For
Our ADSs



|Persons depositing or withdrawing shares or ADS                                                                                                                                                |  |                                                                                                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|holders must pay:                                                                                                                                                                              |  | For:                                                                                                                                                           
|$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)                                                                                                                                          |  | •      Issuance
    of ADSs, including issuances resulting from a distribution of shares or rights or other property                                           
|                                                                                                                                                                                               |  | •      Cancellation
    of ADSs for the purpose of withdrawal, including if the Deposit Agreement terminates                                                   
|$0.05 (or less) per ADS                                                                                                                                                                        |  | •      Any
    cash distribution to ADS holders                                                                                                                
|A fee equivalent to the fee that would be payable if securities distributed to you had been
    shares and the shares had been deposited for issuance of ADSs                                  |  | •      Distribution
    of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders                    
|                                                                                                                                                                                               |  |                                                                                                                                                                
|$0.05 (or less) per ADSs per calendar year                                                                                                                                                     |  | •      Depositary
    services                                                                                                                                 
|Registration or transfer fees                                                                                                                                                                  |  | •      Transfer
    and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw
    shares
|Expenses of the depositary                                                                                                                                                                     |  | •      Cable,
    telex and facsimile transmissions (when expressly provided in the Deposit Agreement)                                                         
|                                                                                                                                                                                               |  | •      Converting
    foreign currency to U.S. dollars                                                                                                         
|Taxes and other governmental charges the depositary or the custodian have to pay on any
    ADS or share underlying an ADS, for example, share transfer taxes, stamp duty or withholding taxes |  | •      As
    necessary                                                                                                                                        
|Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                                    |  | •      As
    necessary                                                                                                                                        



The depositary collects its fees for delivery
and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries
acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed
or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services
by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants
acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that
are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those
services are paid.



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From time to time, the depositary may
make payments to us to reimburse and / or share revenue from the fees collected from ADS holders, or waive fees and expenses for
services provided, generally relating to costs and expenses arising out of establishment and maintenance of the ADS program. In
performing its duties under the deposit agreement, the depositary may use brokers, dealers or other services providers that are
affiliates of the depositary and that may earn or share fees or commissions.



PART II



ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES



Not applicable



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



A.-D. Material Modifications to the
Rights of Security Holders.



None.



E. Use of Proceeds.



Not Applicable.



ITEM 15. CONTROLS AND PROCEDURES



(a) Evaluation of Disclosure Controls and Procedures



An evaluation was performed under the supervision
and with the participation of our management, including our Chief Executive Officer and Principal Financial and Accounting
Officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures as of the end of
the fiscal year ended June 30, 2016. Based on that evaluation, our management, including our Chief Executive Officer and Principal
Financial and Accounting Officer, have concluded that our disclosure controls and procedures as of June 30, 2016 were
effective and that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



(b) Management’s annual report on internal control
over financial reporting



Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934, as amended. Internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with IFRS
and 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 a company’s assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting
principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s
management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements.



Because of its inherent limitations, a
system of internal control over financial reporting can provide only reasonable assurance with respect to consolidated financial
statements preparation and presentation and may not prevent or detect misstatements. 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.



As required by Section 404 of the Sarbanes-Oxley
Act of 2002 and related rules as promulgated by the SEC, our management assessed the effectiveness of the our internal control
over the financial reporting as of June 30, 2016, using criteria established in Internal Control - Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment using those criteria,
our management concluded that our internal control over financial reporting was effective as of June 30, 2016.



(c) Attestation report of the registered public accounting
firm



Not applicable.



(d) Changes in Internal Controls over Financial Reporting



There were no changes in our internal control
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the year ended June 30, 2016
that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
It should be noted that while our management believes that our disclosure controls and procedures provide a reasonable level of
assurance; our management does not expect that our disclosure controls and procedures or internal financial controls will prevent
all errors or fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.



ITEM 16.    [RESERVED]



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ITEM 16A.  AUDIT COMMITTEE FINANCIAL EXPERT.



Our Board of Directors has determined that
Ms. Emma Waldon, is an independent financial expert serving on our audit committee.



ITEM 16B.  CODE OF ETHICS.



The Company has adopted
a Code of Conduct that applies to its Chief Executive Officer and all of its directors, officers and employees, or persons performing
similar functions. A copy of our Code of Conduct is available at its website. Any future changes to the Code of Conduct will be
posted on the Company’s website or filed as an exhibit to a report filed with the SEC within five business days of the change
being effective.



ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.



The following table represents aggregate
fees billed to the Company for fiscal years ended June 30, 2016 and 2015 by BDO East Coast Partnership and other BDO international
offices, the Company’s principal accounting firm.



|Accountant Fees and Services   |  | 2016 |         |  | 2015 |   
|------------------------------ |  | ---- | ------- |  | ---- | --
|Audit Fees                     |  | A$   | 175,680 |  |      | A$
|Audit Related Fees (F1 review) |  | A$   | 30,434  |  |      | A$
|Tax Fees                       |  |      | -       |  |      |   
|All Other Fees                 |  |      | -       |  |      |   
|                               |  | A$   | 206,114 |  |      | A$



Audit Fees



The audit fees for
the years ended June 30, 2016 and 2015, respectively, were paid for professional services rendered for the audits of our consolidated
financial statements, half year reviews, consents, and assistance with review of documents filed with the SEC.



Tax Fees



Not applicable.



Other Fees



Not applicable.



ITEM 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR
AUDIT COMMITTEES.



Not applicable.



ITEM 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER
AND AFFILIATED PURCHASERS.



Not applicable.



ITEM 16F.  CHANGE IN REGISTRANT’S CERTIFYING
ACCOUNTANT.



Not applicable.



ITEM 16G.  CORPORATE GOVERNANCE.



Not Applicable.



ITEM 16H.  MINE SAFETY DISCLOSURE.



Not applicable.



PART III



ITEM 17.  FINANCIAL STATEMENTS



Our audited Financial Statements are included as the “F”
pages attached to this report.



All financial statements in this Annual Report, unless otherwise
stated, are presented in accordance with IFRS.



ITEM 18.  FINANCIAL STATEMENTS



The Company has elected to provide financial statements pursuant
to ITEM 17.



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ITEM 19. EXHIBITS



|Exhibit No. |  | Description                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |  |                                                                                                                                                                              
|1.1*        |  | Constitution of the Registrant, as currently in effect                                                                                                                       
|1.2*        |  | Certificate of Registration on Change of Name dated February 28, 2007                                                                                                        
|1.3*        |  | Certificate of Registration on Change of Name dated December 18, 2008                                                                                                        
|2.1*        |  | Registrant’s Specimen American Depositary Receipt (included in Exhibit 4.2)                                                                                                  
|2.2*        |  | Form of Amended and Restated Deposit Agreement among the Registrant, the depositary and
    holder of the American Depositary Receipts                                       
|2.3*        |  | Form of Warrant issued to Northland Capital Markets                                                                                                                          
|4.1*        |  | 2014 U.S. Omnibus Securities and Incentive Plan                                                                                                                              
|4.2†*       |  | Letter of Agreement between American Intramural Sports Group LLC and the Registrant dated
    March 4, 2013                                                                  
|4.3†**      |  | Amended and Restated License and Services Agreement between IMLeagues LLC and the Registrant
    dated January 26, 2015                                                      
|4.4*        |  | Asset Purchase Agreement dated August 10, 2012 between Howmark Mobile LLC and the Registrant                                                                                 
|4.5*        |  | Memorandum dated April 9, 2013, as revised on April 15, 2013                                                                                                                 
|4.6*        |  | Memorandum of Confirmation dated October 2013                                                                                                                                
|4.7*        |  | Second Memorandum of Confirmation dated November 2013                                                                                                                        
|4.8*        |  | Clarification Agreement dated as of April 30, 2014                                                                                                                           
|4.9**       |  | Share Purchase Agreement (Series B-2) dated April 24, 2015 between Big Teams LLC and the
    Registrant                                                                      
|4.10**      |  | Amendment to Share Purchase Agreement (Series B-2) dated August 19, 2015 between Big Teams
    LLC and the Registrant                                                        
|4.11†**     |  | License and Services Agreement dated April 24, 2015 between Big Teams LLC and the Registrant                                                                                 
|4.12†       |  | First Amendment to Amended and Restated License and Services Agreement between IMLeagues LLC and the Registrant dated
    August 26, 2016                                    
|8.1         |  | List of Subsidiaries of the Registrant                                                                                                                                       
|11.1*       |  | Code of Business Conduct and Ethics of the Registrant                                                                                                                        
|12.1        |  | Certification of the Chief Executive Officer (Principal Executive Officer) pursuant to Rule
    13a-14(a) of the Securities Exchange Act, as amended                         
|12.2        |  | Certification of the Chief Financial Officer (Principal Financial Officer) pursuant to Rule
    13a-14(a) of the Securities Exchange Act, as amended                         
|13.1        |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18
    U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|15.1        |  | Consent of BDO East Coast Partnership to incorporation by reference in the registration
    statement on Form F-3 of the Registrant (File No. 333-205656).                   



|* |  | Incorporated by reference to the registration statement on Form F-1 of the Registrant
(File No. 333-161602).
|- |  | ------------------------------------------------------------------------------------------------------------



|** |  | Incorporated
                                         by reference to the Registrant’s Annual Report on Form 20-F for the year ended
                                         June 30, 2015.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|† |  | Confidential treatment has been requested with respect to portions of this exhibit.
|- |  | -----------------------------------------------------------------------------------



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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.



|MOKO SOCIAL MEDIA LIMITED                                    |                                                                                        | 
|------------------------------------------------------------ | -------------------------------------------------------------------------------------- | 
|                                                             |                                                                                        | 
|By:                                                          | /s/ Shripal Shah                                                                       | 
|Name: Shripal Shah                                           | Name:Emma Waldon                                                                       | 
|Title: Chief Executive Officer (Principal Executive Officer) | Title: Director and Company Secretary (Principal Financial and Accounting
    Officer)
|Date: October 31, 2016                                       | Date: October 31, 2016                                                                 | 



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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                         | Page      
|------------------------------------------------------------------------ | ----------
|                                                                         |           
|Report of Independent Registered Public Accounting Firm                  | F-2       
|Consolidated Statements of profit or loss and other comprehensive income | F-3       
|Consolidated Statements of financial position                            | F-5       
|Consolidated Statements of changes in equity                             | F-6       
|Consolidated Statements of cash flows                                    | F-8       
|Notes to Consolidated Financial Statements                               | F-9 – F-52



F-1


Table of Contents








Independent Auditor’s Report





To the Board of Directors and stockholders
of Moko Social Media Limited



We have audited the accompanying consolidated
financial statements of Moko Social Media Limited and its subsidiaries, which comprise the consolidated statements of financial
position as of June 30, 2015 and 2016, and the related consolidated statements of profit or loss and comprehensive income, changes
in equity and cash flows for the three years ended June 30, 2016, and the related notes to the consolidated financial statements.



Management’s Responsibility
for the Financial Statements



Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.



Auditor’s Responsibility



Our responsibility is to express an opinion
on these consolidated financial statements based on our audits. We conducted our audit 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 consolidated financial statements are free from material misstatement.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements.



We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Moko Social Media Limited and
its subsidiaries as of June 30, 2015 and 2016, and the results of their operations and their cash flows for three years ended
June 30, 2016, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board.



Emphasis of matter



Without modifying our opinion, we draw
attention to Note 1 in the financial report, which indicates that the ability of the consolidated entity to continue as a going
concern is dependent upon the future successful raising of necessary funding through equity. These conditions, along with other
matters as set out in Note 1, raises substantial doubt about the consolidated entity’s ability to continue as a going concern
and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course
of business.



/s/ BDO

BDO EAST COAST PARTNERSHIP

Sydney, Australia

31 October 2016





F-2


Table of Contents




CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME



For the year ended 30 June 2016



|                                                              |  |      |   |  | Consolidated | 
|------------------------------------------------------------- |  | ---- | - |  | ------------ | 
|                                                              |  | Note |   |  | 2016         | 
|                                                              |  |      |   |  | $            | 
|Revenue and other income                                      |  |      |   |  |              | 
|Revenue                                                       |  |      | 5 |  |              | 
|Interest income                                               |  |      | 5 |  |              | 
|Other income                                                  |  |      | 5 |  |              | 
|Fair value gain on deferred consideration                     |  |      | 5 |  |              | 
|Expenses                                                      |  |      |   |  |              | 
|Cost of providing goods and services                          |  |      |   |  |              | 
|License fee                                                   |  |      |   |  |              | 
|Computer expenses                                             |  |      |   |  |              | 
|Marketing expenses                                            |  |      |   |  |              | 
|Travel and entertainment expenses                             |  |      |   |  |              | 
|Occupancy expenses                                            |  |      |   |  |              | 
|Administration expenses                                       |  |      |   |  |              | 
|Exchange loss                                                 |  |      |   |  |              | 
|Finance costs                                                 |  |      |   |  |              | 
|Legal and professional fees                                   |  |      |   |  |              | 
|Employee benefits expenses                                    |  |      | 6 |  |              | 
|Share based payments                                          |  |      | 6 |  |              | 
|Depreciation and amortisation                                 |  |      | 6 |  |              | 
|Other expenses                                                |  |      | 6 |  |              | 
|Product cost                                                  |  |      |   |  |              | 
|Impairment expenses                                           |  |      | 6 |  |              | 
|                                                              |  |      |   |  |              | 
|Loss before income tax                                        |  |      |   |  |              | 
|Income tax benefit / (expense)                                |  |      | 7 |  |              | 
|                                                              |  |      |   |  |              | 
|Loss after income tax expense from continuing operations      |  |      |   |  |              | 
|Loss after income tax expense from discontinued operations    |  |      |   |  |              | 
|                                                              |  |      |   |  |              | 
|Loss after income tax                                         |  |      |   |  |              | 
|                                                              |  |      |   |  |              | 
|Other comprehensive income for the year, net of tax           |  |      |   |  |              | 
|Items that may be reclassified subsequently to profit or loss |  |      |   |  |              | 
|Exchange differences on translation of foreign operations     |  |      |   |  |              | 
|Total comprehensive income for the year,
    net of tax       |  |      |   |  |              | 
|                                                              |  |      |   |  |              | 
|Total comprehensive income for the year is attributable to:   |  |      |   |  |              | 
|Continuing operations                                         |  |      |   |  |              | 
|Discontinued operations                                       |  |      |   |  |              | 
|Total comprehensive income for the year                       |  |      |   |  |              | 
|                                                              |  |      |   |  |              | 
|Loss attributable to:                                         |  |      |   |  |              | 
|Owners of the Company                                         |  |      |   |  |              | 
|Non-controlling interest                                      |  |      |   |  |              | 
|                                                              |  |      |   |  |              | 



F-3


Table of Contents




CONSOLIDATED STATEMENT OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME



For the year ended 30 June 2016



|                                                                                   |  |      |  |  | Consolidated | 
|---------------------------------------------------------------------------------- |  | ---- |  |  | ------------ | 
|                                                                                   |  | Note |  |  | 2016         | 
|                                                                                   |  |      |  |  | $            | 
|Total comprehensive income for the year attributable to owners of the company:     |  |      |  |  |              | 
|Continuing operations                                                              |  |      |  |  |              | 
|Discontinued operations                                                            |  |      |  |  |              | 
|Owners of the Company                                                              |  |      |  |  |              | 
|                                                                                   |  |      |  |  |              | 
|Total comprehensive income for the year attributable to non-controlling interests: |  |      |  |  |              | 
|Continuing operations                                                              |  |      |  |  |              | 
|Discontinued operations                                                            |  |      |  |  |              | 
|Non-controlling interests                                                          |  |      |  |  |              | 



*The restatement of comparatives is related
to discontinued operations. Please refer to Note 8 Discontinued operations for further details



|                                                                           |  |  |    |  | Consolidated | 
|-------------------------------------------------------------------------- |  |  | -- |  | ------------ | 
|                                                                           |  |  |    |  | 2016         | 
|                                                                           |  |  |    |  | Cents        | 
|                                                                           |  |  |    |  |              | 
|Earnings per share attributable to the owners of MOKO Social Media Limited |  |  |    |  |              | 
|Basic / Diluted EPS                                                        |  |  | 26 |  |              | 
|                                                                           |  |  |    |  |              | 
|Earnings per share from discontinued operations                            |  |  |    |  |              | 
|Basic / Diluted EPS                                                        |  |  | 26 |  |              | 
|                                                                           |  |  |    |  |              | 
|Total Earnings per share from loss                                         |  |  |    |  |              | 
|Basic / Diluted EPS                                                        |  |  | 26 |  |              | 



THESE FINANCIAL STATEMENTS SHOULD BE READ
IN CONJUNCTION WITH THE ACCOMPANYING NOTES



F-4


Table of Contents




CONSOLIDATED STATEMENT
OF FINANCIAL POSITION



As at 30 June 2016



|                                    |  |      |  | Consolidated |            
|----------------------------------- |  | ---- |  | ------------ | -----------
|                                    |  | Note |  | 2016         |            
|                                    |  |      |  | $            |            
|Current assets                      |  |      |  |              |            
|Cash and cash equivalents           |  | 9    |  |              | 2,546,772  
|Trade and other receivables         |  | 10   |  |              | 38,660     
|Other current assets                |  | 11   |  |              | 326,643    
|Total current assets                |  |      |  |              | 2,912,075  
|                                    |  |      |  |              |            
|Non-current assets                  |  |      |  |              |            
|Property, plant and equipment       |  | 12   |  |              | 136,731    
|Intangibles                         |  | 13   |  |              | 100,835    
|Available-for-sale financial assets |  | 14   |  |              | 560,000    
|Total non-current assets            |  |      |  |              | 797,566    
|Total assets                        |  |      |  |              | 3,709,641  
|                                    |  |      |  |              |            
|Current liabilities                 |  |      |  |              |            
|Trade and other payables            |  | 15   |  |              | 1,047,672  
|Employee benefits                   |  | 16   |  |              | 168,210    
|Total current liabilities           |  |      |  |              | 1,215,882  
|                                    |  |      |  |              |            
|Non-current liabilities             |  |      |  |              |            
|Employee benefits                   |  | 16   |  |              | 11,818     
|Total non-current liabilities       |  |      |  |              | 11,818     
|Total liabilities                   |  |      |  |              | 1,227,700  
|                                    |  |      |  |              |            
|Net assets                          |  |      |  |              | 2,481,941  
|                                    |  |      |  |              |            
|Equity                              |  |      |  |              |            
|Issued capital                      |  | 17   |  |              | 69,142,733 
|Reserves                            |  | 18   |  |              | 14,053,478 
|Accumulated losses                  |  | 19   |  |              | (80,669,505
|Non-controlling interest            |  |      |  |              | (44,765    
|Total equity                        |  |      |  |              | 2,481,941  



THESE FINANCIAL STATEMENTS SHOULD BE READ IN CONJUNCTION WITH
THE ACCOMPANYING NOTES



F-5


Table of Contents




CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY



For the year ended 30 June 2016



|Consolidated
    (2015)                                            |  | Issued
    Capital |            |   | Foreign
    currency Translation Reserve |  |           | Option
    Reserves |  |  | Accumulated 
Losses |  |  | Non-
    controlling interest |             |   | Total | 
|------------------------------------------------------------------ |  | ------------------ | ---------- | - | ---------------------------------------- |  | --------- | ------------------- |  |  | ------------------- |  |  | ----------------------------- | ----------- | - | ----- | 
|                                                                   |  | $                  |            |   | $                                        |  |           | $                   |  |  | $                   |  |  | $                             |             |   | $     | 
|Balance at 30 June 2013                                            |  |                    | 24,656,473 |   |                                          |  | 814,848   |                     |  |  | 2,859,360           |  |  |                               | (25,457,309 | ) |       | 
|                                                                   |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Loss after income tax expense for the period                       |  |                    | -          |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | (13,472,361 | ) |       | 
|Other comprehensive income                                         |  |                    | -          |   |                                          |  | (244,676  | )                   |  |  | -                   |  |  |                               | -           |   |       | 
|Total comprehensive income for the year                            |  |                    |            |   |                                          |  | (244,676  | )                   |  |  |                     |  |  |                               | (13,472,361 | ) |       | 
|                                                                   |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Transactions with owners in their capacity as owners               |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Issue of ordinary shares on exercise of options                    |  |                    | 3,582,461  |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares on capital raising                        |  |                    | 14,161,910 |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares to consultants                            |  |                    | 160,000    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of performance shares to employees                           |  |                    | 200        |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares as consideration for business combination |  |                    | 602,365    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares in settlement of loans from directors     |  |                    | 200,000    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Capital raising costs                                              |  |                    | (1,683,747 | ) |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Share based payments - Options                                     |  |                    | -          |   |                                          |  | -         |                     |  |  | 5,561,272           |  |  |                               | -           |   |       | 
|Balance at 30 June 2014                                            |  |                    | 41,679,662 |   |                                          |  | 570,172   |                     |  |  | 8,420,632           |  |  |                               | (38,929,670 | ) |       | 
|                                                                   |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Loss after income tax expense for the period                       |  |                    | -          |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | (20,013,288 | ) |       | 
|Other comprehensive income                                         |  |                    | -          |   |                                          |  | 1,397,333 |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Total comprehensive income for the year                            |  |                    | -          |   |                                          |  | 1,397,333 |                     |  |  | -                   |  |  |                               | (20,013,288 | ) |       | 
|                                                                   |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Transactions with owners in their capacity as owners               |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Issue of ordinary shares on exercise of options                    |  |                    | 7,800,973  |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares on capital raising                        |  |                    | 8,762,325  |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares to consultants                            |  |                    | 300,000    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares to employees                              |  |                    | 115,324    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Issue of ordinary shares as consideration for business combination |  |                    | 200,000    |   |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Capital raising costs                                              |  |                    | (643,913   | ) |                                          |  | -         |                     |  |  | -                   |  |  |                               | -           |   |       | 
|Share based payments - Options                                     |  |                    | -          |   |                                          |  | -         |                     |  |  | 1,825,843           |  |  |                               | -           |   |       | 
|                                                                   |  |                    |            |   |                                          |  |           |                     |  |  |                     |  |  |                               |             |   |       | 
|Balance at 30 June 2015                                            |  |                    | 58,214,371 |   |                                          |  | 1,967,505 |                     |  |  | 10,246,475          |  |  |                               | (58,942,958 | ) |       | 



THESE FINANCIAL STATEMENTS SHOULD BE READ
IN CONJUNCTION WITH THE ACCOMPANYING NOTES



F-6


Table of Contents




CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY



For the year ended 30 June 2016



|Consolidated
    (2016)                              |  | Issued
    capital |            |   | Foreign
    currency translation reserve |  |           | Share
    based payments reserve |  |  | Accumulated
    losses |  |  | Non-
    controlling interest |             |   | Total | 
|---------------------------------------------------- |  | ------------------ | ---------- | - | ---------------------------------------- |  | --------- | -------------------------------- |  |  | ---------------------- |  |  | ----------------------------- | ----------- | - | ----- | 
|                                                     |  | $                  |            |   | $                                        |  |           | $                                |  |  | $                      |  |  | $                             |             |   | $     | 
|                                                     |  |                    |            |   |                                          |  |           |                                  |  |  |                        |  |  |                               |             |   |       | 
|Balance at 30 June 2015                              |  |                    | 58,214,371 |   |                                          |  | 1,967,505 |                                  |  |  | 10,246,475             |  |  |                               | (58,942,958 | ) |       | 
|                                                     |  |                    |            |   |                                          |  |           |                                  |  |  |                        |  |  |                               |             |   |       | 
|Loss after income tax expense for the year           |  |                    | -          |   |                                          |  | -         |                                  |  |  | -                      |  |  |                               | (21,457,299 | ) |       | 
|Non-controlling interest changes                     |  |                    | -          |   |                                          |  | -         |                                  |  |  | -                      |  |  |                               | (269,248    | ) |       | 
|Other comprehensive income                           |  |                    | -          |   |                                          |  | 590,423   |                                  |  |  | -                      |  |  |                               | -           |   |       | 
|Total comprehensive income for the year              |  |                    | -          |   |                                          |  | 590,423   |                                  |  |  | -                      |  |  |                               | (21,726,547 | ) |       | 
|                                                     |  |                    |            |   |                                          |  |           |                                  |  |  |                        |  |  |                               |             |   |       | 
|Transactions with owners in their capacity as owners |  |                    |            |   |                                          |  |           |                                  |  |  |                        |  |  |                               |             |   |       | 
|Issue of ordinary shares on capital raising          |  |                    | 11,778,867 |   |                                          |  | -         |                                  |  |  | -                      |  |  |                               | -           |   |       | 
|Issue of ordinary shares to consultants              |  |                    | 360,128    |   |                                          |  | -         |                                  |  |  | -                      |  |  |                               | -           |   |       | 
|Issue of ordinary shares to employees                |  |                    | 15,097     |   |                                          |  | -         |                                  |  |  | -                      |  |  |                               | -           |   |       | 
|Capital raising costs                                |  |                    | (1,225,730 | ) |                                          |  | -         |                                  |  |  | -                      |  |  |                               | -           |   |       | 
|Share based payments - Options                       |  |                    | -          |   |                                          |  | -         |                                  |  |  | 1,249,075              |  |  |                               | -           |   |       | 
|                                                     |  |                    |            |   |                                          |  |           |                                  |  |  |                        |  |  |                               |             |   |       | 
|Balance at 30 June 2016                              |  |                    | 69,142,733 |   |                                          |  | 2,557,928 |                                  |  |  | 11,495,550             |  |  |                               | (80,669,505 | ) |       | 



THESE FINANCIAL STATEMENTS SHOULD BE READ
IN CONJUNCTION WITH THE ACCOMPANYING NOTES



F-7


Table of Contents




CONSOLIDATED STATEMENT OF CASH FLOWS



For the year ended 30 June 2016



|                                                          |  |      |  | Consolidated |            
|--------------------------------------------------------- |  | ---- |  | ------------ | -----------
|                                                          |  | Note |  | 2016         |            
|                                                          |  |      |  | $            |            
|                                                          |  |      |  |              |            
|Cash flows from operating activities                      |  |      |  |              |            
|                                                          |  |      |  |              |            
|Net receipts from customers                               |  |      |  |              | 1,588,278  
|Research & Development tax refund                         |  |      |  |              | 905,747    
|Export market development grant received                  |  |      |  |              | -          
|Payments to suppliers and employees                       |  |      |  |              | (16,756,352
|Interest received                                         |  |      |  |              | 20,655     
|Interest and other finance costs paid                     |  |      |  |              | (74,341    
|Income taxes refund / (paid)                              |  |      |  |              | 6,889      
|Net cash used in operating activities                     |  | 21   |  |              | (14,309,124
|                                                          |  |      |  |              |            
|Cash flows from investing activities                      |  |      |  |              |            
|Proceeds from sale of property, plant and equipment       |  |      |  |              | 15,910     
|Payment for acquisition of business, net of cash acquired |  |      |  |              | -          
|Payment for sale of business                              |  |      |  |              | (69,224    
|Payment for investments                                   |  | 14   |  |              | (1,042,142 
|Payment for property, plant and equipment                 |  |      |  |              | (7,561     
|Payments for disposal of subsidiary                       |  |      |  |              | -          
|Net cash used in investing activities                     |  |      |  |              | (1,103,017 
|                                                          |  |      |  |              |            
|Cash flows from financing activities                      |  |      |  |              |            
|                                                          |  |      |  |              |            
|Proceeds from issues of shares                            |  |      |  |              | 11,778,867 
|Share issue transaction cost                              |  |      |  |              | (1,056,746 
|Proceeds from borrowings                                  |  |      |  |              | 1,500,000  
|Repayment of borrowings                                   |  |      |  |              | (1,500,000 
|Net cash provided by financing activities                 |  |      |  |              | 10,722,121 
|                                                          |  |      |  |              |            
|Net decrease in cash held                                 |  |      |  |              | (4,690,020 
|                                                          |  |      |  |              |            
|Cash and cash equivalents at beginning of the year        |  |      |  |              | 7,219,908  
|                                                          |  |      |  |              |            
|Effects of exchange rate changes on cash                  |  |      |  |              | 16,884     
|Cash and cash equivalents at end of the year              |  | 9    |  |              | 2,546,772  



THESE FINANCIAL STATEMENTS SHOULD BE READ
IN CONJUNCTION WITH THE ACCOMPANYING NOTES



F-8


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies



The principal accounting policies adopted
in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.



Reporting entity



MOKO Social Media Limited (the Company)
is a company domiciled in Australia. The consolidated financial statements of the Company as at and for the year ended 30 June
2016 comprises the Company and its subsidiaries (together referred to as the Consolidated Entity). The Consolidated Entity
is involved in tailored digital publishing of mobile applications for common interest groups, within the youth and young adult
demographic, in the United States of America.



The consolidated financial statements were
authorised for issue by the Board of Directors on 31 October 2016.



Basis of preparation



Statement of compliance



These general purpose financial statements
have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards
Board ('AASB') and the Corporations Act 2001, as appropriate for-profit oriented entities. These financial statements also comply
with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').



Historical cost convention



The financial statements have been prepared
under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial
assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment
and derivative financial instruments.



Going concern



The 30 June 2016 financial report has been
prepared on a going concern basis which contemplates continuity of normal business activities and the realisation of assets and
settlement of liabilities in the ordinary course of business.  This is not withstanding that the Consolidated Entity
generated a loss from continuing activities of $20,803,136 (2015: loss of $18,995,935) and continues to experience constraints
around cash flow, with a net cash outflow from operations for the full year of $14,309,124 (2015: $18,231,444).



In order to continue as a going concern,
the Consolidated Entity needs to raise additional funds. The directors acknowledge that the requirement to raise additional funding
represents a material uncertainty which may cast significant doubt over the ability of the Consolidated Entity to continue as a
going concern.



On 26 August 2016, the Consolidated Entity
announced it is undertaking a review of strategic options for the future of the Consolidated Entity and has appointed District
Capital Partners (DCP) to advise on alternatives and assist with the process. DCP is a financial advisory firm that specialises
in M&A transaction execution and corporate finance services. DCP are reviewing all possibilities including straight equity
investments and the potential sale of the Consolidated Entity and are currently seeking proposals from a number of interested parties.



The Consolidated Entity has received written
confirmation from a substantial shareholder of their current intention to provide additional working capital to the Consolidated
Entity to enable a potential transaction from the DCP process to be completed.



The Consolidated Entity also expects to
receive a Research & Development tax refund from the Australian Taxation Office. The Consolidated Entity has submitted a Research
& Development Tax Incentive Application for the financial year ended 30 June 2016 which results in a refund of $829,674. This
is subject to review by the Australian Tax Office and AusIndustry.



The Directors are confident that additional
funds can be raised and the Consolidated Entity can continue to meet its debts as and when they become due and payable. The financial
report has therefore been prepared on a going concern basis.



F-9


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Should the Consolidated Entity be unable
to continue as a going concern it may be required to realise its assets and discharge its liabilities other than in the normal
course of business and at amounts different to those stated in the financial statements. The financial statements do not include
any adjustments relating to the recoverability and classification of asset carrying amounts or the amount of liabilities that might
result should the Consolidated Entity be unable to continue as a going concern and meet its debts as and when they fall due.



Critical accounting estimates



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



New, revised or amending Accounting Standards and Interpretations
adopted



The Consolidated Entity has adopted all
of the new, revised or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB')
that are mandatory for the current reporting period.



Any new, revised or amending Accounting
Standards or Interpretations that are not yet mandatory have generally not been early adopted, unless stated otherwise.



The adoption of these Accounting Standards
and Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity.



Parent entity information



In accordance with the Corporations Act
2001, these financial statements present the results of the Consolidated Entity only. Supplementary information about the parent
entity is disclosed in Note 24.



Principles of consolidation



The consolidated financial statements incorporate
the assets and liabilities of all subsidiaries of MOKO Social Media Limited as at 30 June 2016 and the results of all subsidiaries
for the year then ended. MOKO Social Media Limited and its subsidiaries together are referred to in these financial statements
as the 'Consolidated Entity' or ‘MOKO’.



Subsidiaries are all those entities over
which the Consolidated Entity has the power to govern the financial and operating policies, generally accompanying a shareholding
of more than one-half of the voting rights. The effects of potential exercisable voting rights are considered when assessing whether
control exists. Subsidiaries are fully consolidated from the date on which control is transferred to the Consolidated Entity. They
are de-consolidated from the date that control ceases.



Intercompany transactions, balances and
unrealised gains on transactions between entities in the Consolidated Entity are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Consolidated Entity.



The acquisition of subsidiaries is accounted
for using the acquisition method of accounting. Refer to the 'business combinations' accounting policy for further details. A change
in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the
consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.



Non-controlling interest in the results
and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income and statement
of financial position of the Consolidated Entity. Losses incurred by the Consolidated Entity are attributed to the non-controlling
interest in full, even if that results in a deficit balance.



Where the Consolidated Entity loses control
over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together
with any cumulative translation differences recognised in equity. The Consolidated Entity recognises the fair value of the consideration
received and the fair value of any investment retained together with any gain or loss in profit or loss.



F-10


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Segment reporting



Operating segments are reported in a manner
consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision makers, who
are responsible for allocating resources and assessing performance of the operating segments, is the Board of Directors.



Foreign currency translation



Functional and presentation currency



These consolidated financial statements
are presented in Australian dollars, which is MOKO Social Media Limited’s functional and presentation currency.



The functional currencies of the overseas
subsidiaries are as follows:



|Entity               |  | Functional
    currency    
|-------------------- |  | ---------------------------
|MOKO.mobi Inc        |  | United States Dollars (USD)
|MOKO Door Foundation |  | United States Dollars (USD)



The functional currencies of the overseas
subsidiaries are translated to the presentation currency.



Foreign currency transactions



Foreign currency transactions are translated
into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are
translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange
rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when
fair values were determined.



Exchange differences arising on the translation
of monetary items are recognised in the statement of profit or loss and other comprehensive income, except where deferred in equity
as a qualifying cash flow or net investment hedge.



Exchange differences arising on the translation
of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise
the exchange difference is recognised in the statement of profit or loss and other comprehensive income.



Foreign operations



The assets and liabilities of foreign operations
are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations
are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions,
for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency
reserve in equity.



The foreign currency reserve is recognised
in profit or loss when the foreign operation or net investment is disposed of.



Revenue and other income



Revenue is recognised when it is probable that the
economic benefit will flow to the Consolidated Entity and the revenue can be reliably measured. Revenue is measured at the
fair value of the consideration received or receivable.



All revenue is stated net of the amount of goods and services
tax (GST).



Rendering of services



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



The Mobile Social segment generates revenue
from its customers who are the individually contracted mobile users engaging in MOKO’s mobile social networks or using its
community and chat products, typically via pre-paid, monthly, subscriptions which are billed directly to user’s mobile phone
accounts, enabling them to access and



F-11


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



participate in our mobile chat and share
communities. Given the short subscription period and the inability to cancel mid-month, revenue is recognised when paid by the
carriers to MOKO each month.



‘Carriers’ are individual telecommunication
service providers, who typically have their own network and are consumer facing in the marketplace, and provide the MOKO social
chat platform. Revenue is recognised gross with amounts payable to carriers and aggregators as a cost of sale. This accurately
represents the Consolidated Entity’s relationship with its carriers as being the “principal” rather than “agent”
as noted in AASB 118 —“Revenue”.



The Mobile Advertising segment is MOKO’s
proprietary U.S. mobile performance advertising network, historically has primarily consisted of working with performance based
advertisers seeking specific audiences for offers and with publishers to identify optimal advertisements or offers for their audiences.
Where applicable, the Company records its revenue from this line of business on a gross basis. All other revenue in the Mobile
Advertising unit is recorded net.



Sale of goods



Sale of goods revenue is recognised
at the point of sale, which is where the customer has taken delivery of the goods, the risks and rewards are transferred to
the customer and there is a valid sales contract. Amounts disclosed as revenue are net of sales returns and trade
discounts.



Interest



Interest received is recognised on a proportional basis to the
interest rates applicable to the financial assets.



Other income



Other income is recognised when it is received or when the right
to receive payment is established.



Government grants



Grants from the government are recognised
at their fair value where there is a reasonable assurance that the grant will be received and the Consolidated Entity will comply
with all attached conditions. Government grants relating to costs are deferred and recognised in the statement of profit or loss
and other comprehensive.



Income tax



The income tax expense or revenue for the
period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets
and liabilities and their carrying amounts in the financial statements, and to unused tax losses.



Deferred tax assets and liabilities are
recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled,
based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to
the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception
is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset
or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination,
that at the time of the transaction did not affect either accounting profit or taxable profit or loss.



Deferred tax assets are recognised for
deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses. Deferred tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current
tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the liability simultaneously.



Current and deferred tax balances attributable
to amounts recognised directly in equity are also recognised directly in equity.



F-12


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Discontinued operations



A discontinued operation is a component
of an entity, being a cash-generating unit (or a group of cash generating units), that either has been disposed of, 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 the view to resale. The results of discontinued operations are presented separately on the face of the statement of profit
or loss and other comprehensive income.



Cash and cash equivalents



For cash flow statement presentation purposes,
cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities 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, and bank overdrafts.



Trade and other receivables



Trade receivables are recognised initially
at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are generally due
for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be
uncollectible are written off. A provision for impairment of trade receivables is raised when there is objective evidence that
the Consolidated Entity will not be able to collect all amounts due according to the original terms of receivables. The amount
of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted
if the effect of discounting is immaterial. The amount of the impairment is recognised in the statement of profit or loss and other
comprehensive income.



Other receivables are recognised at amortised
cost, less any provision for impairment.



Property, plant and equipment



Each class of property, plant and equipment
is carried at cost value less, where applicable, any accumulated depreciation and impairment losses.



The carrying amount of plant and equipment
is reviewed annually by the Directors to ensure it is not in excess of the recoverable amount of the assets.



Depreciation



The depreciable amount of all fixed assets
is depreciated on a straight-line basis over their useful lives commencing from the time the asset is held ready for use.



The depreciation rates used for each class of depreciable assets
are:



|Class
    of fixed asset |  | Depreciation
    rate                 
|------------------------ |  | --------------------------------------
|Computer equipment       |  | 371⁄2% - 60% per annum                  
|Furniture and fittings   |  | 111⁄2% - 30% per annum                  
|Leasehold improvements   |  | Shorter of lease term or 20% per annum



The assets’ residual values and useful
lives are reviewed, and adjusted if appropriate, at each reporting date.



An asset’s carrying amount is written
down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included
in the statement of profit or loss and other comprehensive income.



F-13


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



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.



A distinction is made between finance leases,
which effectively transfer from the lessor to the lessee substantially all risks and benefits incidental to ownership of leased
assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.



Finance leases are capitalised. A lease
asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments.
Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant
rate of interest on the remaining balance of the liability.



Leased assets acquired under a finance
lease are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term
if there is no reasonable certainty that the Consolidated Entity will obtain ownership at the end of the lease term.



Operating lease payments, net of any incentives
received from the lessor, are charged to profit or loss on a straight line basis over the term of the lease.



Intangible assets



Intangible assets acquired as part of a
business combination, other than goodwill, are initially measured at their fair value at the date of acquisition. Intangible assets
acquired separately are initially recognised at cost. Intangible assets are subsequently measured at cost less amortisation and
any impairment. The gains or losses recognised in profit or loss arising from de-recognition of intangible assets are measured
as the difference between net disposal proceeds and the carrying amount of the intangible asset. The useful lives of finite life
intangibles are reviewed annually by the Directors. Changes in the expected pattern of consumption or useful life are accounted
for prospectively by changing the amortisation method or period.



Goodwill



Goodwill arises on business combinations
and is not amortised. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances
indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are
taken to profit or loss and are not subsequently reversed.



The amortisation rates used for each class
of amortisable assets are:



|Class
    of fixed asset              |  | Amortisation
    rate (1)
|------------------------------------- |  | -------------------------
|Computer software                     |  | 50% per annum            
|Customer contracts                    |  | 50% per annum            
|Capitalised product development costs |  | 50% per annum            
|Intellectual Property                 |  | 20% - 50% per annum      
|Customer Database                     |  | 100% per annum           



| | (1) | Straight line amortisation is used as this reflects the periods over which the Consolidated Entity
expects to realise the benefits from the underlying assets
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



Computer software



Computer software costs associated with
software are deferred and amortised on a straight line basis over the period of their expected benefit.



Customer contracts



Customer contracts acquired in a business
combination are amortised on a straight line basis over the period of their expected benefit.



F-14


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Capitalised product development cost



Research costs are expensed in the period
in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering
its commercial and technical feasibility; the Consolidated Entity is able to use or sell the asset; the Consolidated Entity has
sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs
are amortised on a straight line basis over the period of their expected benefit.



Intellectual Property



Intellectual property acquired in a business
combination are amortised on a straight line basis over the period of their expected benefit.



Customer database



Customer databases acquired in a business
combination are amortised on a straight line basis over the period of their expected benefit.



Impairment of non-financial assets



Goodwill and other 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 non-financial assets are reviewed 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.



Recoverable amount is the higher of an
asset's fair value less costs to sell and value-in-use. The value-in-use is the present value of the estimated future cash flows
relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets
that do not have independent cash flows are grouped together to form a cash-generating unit.



Investments and other financial assets



Investments and other financial assets
are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets
at fair value through profit or loss. They are subsequently measured at either amortised cost or fair value depending on their
classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories
is restricted.



Financial assets are derecognised when
the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has
transferred substantially all the risks and rewards of ownership.



Available-for-sale financial assets



Available-for-sale financial assets are
non-derivative financial assets, principally equity securities, that are either designated as available-for-sale or not classified
as any other category. After initial recognition, fair value movements are recognised in other comprehensive income through the
available-for-sale reserve in equity. Cumulative gain or loss previously reported in the available-for-sale reserve is recognised
in profit or loss when the asset is derecognised or impaired.



Impairment of financial assets



The consolidated entity assesses at the
end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or
delinquency in payments; or observable data indicating that there is a measurable decrease in estimated future cash flows.



The amount of the impairment allowance
for financial assets carried at cost is the difference between the asset's carrying amount and the present value of estimated future
cash flows, discounted at the current market rate of return for similar financial assets.



F-15


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Trade and other payables



These amounts represent liabilities for
goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition.



Employee benefits



Short-term employee benefits



Liabilities for wages and salaries, including
non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of the reporting date are measured
at the amounts expected to be paid when the liabilities are settled.



Other long-term employee benefits



The liability for annual leave and long
service leave not expected to be settled within 12 months of the reporting date are 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
currency that match, as closely as possible, the estimated future cash outflows.



Defined contribution superannuation
expense



Contributions to defined contribution superannuation
plans are expensed in the period in which they are incurred.



Share based payments



When goods or services received are acquired
in a share-based payment transaction, they are recognised as expenses or assets, as determined by the nature of the goods or services
received, over the vesting period attached to the equity instrument acquired in the transaction. A corresponding increase is recognised
in equity.



The goods or services are measured by reference
to the fair value of goods or services received, or where this is not possible, indirectly, by reference to the fair value of the
equity instrument acquired at grant date.



The fair value of securities provided to
Directors and employees is determined by reference to the fair value of the equity instrument granted.



Business combinations



The acquisition method of accounting is
used to account for business combinations regardless of whether equity instruments or other assets are acquired.



The consideration transferred is the sum
of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer
to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combination,
the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of the acquiree’s
identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.



On the acquisition of a business, the Consolidated
Entity assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic conditions, the Consolidated Entity’s operating or accounting policies and other pertinent
conditions in existence at the acquisition date. The difference between the acquisition date fair value of assets acquired, liabilities
assumed and any non-controlling interest in the acquiree and the fair value of the consideration transferred and the fair value
of any pre-existing investment in the acquiree is recognised as goodwill. If the consideration transferred and the pre-existing
fair value is less than the fair value of the identifiable net assets acquired, being a bargain purchase to the acquirer, the difference
is recognised as a gain directly in profit or loss by the acquirer on the acquisition-date, but only after a reassessment of the
identification and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the consideration
transferred and the acquirer's previously held equity interest in the acquirer.



F-16


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



Business combinations are initially accounted
for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts recognised and also recognises additional
assets or liabilities during the measurement period, based on new information obtained about the facts and circumstances that existed
at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisition or
(ii) when the acquirer receives all the information possible to determine fair value and at which time the business combination
accounting is final.



Issued capital



Ordinary 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.



Earnings per share



Basic earnings per share



Basic earnings per share is calculated
by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary
shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in
ordinary shares issued during the year.



Diluted earnings per share



Diluted earnings per share adjusts the
figures 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 shares assumed to have
been issued for no consideration in relation to dilutive potential ordinary shares.



Goods and Services Tax (GST)



Revenues, expenses and assets are recognised
net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is
recognised as part of the cost of acquisition of the asset or as part of the expense.



Receivables and payables are stated inclusive
of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included
with other receivables or payables in the statement of financial position.



Cash flows are presented on a gross basis.
The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation
authority, are presented as operating cash flow.



Comparative Figures



Certain comparative figures have been adjusted to conform to
changes in presentation for the current financial year.



New accounting standards and interpretations that are not
yet mandatory



Australian Accounting Standards and Interpretations
that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Consolidated Entity for
the annual reporting period ended 30 June 2016, unless noted below. The Consolidated Entity's assessment of the impact of these
new or amended Accounting Standards and Interpretations, most relevant to the Consolidated Entity, are set out below.



AASB 15: Revenue from Contracts with Customers



This standard is applicable to annual reporting
periods beginning on or after 1 January 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards –
Effective Date of AASB 15.



When effective, this Standard will replace
the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of
exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary
exchanges between entities in the same line of business to facilitate sales to customers and potential customers.



The core principle of the Standard is that
an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB
15 provides the following five-step process:



F-17


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 1: Significant accounting policies (continued)



| | - | identify the contract(s) with a customer;
| | - | -----------------------------------------



| | - | identify the performance obligations in the contract(s);
| | - | --------------------------------------------------------



| | - | determine the transaction price;
| | - | --------------------------------



| | - | allocate the transaction price to the performance obligations
in the contract(s); and
| | - | -------------------------------------------------------------------------------------



| | - | recognise revenue when (or as) the performance obligations
are satisfied.
| | - | -------------------------------------------------------------------------



The transitional provisions of this Standard
permit an entity to either: restate the contracts that existed in each prior period presented per AASB 108: Accounting Policies,
Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect
of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure requirements
regarding revenue.



Although the Directors anticipate that
the adoption of AASB 15 may have an impact on the Group’s financial statements, it is impracticable at this stage to provide
a reasonable estimate of such impact.



AASB 16: Leases



This standard is applicable to annual reporting periods beginning
on or after 1 January 2019.



When effective, this Standard will replace
the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a
single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.



The main changes introduced by the new
Standard include:



| | - | recognition of a right-to-use asset and liability for all
leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | depreciation of right-to-use assets in line with AASB 116:
Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | variable lease payments that depend on an index or a rate
are included in the initial measurement of the lease liability using the index or rate at the commencement date;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | by applying a practical expedient, a lessee is permitted
to elect not to separate non-lease components and instead account for all components as a lease; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | additional disclosure requirements.
| | - | -----------------------------------



The transitional provisions of AASB 16
allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect
of retrospective application as an adjustment to opening equity on the date of initial application.



Although the Directors anticipate that
the adoption of AASB 16 will impact the Group's financial statements, it is impracticable at this stage to provide a reasonable
estimate of such impact.



Note 2: Financial risk management



Financial risk management objectives



The Consolidated Entity's activities expose it to a variety
of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The overall
risk management strategy focuses on the unpredictability of the finance markets and seeks to minimise the potential adverse effects
on the financial performance. The Consolidated Entity's uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing
analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried
out under the direction of the Board.



Market risk



Foreign currency risk



F-18


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 2: Financial risk management (continued)



The Consolidated Entity undertakes certain
transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.



Foreign exchange risk arises from future
commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's
functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.



In order to protect against Foreign exchange
movement, the Consolidated Entity has set up foreign currency bank accounts, by depositing surplus foreign currency in a foreign
currency account for later use.



The carrying amounts of the Consolidated
Entity's foreign currency denominated financial assets and financial liabilities at the reporting date, expressed in Australian
dollars, were as follows:



|                      |  | Assets |           |  | Liabilities | 
|--------------------- |  | ------ | --------- |  | ----------- | 
|                      |  | 2016   |           |  | 2015        | 
|Consolidated          |  | $      |           |  | $           | 
|United States dollars |  |        | 1,903,805 |  |             | 
|Great British pounds  |  |        | 47        |  |             | 
|                      |  |        | 1,903,852 |  |             | 



Sensitivity analysis



The Consolidated Entity had net assets denominated in foreign
currencies of $1,151,631 as at 30 June 2016 (2015 net assets: of $4,325,025). Based on this exposure, had the Australian dollar
weakened by 10%/strengthened by 5% against these foreign currencies with all other variables held constant, the Consolidated Entity's
loss before tax for the year would have been $115,163 higher/$57,582 lower (2015: $435,203 higher/$217,601 lower). The percentage
change is the expected overall volatility of the significant currencies, which is based on management's assessment of reasonable
possible fluctuations taking into consideration movements over the last 6 months each year and the spot rate at each reporting
date. The actual foreign exchange loss of continuing operations for the year ended 30 June 2016 was $79,724 (2015 foreign exchange
gain: $55,583).



Price risk



The Consolidated Entity is not exposed
to any significant price risk.



Interest rate risk



The Consolidated Entity’s income
and operating cash flows are not materially exposed to changes in market interest rates.



At the reporting date the interest rate profile of the Consolidated
Entity’s interest bearing financial instruments was:



|                          |  | 30-Jun-16                          |      |   | 30-Jun-15 | 
|------------------------- |  | ---------------------------------- | ---- | - | --------- | 
|                          |  | Weighted
    average interest rate |      |   | Balance   | 
|                          |  | %                                  |      |   | $         | 
|Variable rate instruments |  |                                    |      |   |           | 
|Cash at bank              |  |                                    | 1.50 | % |           | 
|                          |  |                                    |      |   |           | 
|Fixed rate instruments    |  |                                    |      |   |           | 
|Term deposits             |  |                                    | 1.93 | % |           | 
|                          |  |                                    |      |   |           | 



Cash flow sensitivity analysis for variable rate instruments



A change of 75 basis points in interest
rates would increase or decrease the Consolidated Entity’s loss by $7,850 (2015: $48,428), based on the cash at bank at reporting
date and calculated on an annual basis. The Board assessed a 75 basis point movement as being reasonably possible based on short
term historical movements. This analysis assumes that all other variables remain constant.



F-19


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 2: Financial risk management (continued)



Credit risk



Credit risk refers to the risk that a counterparty
will default on its contractual obligations resulting in financial loss to the Consolidated Entity. For the Company, it arises
from receivables due from subsidiaries.



The Consolidated Entity does not hold any
credit derivatives to offset its credit exposure.



The Consolidated Entity trades only with
recognised, creditworthy third parties, and as such collateral is not requested nor is it the Consolidated Entity’s policy
to securitise its trade and other receivables.



Trade and other receivables



It is the Consolidated Entity's policy
that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their
credit rating, financial position, past experience and industry reputation, noting that the majority of counter parties are large
telecommunication organisations.



In addition, receivable balances are monitored
on an ongoing basis and as a result that the Consolidated Entity’s experience of bad debts has not been significant.



The Consolidated Entity does not have any
material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the
Consolidated Entity.



Liquidity risk



Vigilant liquidity risk management
requires the Consolidated Entity to maintain sufficient liquid assets (mainly cash and cash equivalents) to be able to pay
debts as and when they become due and payable.



The Consolidated Entity manages liquidity
risk by maintaining adequate at call cash reserves and available borrowing facilities by continuously monitoring actual and forecast
cash flows and matching the maturity profiles of financial assets and liabilities.



Remaining contractual maturities



The following tables detail the Consolidated
Entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. All
liabilities were non-derivative and non-interest bearing.



|Consolidated
    - 2016 |  | Weighted
    average interest rate % |   |  | 1
    year or less |  |           | Between
    1 and 2 years |  |  | Between
    2 and 5 years |  |  | Over
    5 years |   |  | Remaining
    contractual maturities | 
|----------------------- |  | ------------------------------------ | - |  | ------------------ |  | --------- | ------------------------- |  |  | ------------------------- |  |  | ---------------- | - |  | ------------------------------------ | 
|                        |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                      | 
|Non-derivatives         |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                      | 
|Non-interest bearing    |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                      | 
|Trade payables          |  |                                      | - |  |                    |  | 638,393   |                           |  |  | -                         |  |  |                  | - |  |                                      | 
|Other payables          |  |                                      | - |  |                    |  | 409,279   |                           |  |  | -                         |  |  |                  | - |  |                                      | 
|Total non-derivatives   |  |                                      |   |  |                    |  | 1,047,672 |                           |  |  | -                         |  |  |                  | - |  |                                      | 



|Consolidated
    - 2015 |  | Weighted
    average interest rate % |   |  | 1
    year or less |  |           | Between
    1 and 2 years |  |  | Between
    2 and 5
years |  |  | Over
    5
years |   |  | Remaining
    contractual
    maturities | 
|----------------------- |  | ------------------------------------ | - |  | ------------------ |  | --------- | ------------------------- |  |  | ------------------------- |  |  | ---------------- | - |  | ---------------------------------------- | 
|                        |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                          | 
|Non-derivatives         |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                          | 
|Non-interest bearing    |  |                                      |   |  |                    |  |           |                           |  |  |                           |  |  |                  |   |  |                                          | 
|Trade payables          |  |                                      | - |  |                    |  | 1,835,324 |                           |  |  | -                         |  |  |                  | - |  |                                          | 
|Other payables          |  |                                      | - |  |                    |  | 733,938   |                           |  |  | -                         |  |  |                  | - |  |                                          | 
|Total non-derivatives   |  |                                      |   |  |                    |  | 2,569,262 |                           |  |  | -                         |  |  |                  | - |  |                                          | 



F-20


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 2: Financial risk management (continued)



The cash flows in the maturity analysis
above are not expected to occur significantly earlier than contractually disclosed above.



Fair value of financial instruments



The fair values of financial assets and
liabilities are determined in accordance with generally accepted pricing models based on estimated future cash flows. The Directors
consider that the carrying amounts of financial assets and financial liabilities recorded in the financial statements approximate
their fair values, because they are short-term in nature.



Note 3: Critical accounting estimates and judgements



The preparation of the financial statements
requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements.
Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue
and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors,
including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting
judgements and estimates will seldom equal the related actual results. The judgements, 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.



Share-based payment transactions



The Consolidated Entity measures the cost
of equity-settled transactions with directors, employees and limited suppliers, 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 either a Binomial, Black-Scholes or other estimation
model such as a trinomial barrier option model after taking into account the terms and conditions upon which the instruments were
granted. 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 but may impact profit or loss and equity.



Provision for impairment of receivables



The provision for impairment of receivables
assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent
sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtors financial
position.



Estimation of useful lives of assets



The Consolidated Entity determines the
estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life
intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation
and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete
or non-strategic assets that have been abandoned or sold will be written off or written down.



Goodwill and other indefinite life intangible
assets



The Consolidated Entity tests annually,
or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible
assets have suffered any impairment, in accordance with the accounting policy stated in Note 1. The recoverable amounts of cash-generating
units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated
discount rates based on the current cost of capital and growth rates of the estimated future cash flows.



Long term employee benefits



Per Note 1, the liability for long service
leave is recognised and measured at the present value of the estimated future cash flows to be made in respect of all employees
at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay increases through
promotion and inflation have been taken into account.



Business combinations



As discussed in Note 1, business combinations
are initially accounted for on a provisional basis. The fair value of assets acquired, liabilities and contingent liabilities assumed
are initially estimated by the Consolidated Entity taking into consideration all available information at the reporting date. Fair
value adjustments on the finalisation of the business combination accounting is retrospective, where applicable, to the period
the combination occurred and may have an impact on the assets and liabilities, depreciation and amortisation reported, when the
accounting is finalised.



F-21


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 4: Segment information



MOKO Social Media Limited is organized
into three operating segments: Mobile Social, Mobile Advertising and Mobile Commerce. Mobile Commerce was sold in March 2016. (2015:
three operating segments including Mobile Social, Mobile Advertising and Mobile Commerce). These operating segments are based on
the internal reports that are reviewed and used by the Board of Directors in assessing performance and in determining the allocation
of resources. There is no aggregation of operating segments. Segment Mobile Commerce was discontinued after MOKO sold Deals I Love
(Australia) on 30 March 16.



Types of products and services



The principal products and services of
each of these operating segments are as follows:



|Mobile Social      |  | MOKO’s proprietary mobile social networks and community/chat products                                                                      
|------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                                            
|Mobile Advertising |  | MOKO’s own proprietary mobile performance ad network and customised mobile publishing division                                             
|                   |  |                                                                                                                                            
|Mobile Commerce    |  | MOKO’s subsidiary e-commerce platform. Sales volumes and average revenue per user grew via diversified marketing channels and product range



Intersegment receivables, payables and
loans



Intersegment loans are initially recognised
at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted
to fair value based on market interest rates. Intersegment receivables, payables and loans are eliminated on consolidation.



Operating segment information



|Continuing
    operations      
|-------------------------------
|Consolidated
    - 30 June 2016
|                               
|Total segment revenue          
|                               
|EBITDA                         
|                               
|Depreciation and amortisation  
|Impairment expenses            
|Other income                   
|Finance costs                  
|Loss before income tax         
|Income tax benefit             
|Loss after income tax          
|                               
|Assets                         
|Liabilities                    



F-22


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 4: Segment information (continued)



|Continuing
    operations                 
|------------------------------------------
|Consolidated
    – 30 June 2015 (restated)
|                                          
|Total Segment Revenue                     
|                                          
|EBITDA                                    
|                                          
|Depreciation and amortisation             
|Interest income                           
|Finance costs                             
|Loss before income tax                    
|Income tax benefit                        
|Loss after income tax                     
|                                          
|Assets (continuing operations)            
|Assets (discontinued operations)          
|Assets                                    
|                                          
|Liabilities (continuing operations)       
|Liabilities (discontinued operations)     
|Liabilities                               



|Continuing operations                
|-------------------------------------
|30
    June 2014 (restated) *        
|                                     
|Total segment revenue                
|                                     
|EBITDA                               
|                                     
|Depreciation and amortisation        
|Interest received                    
|Finance costs                        
|Loss before income tax               
|Income tax (expense)                 
|Loss after income tax                
|                                     
|Assets (continuing operations)       
|Assets (discontinued operations)     
|Assets                               
|                                     
|Liabilities (continuing operations)  
|Liabilities (discontinued operations)
|Liabilities                          



F-23


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 4: Segment information (continued)



Geographical information



|Continuing
    operations       
|--------------------------------
|Consolidated
    - 30 June 2016 
|                                
|                                
|Sales to external customers     
|Add: Interest income            
|Add: Other income               
|Less: Cost of providing services
|Less: Expenses *                
|Loss before income tax          
|Income tax benefit              
|Loss after income tax           
|                                
|Assets                          
|Liabilities                     



* Overhead expenses are not associated with any one particular
geographic region.



|Continuing
    operations                     
|----------------------------------------------
|Consolidated
    - 30 June 2015
    (restated)
|                                              
|                                              
|Sales to external customers                   
|Add: Interest income                          
|Add: Other income                             
|Less: Cost of providing services              
|Less: Expenses *                              
|Loss before income tax                        
|Income tax benefit                            
|Loss after income tax                         
|                                              
|Assets (continuing operations)                
|Assets (discontinued operations)              
|Assets                                        
|                                              
|Liabilities (continuing operations)           
|Liabilities (discontinued operations)         
|Liabilities                                   



* Overhead expenses are not associated with any one particular
geographic region.



F-24


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 4: Segment information (continued)



|Continuing operations                                    
|---------------------------------------------------------
|30
    June 2014(restated) *                             
|                                                         
|                                                         
|Sales to external customers                              
|Add: Interest received                                   
|Add: Other income                                        
|Add: Fair value gain on deferred contingent consideration
|Less: Cost of providing services                         
|Less: Expenses *                                         
|Loss after income tax expense                            
|Income tax (expense)                                     
|Loss after income tax                                    
|                                                         
|Assets (continuing operations)                           
|Assets (discontinued operations)                         
|Assets                                                   
|                                                         
|Liabilities (continuing operations)                      
|Liabilities (discontinued operations)                    
|Liabilities                                              



* Overhead expenses are not associated
with any one particular geographic region.



Major customers



MOKO has a number of customers to
whom it provides services. The Consolidated Entity supplies a single external customer in the Mobile Social Segment who
accounts for 17% of external revenue (2015: 44%, 2014: 80%). Major Mobile Advertising customers account for 64% (2015:
39%, 2014: no major client above 10%) of external revenue, with details as below.



|                                        |  | Consolidated |   
|--------------------------------------- |  | ------------ | --
|Major
    customer – Mobile Advertising |  | 2016         |   
|                                        |  | %            |   
|                                        |  |              |   
|Mobile Advertising customer 1           |  |              | 16
|Mobile Advertising customer 2           |  |              | 16
|Mobile Advertising customer 3           |  |              | 13
|Mobile Advertising customer 4           |  |              | 13
|Mobile Advertising customer 5           |  |              | 6 
|                                        |  |              | 64



F-25


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 5: Revenue and other income



|                                                     |  | Consolidated |          
|---------------------------------------------------- |  | ------------ | ---------
|                                                     |  | 2016         |          
|                                                     |  | $            |          
|Revenue                                              |  |              | 84,830   
|                                                     |  |              |          
|Interest received                                    |  |              | 17,830   
|                                                     |  |              |          
|Other income                                         |  |              |          
|Research & development tax refund                    |  |              | 905,747  
|Rental income                                        |  |              | 143,734  
|Grants received                                      |  |              | -        
|Income from Sales of Business                        |  |              | -        
|                                                     |  |              | 1,049,481
|Fair value gain on deferred contingent consideration |  |              | -        



The $905,747 research and development tax
refund was received on 30 October 2015 (2015: $947,845 received on 18 April 2015) for a claim in accordance with the Commonwealth
Government's Research and Development Tax Incentive Regime which has been in operation since 1 July 2011, the 45% refundable tax
offset is available to companies that have grouped aggregated turnover of less than $20million.  There is no cap on Research
& development expenditure.



Note 6: Expenses



Loss before income tax includes the following specific expenses:



|                                                         |  | Consolidated |          
|-------------------------------------------------------- |  | ------------ | ---------
|                                                         |  | 2016         |          
|                                                         |  | $            |          
|Employee benefits expenses                               |  |              |          
|Salaries and wages (including contractors, annual leave) |  |              | 5,459,847
|Superannuation, Healthcare & Workers Compensation        |  |              | 739,897  
|Total employee benefits expenses                         |  |              | 6,199,744
|                                                         |  |              |          
|Share based payments                                     |  |              | 1,263,528
|                                                         |  |              |          
|Depreciation                                             |  |              |          
|Computer equipment                                       |  |              | 78,769   
|Furniture and fittings                                   |  |              | 9,094    
|Leasehold Improvement                                    |  |              | 7,239    
|Total depreciation                                       |  |              | 95,102   
|                                                         |  |              |          
|Amortisation                                             |  |              |          
|Computer software                                        |  |              | 88,523   
|Capitalised product development                          |  |              | -        
|Intellectual Property                                    |  |              | 260,251  
|Customer database                                        |  |              | -        
|Total amortisation                                       |  |              | 348,774  
|                                                         |  |              |          
|Total depreciation and amortisation                      |  |              | 443,876  



F-26


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 6: Expenses (continued)



|                                                                     |  | Consolidated |          
|-------------------------------------------------------------------- |  | ------------ | ---------
|                                                                     |  | 2016         |          
|                                                                     |  | $            |          
|Impairment expenses                                                  |  |              |          
|Available-for-sale financial assets                                  |  |              | 737,811  
|Intellectual Property                                                |  |              | 1,935,919
|Goodwill                                                             |  |              | 1,579,904
|Total impairment                                                     |  |              | 4,253,634
|                                                                     |  |              |          
|Rental expense relating to operating leases - Minimum lease payments |  |              | 487,941  



Note 7: Income tax benefit



|                                                                                                      |  | Consolidated |            
|----------------------------------------------------------------------------------------------------- |  | ------------ | -----------
|                                                                                                      |  | 2016         |            
|                                                                                                      |  | $            |            
|Income tax benefit                                                                                    |  |              |            
|Current tax benefit                                                                                   |  |              | -          
|Deferred tax                                                                                          |  |              | -          
|Adjustment recognised for prior periods                                                               |  |              | 6,889      
|Aggregate income tax benefit                                                                          |  |              | 6,889      
|                                                                                                      |  |              |            
|Prima facie tax on loss before income tax is reconciled to income tax (benefit) / expense as follows: |  |              |            
|Loss before income tax                                                                                |  |              | (20,810,025
|                                                                                                      |  |              |            
|Prima facie tax on loss before income tax at 30%                                                      |  |              | (6,243,008 
|Adjustment for jurisdictional differences in tax rates                                                |  |              | (364,624   
|Add tax effect of:                                                                                    |  |              |            
|Non-allowable items                                                                                   |  |              | 1,883,761  
|Non-assessable items                                                                                  |  |              | (528,386   
|Tax losses and timing differences not brought to account                                              |  |              | 5,252,257  
|Adjustment recognised for prior periods                                                               |  |              | 6,889      
|Current tax benefit                                                                                   |  |              | 6,889      
|                                                                                                      |  |              |            
|Recognised deferred tax assets:                                                                       |  |              |            
|Share based payments – non qualified plan                                                             |  |              | -          
|                                                                                                      |  |              |            
|Deferred tax not recognised:                                                                          |  |              |            
|                                                                                                      |  |              |            
|Tax losses carried forward                                                                            |  |              | 51,622,399 
|Other temporary differences not recognised                                                            |  |              | 2,512,971  
|Unused tax losses for which no deferred tax has been recognised                                       |  |              | 54,135,370 
|Potential tax benefit at notional rate of tax *                                                       |  |              | 17,256,228 



F-27


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 7: Income tax benefit (continued)



No amounts have been recognised for deferred tax on unutilised
tax losses as it is not yet probable that future taxable amounts will be available against which the Company will utilise these
assets in future years.



* Potential tax benefit at notional
rate of tax is 30% for AU entities and 34% for US entities.



Note 8: Discontinued operations



On 31 October 2015, the operations of Tagroom Pty Ltd and MOKO
Performance Network (formerly OfferMobi) were discontinued. These entities were operated as part of the mobile advertising segment.



On 30 March 2016, MOKO sold Deals I Love (Australia) Pty Ltd
(“DIL”) to Hedgeabelli Pty Ltd. As a condition to the occurrence of Completion, MOKO advanced $37,500 to DIL as part
of the Completion Loan. On the completion date, MOKO released DIL from any outstanding loan balances amounting to $1,092,084.



On 29 April 2016, MOKO Door Foundation was discontinued operation
and filed for dissolution in the State of Delaware in the US. The dissolution was duly authorised on 6 June 2016.



| | (a) | Financial performance
| | --- | ---------------------



|                                                           |  | 2016 |           |   | 2015
    (restated) |  |            | 2014
    (restated) |  | 
|---------------------------------------------------------- |  | ---- | --------- | - | ------------------- |  | ---------- | ------------------- |  | 
|                                                           |  | $    |           |   | $                   |  |            | $                   |  | 
|Revenue                                                    |  |      | 1,099,346 |   |                     |  | 4,694,199  |                     |  | 
|Interest received                                          |  |      | 2,825     |   |                     |  | 2,685      |                     |  | 
|Cost of providing goods and services                       |  |      | (822,479  | ) |                     |  | (3,268,279 | )                   |  | 
|Expenses                                                   |  |      | (836,448  | ) |                     |  | (2,737,081 | )                   |  | 
|Depreciation and amortisation                              |  |      | (2,192    | ) |                     |  | (3,134     | )                   |  | 
|Impairment expenses                                        |  |      | (179,727  | ) |                     |  | -          |                     |  | 
|Loss before tax from discontinued operations               |  |      | (738,675  | ) |                     |  | (1,311,610 | )                   |  | 
|                                                           |  |      |           |   |                     |  |            |                     |  | 
|Income tax benefit                                         |  |      | -         |   |                     |  | 13,538     |                     |  | 
|                                                           |  |      |           |   |                     |  |            |                     |  | 
|Loss after income tax                                      |  |      | (738,675  | ) |                     |  | (1,298,072 | )                   |  | 
|                                                           |  |      |           |   |                     |  |            |                     |  | 
|Loss after income tax benefit from discontinued operations |  |      | (738,675  | ) |                     |  | (1,298,072 | )                   |  | 
|                                                           |  |      |           |   |                     |  |            |                     |  | 
|Owners of the Company                                      |  |      | (654,163  | ) |                     |  | (1,017,353 | )                   |  | 
|Non-controlling interests                                  |  |      | (84,512   | ) |                     |  | (280,719   | )                   |  | 
|                                                           |  |      | (738,675  | ) |                     |  | (1,298,072 | )                   |  | 



| | (b) | Cash flow information
| | --- | ---------------------



|                            |  | 2016 |          |   | 2015
    (restated) |  |            |   | 2014
    (restated) |  | 
|--------------------------- |  | ---- | -------- | - | ------------------- |  | ---------- | - | ------------------- |  | 
|                            |  | $    |          |   | $                   |  |            |   | $                   |  | 
|Operating activities        |  |      | (248,046 | ) |                     |  | (1,515,583 | ) |                     |  | 
|Investing activities        |  |      | (26,253  | ) |                     |  | 13,859     |   |                     |  | 
|Financing activities*       |  |      | 144,553  |   |                     |  | 1,180,805  |   |                     |  | 
|Net cash (outflow) / inflow |  |      | (129,746 | ) |                     |  | (320,919   | ) |                     |  | 



* Financing activities are fund transfers from parent company,
MOKO Social Media Limited.



F-28


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 9: Cash and cash equivalents



|             |  | Consolidated |          
|------------ |  | ------------ | ---------
|             |  | 2016         |          
|             |  | $            |          
|Cash on hand |  |              | 586      
|Cash at bank |  |              | 2,546,186
|             |  |              | 2,546,772



Note 10: Trade and other receivables



|                                              |  | Consolidated |         
|--------------------------------------------- |  | ------------ | --------
|                                              |  | 2016         |         
|                                              |  | $            |         
|Trade receivables                             |  |              | 311,522 
|Less: Provision for impairment of receivables |  |              | (282,815
|                                              |  |              | 28,707  
|                                              |  |              |         
|Other debtors                                 |  |              | 9,953   
|                                              |  |              |         
|Total                                         |  |              | 38,660  



Impairment of receivables



The Consolidated Entity has recognised
a loss of $142,688 (2015: $313,428) in the statement of profit or loss and other comprehensive income in respect of impairment
of receivables for the year ended 30 June 2016.



The ageing of the impaired receivables
provided for above are as follows:



|           |  | Consolidated |        
|---------- |  | ------------ | -------
|           |  | 2016         |        
|           |  | $            |        
|1-30 days  |  |              | -      
|31-60 days |  |              | -      
|61-90 days |  |              | -      
|90+ days   |  |              | 282,815
|           |  |              | 282,815



Movements in the provision for impairment of receivables are
as follows:



|                                                         |  | Consolidated |        
|-------------------------------------------------------- |  | ------------ | -------
|                                                         |  | 2016         |        
|                                                         |  | $            |        
|Opening Balance                                          |  |              | 140,127
|Additional provisions recognised                         |  |              | 142,688
|Receivables written off during the year as uncollectable |  |              | -      
|Closing Balance                                          |  |              | 282,815



Past due but not impaired



Customers with balances past due but without
provision for impairment of receivables amount to $14,735 as at 30 June 2016 ($61,280 as at 30 June 2015).



F-29


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 10: Trade and other receivables
(continued)



The Consolidated Entity did not consider
a credit risk on the aggregate balances after reviewing credit terms of customers based on recent collection practices.



The ageing of the past due but not impaired
receivables are as follows:



|31-60 days |  |  | 776    |  |  |  | 17,556 | 
|---------- |  |  | ------ |  |  |  | ------ | 
|61-90 days |  |  | 2,490  |  |  |  | 440    | 
|90+ days   |  |  | 11,469 |  |  |  | 43,284 | 
|           |  |  | 14,735 |  |  |  | 61,280 | 



Note 11: Other current assets



|            |  | Consolidated |        
|----------- |  | ------------ | -------
|            |  | 2016         |        
|            |  | $            |        
|Deposit     |  |              | 112,345
|Prepayments |  |              | 214,298
|            |  |              | 326,643



Note 12: Property, plant and equipment



|Consolidated                                   |  | Computer
    equipment |          |   | Furniture
    and fittings |  |         | Leasehold
    Improvements |  |  | Total   |  
|---------------------------------------------- |  | ---------------------- | -------- | - | -------------------------- |  | ------- | -------------------------- |  |  | ------- | -
|                                               |  | $                      |          |   | $                          |  |         | $                          |  |  | $       |  
|2015                                           |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Cost                                           |  |                        | 772,604  |   |                            |  | 80,064  |                            |  |  | 33,902  |  
|Accumulated depreciation                       |  |                        | (590,881 | ) |                            |  | (35,542 | )                          |  |  | (4,186  | )
|Balance at 30 June 2015                        |  |                        | 181,723  |   |                            |  | 44,522  |                            |  |  | 29,716  |  
|                                               |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Reconciliation                                 |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Balance at 1 July 2014                         |  |                        | 75,063   |   |                            |  | 12,663  |                            |  |  | -       |  
|Additions                                      |  |                        | 137,622  |   |                            |  | 39,287  |                            |  |  | 33,902  |  
|Depreciation expense                           |  |                        | (25,557  | ) |                            |  | (6,602  | )                          |  |  | (3,476  | )
|Depreciation expense (discontinued operations) |  |                        | (3,134   | ) |                            |  | -       |                            |  |  | -       |  
|Effects of movements in exchange rates         |  |                        | (2,271   | ) |                            |  | (826    | )                          |  |  | (710    | )
|Balance at 30 June 2015                        |  |                        | 181,723  |   |                            |  | 44,522  |                            |  |  | 29,716  |  
|                                               |  |                        |          |   |                            |  |         |                            |  |  |         |  
|2016                                           |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Cost                                           |  |                        | 746,300  |   |                            |  | 67,536  |                            |  |  | 34,982  |  
|Accumulated depreciation                       |  |                        | (661,008 | ) |                            |  | (39,521 | )                          |  |  | (11,558 | )
|Balance at 30 June 2016                        |  |                        | 85,292   |   |                            |  | 28,015  |                            |  |  | 23,424  |  
|                                               |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Reconciliation                                 |  |                        |          |   |                            |  |         |                            |  |  |         |  
|Balance at 1 July 2015                         |  |                        | 181,723  |   |                            |  | 44,522  |                            |  |  | 29,716  |  
|Additions                                      |  |                        | 3,682    |   |                            |  | 4,420   |                            |  |  | 1,080   |  
|Disposal                                       |  |                        | (18,706  | ) |                            |  | (11,981 | )                          |  |  | -       |  
|Disposal (discontinued operations)             |  |                        | (2,543   | ) |                            |  | (597    | )                          |  |  | -       |  
|Depreciation expense                           |  |                        | (78,769  | ) |                            |  | (9,094  | )                          |  |  | (7,239  | )
|Depreciation expense (discontinued operations) |  |                        | (2,107   | ) |                            |  | (85     | )                          |  |  | -       |  
|Effects of movements in exchange rates         |  |                        | 2,012    |   |                            |  | 830     |                            |  |  | (133    | )
|Balance at 30 June 2016                        |  |                        | 85,292   |   |                            |  | 28,015  |                            |  |  | 23,424  |  



F-30


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 13: Intangibles



|Consolidated                                  |  | Computer
    software |          |   | Intellectual
    Property |  |            | Goodwill |  |  | TOTAL      |  
|--------------------------------------------- |  | --------------------- | -------- | - | ------------------------- |  | ---------- | -------- |  |  | ---------- | -
|                                              |  | $                     |          |   | $                         |  |            | $        |  |  | $          |  
|2015                                          |  |                       |          |   |                           |  |            |          |  |  |            |  
|Cost                                          |  |                       | 220,646  |   |                           |  | 4,837,947  |          |  |  | 2,387,346  |  
|Accumulated amortisation                      |  |                       | (121,862 | ) |                           |  | (2,795,527 | )        |  |  | (714,462   | )
|Balance at 30 June 2015                       |  |                       | 98,784   |   |                           |  | 2,042,420  |          |  |  | 1,672,884  |  
|                                              |  |                       |          |   |                           |  |            |          |  |  |            |  
|Reconciliation                                |  |                       |          |   |                           |  |            |          |  |  |            |  
|Balance at 1 July 2014                        |  |                       | 3,283    |   |                           |  | 2,472,621  |          |  |  | 1,117,880  |  
|Acquisitions through business combinations    |  |                       | -        |   |                           |  | -          |          |  |  | 339,570    |  
|Additions                                     |  |                       | 132,395  |   |                           |  | -          |          |  |  | -          |  
|Amortisation expense                          |  |                       | (36,894  | ) |                           |  | (922,345   | )        |  |  | -          |  
|Effects of movements in exchange rates        |  |                       | -        |   |                           |  | 492,144    |          |  |  | 215,434    |  
|Balance at 30 June 2015                       |  |                       | 98,784   |   |                           |  | 2,042,420  |          |  |  | 1,672,884  |  
|                                              |  |                       |          |   |                           |  |            |          |  |  |            |  
|2016                                          |  |                       |          |   |                           |  |            |          |  |  |            |  
|Cost                                          |  |                       | 312,746  |   |                           |  | 5,273,257  |          |  |  | 1,759,631  |  
|Accumulated amortisation                      |  |                       | (211,911 | ) |                           |  | (3,337,338 | )        |  |  | -          |  
|Impairment                                    |  |                       | -        |   |                           |  | (1,935,919 | )        |  |  | (1,759,631 | )
|Balance at 30 June 2016                       |  |                       | 100,835  |   |                           |  | -          |          |  |  | -          |  
|                                              |  |                       |          |   |                           |  |            |          |  |  |            |  
|Reconciliation                                |  |                       |          |   |                           |  |            |          |  |  |            |  
|Balance at 1 July 2015                        |  |                       | 98,784   |   |                           |  | 2,042,420  |          |  |  | 1,672,884  |  
|Additions                                     |  |                       | 92,100   |   |                           |  | -          |          |  |  | -          |  
|Amortisation expense                          |  |                       | (88,523  | ) |                           |  | (260,251   | )        |  |  | -          |  
|Impairment expenses                           |  |                       | -        |   |                           |  | (1,935,919 | )        |  |  | (1,579,904 | )
|Impairment expenses (discontinued operations) |  |                       | -        |   |                           |  | -          |          |  |  | (179,727   | )
|Effects of movements in exchange rates        |  |                       | (1,526   | ) |                           |  | 153,750    |          |  |  | 86,747     |  
|Balance at 30 June 2016                       |  |                       | 100,835  |   |                           |  | -          |          |  |  | -          |  



F-31


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 13: Intangibles (continued)



Impairment testing



Intellectual property and Goodwill acquired
through business combinations has been allocated to the cash-generating units:



|Intellectual property                          |  | MobileAdvertising(1) |            |   | MobileCommerce (2) |  |         | Total | 
|---------------------------------------------- |  | -------------------- | ---------- | - | ------------------ |  | ------- | ----- | 
|                                               |  | $                    |            |   | $                  |  |         | $     | 
|2015                                           |  |                      |            |   |                    |  |         |       | 
|Cost                                           |  |                      | 4,788,477  |   |                    |  | 49,470  |       | 
|Accumulated Amortisation                       |  |                      | (2,746,057 | ) |                    |  | (49,470 | )     | 
|Balance at 1 July 2015                         |  |                      | 2,042,420  |   |                    |  | -       |       | 
|Amortisation expense                           |  |                      | (260,251   | ) |                    |  | -       |       | 
|Impairment                                     |  |                      | (1,935,919 | ) |                    |  | -       |       | 
|Effects of movements on foreign exchange rates |  |                      | 153,750    |   |                    |  | -       |       | 
|Balance at 30 June 2016                        |  |                      | -          |   |                    |  | -       |       | 



|Goodwill                                       |  | MobileAdvertising(1) |            |   | MobileCommerce (2) |  |          | Total | 
|---------------------------------------------- |  | -------------------- | ---------- | - | ------------------ |  | -------- | ----- | 
|                                               |  | $                    |            |   | $                  |  |          | $     | 
|                                               |  |                      |            |   |                    |  |          |       | 
|Balance at 1 July 2015                         |  |                      | 1,493,157  |   |                    |  | 179,727  |       | 
|Impairment                                     |  |                      | (1,579,904 | ) |                    |  | (179,727 | )     | 
|Effects of movements on foreign exchange rates |  |                      | 86,747     |   |                    |  | -        |       | 
|Balance at 30 June 2016                        |  |                      | -          |   |                    |  | -        |       | 



| | (1) | Mobile Advertising Cash Generating Unit
| | --- | ---------------------------------------



Ongoing revenues from Mobile Advertising
are expected to be earned from the monetization of MOKO's student products, including REC*IT and REC*IT Fitness. As these products
are not yet commercialized and cash inflows have not occurred as forecast, there is uncertainty over this expectation. As a result,
the carrying value of the goodwill and intellectual property of this cash generating unit was deemed unrecoverable and fully impaired.



| | (2) | Mobile Commerce Cash Generating Unit (discontinued operations)
| | --- | --------------------------------------------------------------



MOKO sold Deals I Love (Australia) Pty
Ltd on 30 March 2016. As a result, the carrying value of the goodwill of this cash generating unit was written down to nil.



Note 14: Available-for-sale financial assets



On 24 April 2015, MOKO signed a Share Purchase
Agreement with Big Teams LLC (“BigTeams”), a limited liability company located in the US. MOKO invested One Million
U.S. Dollars (US$1,000,000 or A$1,297,811) to acquire a 10% equity stake in BigTeams.



BigTeams is the largest high school sports
software platform in the US, providing online tools and data for US high schools to assist with sports team administration, event
management and fundraising.



MOKO launched a tailored version of its
REC*IT app in November 2015, specifically targeted at the students and parents of more than 4,000 US high schools that are currently
serviced by BigTeams, using data generated by BigTeams. This investment has significantly expanded its offering for US students
and provided access to the high school market.



F-32


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 14: Available-for-sale financial assets (continued)



Under the terms of purchase agreement,
MOKO paid US$200,000 (A$256,813) in the year ended 30 June 2015, and further US$800,000 (A$1,042,142) in the current year.



|                         |  | 2016 |           |  | 2015 | 
|------------------------ |  | ---- | --------- |  | ---- | 
|                         |  | $    |           |  | $    | 
|Unlisted ordinary shares |  |      | 1,297,811 |  |      | 



The unlisted ordinary shares are held in
Big Teams LLC. Fair value information relating to this investment has not been disclosed because the shares are not quoted in an
active market and fair value cannot be measured reliably. Management currently has no plans to dispose of the shares.



Based on financial positions and budgets
from Big Teams LLC there is indication that the carrying amount may not be recoverable. An impairment loss has been recognised
for the amount of $737,811 during the year for which the carrying amount exceeds its recoverable amount of $560,000.



|Available-for-sale financial assets |  | Big Teams LLC |          
|----------------------------------- |  | ------------- | ---------
|                                    |  | $             |          
|                                    |  |               |          
|Balance at 1 July 2015              |  |               | 1,297,811
|Impairment                          |  |               | (737,811 
|Balance at 30 June 2016             |  |               | 560,000  



Note 15: Trade and other payables



|                            |  | Consolidated |          
|--------------------------- |  | ------------ | ---------
|                            |  | 2016         |          
|                            |  | $            |          
|Trade payables *            |  |              | 638,393  
|Other payables and accruals |  |              | 409,279  
|                            |  |              | 1,047,672



* Included within trade payables at 30
June 205 was $800k USD for the remaining purchase amount for Big Teams LLC. Refer to Note 14.



Note 16: Employee benefits



|                  |  | Consolidated |        
|----------------- |  | ------------ | -------
|                  |  | 2016         |        
|                  |  | $            |        
|Current           |  |              |        
|Employee benefits |  |              | 168,210
|                  |  |              |        
|Non-Current       |  |              |        
|Employee benefits |  |              | 11,818 



A provision has been recognised for employee
benefits relating to annual leave and long service leave. The measurement and recognition criteria relating to employee benefits
have been included in Note 1 of this report.



F-33


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 16: Employee benefits (continued)



Amounts not expected to be settled within
the next 12 months



The current provision for long service
leave includes all unconditional entitlements where employees have completed the required period of service and also those where
employees are entitled to pro-rata payments in certain circumstances. The employee benefits are presented as current or non-current
based on when the Consolidated Entity expects to settle the long service leave entitlements. However, based on past experience,
the Consolidated Entity does not expect all employees to take the full amount of accrued long service leave or require payment
within the next 12 months.



The following amounts reflect leave that
is not expected to be taken within the next 12 months:



|                                                                    |  | Consolidated |  
|------------------------------------------------------------------- |  | ------------ | -
|                                                                    |  | 2016         |  
|                                                                    |  | $            |  
|Employee benefits obligation expected to be settled after 12 months |  |              | -



Note 17: Issued capital



|                                                                            |  | Consolidated |           
|--------------------------------------------------------------------------- |  | ------------ | ----------
|                                                                            |  | 2016         |           
|                                                                            |  | $            |           
|Fully paid ordinary shares 1,659,796,126 (30 June 2015: 755,486,679 shares) |  |              | 69,142,533
|Fully paid performance shares 20,000,000 (30 June 2015: 20,000,000)         |  |              | 200       
|                                                                            |  |              | 69,142,733



Ordinary shares entitle the holder to
participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on
the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised
capital.



On a show of hands every member present
at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.



(a) Ordinary shares



The followings movements in ordinary share
capital occurred during the year:



|Date             |  | Details                         |  | Numbers of
    shares |               |  | Issue
    Price  $ |  |         | Amount 
    $ | 
|---------------- |  | ------------------------------- |  | --------------------- | ------------- |  | ------------------ |  | ------- | ------------- | 
|1 July 2015      |  | Opening Balance                 |  |                       | 755,486,679   |  |                    |  | Various |               | 
|5 November 2015  |  | NASDAQ placement                |  |                       | 60,000,000    |  |                    |  | 0.06    |               | 
|12 November 2015 |  | Capital raising fees            |  |                       | 2,000,000     |  |                    |  | 0.06    |               | 
|27 November 2015 |  | Issue under US Omnibus Plan     |  |                       | 400,000       |  |                    |  | 0.04    |               | 
|12 April 2016    |  | Entitlement Issue               |  |                       | 817,886,679   |  |                    |  | 0.01    |               | 
|28 April 2016    |  | Underwriting fees               |  |                       | 16,500,000    |  |                    |  | 0.01    |               | 
|28 April 2016    |  | Broker commission               |  |                       | 3,398,384     |  |                    |  | 0.01    |               | 
|28 April 2016    |  | Short term loan fees & interest |  |                       | 4,124,384     |  |                    |  | 0.01    |               | 
|                 |  | Capital raising costs           |  |                       | -             |  |                    |  |         |               | 
|                 |  | Closing Balance                 |  |                       | 1,659,796,126 |  |                    |  |         |               | 



(b) Performance shares



|Issue
    Date   |  | Details                                                  |  | Number
    of  Shares |            |  | Issue
     Price |   |         | Amount
     $ |  |  | Variation
     Price | 
|---------------- |  | -------------------------------------------------------- |  | --------------------- | ---------- |  | ---------------- | - | ------- | ------------- |  |  | -------------------- | 
|                 |  |                                                          |  |                       |            |  |                  |   |         |               |  |  |                      | 
|28 November 2013 |  | Share issue to Director pursuant to shareholder approval |  |                       | 20,000,000 |  |                  | $ | 0.00001 |               |  |  | 200                  | 



F-34


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 17: Issued capital (continued)



A Performance Share Plan was approved by
shareholders at MOKO’s 2013 Annual General Meeting and involves the issuance of a new class of ordinary shares (“Performance
Shares”) to eligible participants for their market value assessed by an independent expert and based on the rights and conditions
attached to the Performance Shares (the “Issue Price”) by means of a payment to the Company of the Issue Price.



Performance Shares remain outstanding for
a period equal to earlier of 3 years from the date of original purchase or the occurrence of the relevant Performance Event (such
earlier date, the “End Date”). If the Performance Shares have not been ‘varied’ by the End Date, which
can include events such as termination, the VWAP share price hurdle having been met, a takeover offer among others (any such event,
a “Variation Event”) then the Performance Shares will be redeemed by the Company for their Issue Price. If a Variation
Event does occur prior to the End Date, the holder has twelve months from the date of the Variation Event to provide notice and
payment (a “Variation Payment”) to the Company.



Upon payment of the Variation Payment to
the Company, the relevant Performance Shares will rank pari passu all with existing ordinary shares of the Company and trade together
in the public market. On the other hand, at no time prior to a Variation Event will the holder be permitted to transfer any Performance
Shares, and no dividend or voting rights will attach to any Performance Shares unless and until varied. In the event that the Variation
Event does not occur prior or upon to the End Date, the Company will pay the Issue Price that it received from the holder for the
applicable Performance Shares and then redeem and cancel those Performance Shares.



No Performance Shares were issued during
the year. In the year ended 2014, Mr. McCann was issued 20.0 million Performance Shares at an Issue Price of $0.00001 per ordinary
share with End Date of the third anniversary of issuance, Variation Payment of $0.10 per ordinary share and the Variation Event
being the 90 day VWAP of our ordinary shares exceeding $0.40 per share. All above performance shares will expire on 28 November
2016.



(c) Options



Options granted



During the year, the Company granted the following options over
unissued ordinary shares:



Table A – Options granted over
unissued ordinary shares



|Class                           |  | Grant Date |  | Expiry Date |  | Exercise
    Price |      |  | Number of
    Options | 
|------------------------------- |  | ---------- |  | ----------- |  | ------------------ | ---- |  | --------------------- | 
|Unlisted Options – Director     |  | 1-Oct-15   |  | 27-Nov-18   |  |                    | 0.15 |  |                       | 
|Unlisted Options – Director     |  | 28-Apr-16  |  | 28-Apr-18   |  |                    | 0.02 |  |                       | 
|Unlisted Options – Director     |  | 28-Apr-16  |  | 28-Apr-18   |  |                    | 0.03 |  |                       | 
|Entitlement Issue               |  | 12-Apr-16  |  | 12-Apr-17   |  |                    | 0.02 |  |                       | 
|Underwriting fees               |  | 28-Apr-16  |  | 12-Apr-17   |  |                    | 0.02 |  |                       | 
|Broker commission               |  | 28-Apr-16  |  | 12-Apr-17   |  |                    | 0.02 |  |                       | 
|Short term loan fees & interest |  | 28-Apr-16  |  | 12-Apr-17   |  |                    | 0.02 |  |                       | 
|Corporate advisory fees         |  | 28-Apr-16  |  | 12-Apr-17   |  |                    | 0.02 |  |                       | 
|Entitlement Issue               |  | 12-Apr-16  |  | 12-Apr-19   |  |                    | 0.04 |  |                       | 
|Underwriting fees               |  | 28-Apr-16  |  | 12-Apr-19   |  |                    | 0.04 |  |                       | 
|Broker commission               |  | 28-Apr-16  |  | 12-Apr-19   |  |                    | 0.04 |  |                       | 
|Short term loan fees & interest |  | 28-Apr-16  |  | 12-Apr-19   |  |                    | 0.04 |  |                       | 
|Corporate advisory fees         |  | 28-Apr-16  |  | 12-Apr-19   |  |                    | 0.04 |  |                       | 
|Total                           |  |            |  |             |  |                    |      |  |                       | 



F-35


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 17: Issued capital (continued)



Table B - Options granted American Depositary
Shares (where one ADS = 40 Ordinary shares)



|Class                       |  | Grant Date |  | Expiry Date |  | Exercise
    Price (per ADS in US$) |      |  | Number
    granted (in ADSs) |  |         | Number granted
    (in ordinary shares) | 
|--------------------------- |  | ---------- |  | ----------- |  | ----------------------------------- | ---- |  | ---------------------------- |  | ------- | --------------------------------------- | 
|Unlisted Options - Employee |  | 19-Sep-15  |  | 31-Jul-17   |  | $                                   | 4.00 |  |                              |  | 20,000  |                                         | 
|Unlisted Options - Employee |  | 22-Sep-15  |  | 22-Sep-17   |  | $                                   | 3.00 |  |                              |  | 25,000  |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-19   |  | $                                   | 5.35 |  |                              |  | 150,000 |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-20   |  | $                                   | 5.35 |  |                              |  | 150,000 |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-18   |  | $                                   | 3.55 |  |                              |  | 75,000  |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-18   |  | $                                   | 3.55 |  |                              |  | 75,000  |                                         | 
|Unlisted Options - Director |  | 1-Oct-15   |  | 27-Nov-18   |  | $                                   | 3.55 |  |                              |  | 50,000  |                                         | 
|Unlisted Options - Director |  | 15-Jan-16  |  | 31-Dec-18   |  | $                                   | 1.14 |  |                              |  | 100,000 |                                         | 
|Total                       |  |            |  |             |  |                                     |      |  |                              |  | 645,000 |                                         | 



These options do not entitle the holder
to participate in any share issue of the Company or any other entity.



Unissued shares under option



At the date of this report, unissued ordinary shares of the
Company under option are:



Table C – Unissued ordinary shares
under option



|Class                                                                   |  | Expiry Date      |  | Exercise
    Price |      |  | Number of Options | 
|----------------------------------------------------------------------- |  | ---------------- |  | ------------------ | ---- |  | ----------------- | 
|Unlisted Director Options                                               |  | 30-Jul-16        |  | $                  | 0.04 |  |                   | 
|Unlisted Options                                                        |  | 30-Jul-16        |  | $                  | 0.04 |  |                   | 
|Unlisted Employee Options                                               |  | 31-Jul-16        |  | $                  | 0.06 |  |                   | 
|Unlisted Employee Options                                               |  | 31-Jul-16        |  | $                  | 0.17 |  |                   | 
|Unlisted Director Options                                               |  | 26-Nov-17        |  | $                  | 0.19 |  |                   | 
|Unlisted Director Options                                               |  | 26-Nov-16        |  | $                  | 0.19 |  |                   | 
|Unlisted Employee Options                                               |  | 31-Jan-17        |  | $                  | 0.20 |  |                   | 
|Unlisted Employee Options                                               |  | 20-Dec-16        |  | $                  | 0.20 |  |                   | 
|Unlisted Employee Options                                               |  | 31-Dec-16        |  | $                  | 0.17 |  |                   | 
|Unlisted Employee Options                                               |  | 31-Dec-16        |  | $                  | 0.08 |  |                   | 
|Unlisted Options – Director                                             |  | 27-Nov-18        |  | $                  | 0.15 |  |                   | 
|Unlisted Options – Director                                             |  | 28-Apr-18        |  | $                  | 0.02 |  |                   | 
|Unlisted Options – Director                                             |  | 28-Apr-18        |  | $                  | 0.03 |  |                   | 
|Entitlement Issue                                                       |  | 12-Apr-17        |  | $                  | 0.02 |  |                   | 
|Underwriting fees                                                       |  | 12-Apr-17        |  | $                  | 0.02 |  |                   | 
|Broker commission                                                       |  | 12-Apr-17        |  | $                  | 0.02 |  |                   | 
|Short term loan fees & interest                                         |  | 12-Apr-17        |  | $                  | 0.02 |  |                   | 
|Corporate advisory fees                                                 |  | 12-Apr-17        |  | $                  | 0.02 |  |                   | 
|Entitlement Issue                                                       |  | 12-Apr-19        |  | $                  | 0.04 |  |                   | 
|Underwriting fees                                                       |  | 12-Apr-19        |  | $                  | 0.04 |  |                   | 
|Broker commission                                                       |  | 12-Apr-19        |  | $                  | 0.04 |  |                   | 
|Short term loan fees & interest                                         |  | 12-Apr-19        |  | $                  | 0.04 |  |                   | 
|Corporate advisory fees                                                 |  | 12-Apr-19        |  | $                  | 0.04 |  |                   | 
|Unlisted Options over American Depositary Shares (Unlisted ADS Options) |  | Refer to table D |  |                    |      |  |                   | 
|Total                                                                   |  |                  |  |                    |      |  |                   | 



F-36


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 17: Issued capital (continued)



Table D – Unissued Options over
American Depositary Shares (where one ADS = 40 Ordinary shares)



|Class                       |  | Grant Date |  | Expiry Date |  | Exercise
    Price  (per ADS in US$) |      |  | Number
    granted (in ADSs) |  |         | Number
    granted (in ordinary shares) | 
|--------------------------- |  | ---------- |  | ----------- |  | ------------------------------------ | ---- |  | ---------------------------- |  | ------- | --------------------------------------- | 
|Unlisted ADS Options        |  | 30-Jun-14  |  | 31-Dec-16   |  | $                                    | 6.29 |  |                              |  | 25,000  |                                         | 
|Unlisted ADS Options        |  | 23-Dec-14  |  | 3-Dec-16    |  | $                                    | 4.58 |  |                              |  | 7,500   |                                         | 
|Unlisted Options - Employee |  | 19-Sep-15  |  | 31-Jul-17   |  | $                                    | 4.00 |  |                              |  | 20,000  |                                         | 
|Unlisted Options - Employee |  | 22-Sep-15  |  | 22-Sep-17   |  | $                                    | 3.00 |  |                              |  | 25,000  |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-19   |  | $                                    | 5.35 |  |                              |  | 150,000 |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-20   |  | $                                    | 5.35 |  |                              |  | 150,000 |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-18   |  | $                                    | 3.55 |  |                              |  | 75,000  |                                         | 
|Unlisted Options - Director |  | 1-Sep-15   |  | 27-Nov-18   |  | $                                    | 3.55 |  |                              |  | 75,000  |                                         | 
|Unlisted Options - Director |  | 1-Oct-15   |  | 27-Nov-18   |  | $                                    | 3.55 |  |                              |  | 50,000  |                                         | 
|Unlisted Options - Director |  | 15-Jan-16  |  | 31-Dec-18   |  | $                                    | 1.14 |  |                              |  | 100,000 |                                         | 
|Total                       |  |            |  |             |  |                                      |      |  |                              |  | 677,500 |                                         | 



These options do not entitle the holder
to participate in any share issue of the Company or any other entity.



Lapse of options



During or since the end of the financial year, the following
options lapsed:



Table E – lapsed options



|Class                       |  | Expiry
    Date |  | Exercise
    Price |          |  | Number
    of Options | 
|--------------------------- |  | --------------- |  | ------------------ | -------- |  | --------------------- | 
|Unlisted Options – Other    |  | 24-Oct-15       |  |                    | 0.155    |  |                       | 
|Unlisted Options – Director |  | 28-Nov-15       |  |                    | 0.4      |  |                       | 
|Unlisted Options – Director |  | 28-Nov-15       |  |                    | 0.1      |  |                       | 
|Unlisted Options – Other    |  | 31-Dec-15       |  |                    | U$0.15   |  |                       | 
|Unlisted Options – Director |  | 31-Jan-16       |  |                    | 0.2      |  |                       | 
|Unlisted Options – Other    |  | 30-Jun-16       |  |                    | US$0.17  |  |                       | 
|Unlisted Options – Employee |  | 30-Jun-16       |  |                    | US$0.05  |  |                       | 
|Unlisted Options – Employee |  | 30-Jun-16       |  |                    | US$0.075 |  |                       | 
|Total                       |  |                 |  |                    |          |  |                       | 



|Class                       |  | Expiry
    Date |  | Exercise
    Price |      |  | Number
    of ADS* | 
|--------------------------- |  | --------------- |  | ------------------ | ---- |  | ------------------ | 
|Unlisted Options - Employee |  | 31-Dec-15       |  | $                  | 4.07 |  |                    | 
|Unlisted Options - Employee |  | 31-Dec-15       |  | $                  | 5.55 |  |                    | 
|Unlisted Options - Employee |  | 30-Jun-16       |  | $                  | 7.50 |  |                    | 
|Unlisted Options - Employee |  | 30-Jun-16       |  | $                  | 6.66 |  |                    | 
|Unlisted Options  - Other   |  | 30-Jun-16       |  | $                  | 4.00 |  |                    | 
|Total                       |  |                 |  |                    |      |  |                    | 



* One ADS = 40 Ordinary shares



F-37


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 17: Issued capital (continued)



Cancellation of options



During or since the end of the financial year, the following
options were cancelled:



Table F – cancelled options



|Class                       |  | Expiry
    Date |  | Exercise
    Price |      |  | Number
    of ADS* | 
|--------------------------- |  | --------------- |  | ------------------ | ---- |  | ------------------ | 
|Unlisted Options - Employee |  | 3-Nov-17        |  | $                  | 4.58 |  |                    | 
|Unlisted Options - Employee |  | 3-Nov-18        |  | $                  | 4.58 |  |                    | 
|Total                       |  |                 |  |                    |      |  |                    | 



* One ADS = 40 Ordinary shares



Shares issued on the exercise of options



During or since the end of the financial
year, Nil option has been exercised.



(d) Capital Management



When managing capital, the Board’s
objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits
for other stakeholders. The Board also aims to maintain a capital structure that ensures the lowest cost of capital available to
the entity.



The Board are constantly adjusting the
capital structure to take advantage of favorable costs of capital or high return on assets. As the market is constantly changing,
management may issue new shares, sell assets to reduce debt or consider payment of dividends to shareholders.



The Board seeks to maintain a balance between
the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound
capital position although there is no formal policy regarding gearing levels. The Consolidated Entity had nil borrowings at 30
June 2016 (2015: nil).



The Consolidated Entity is not subject
to any externally imposed capital requirements.



There were no changes in the Consolidated
Entity’s approach to capital management during the year.



Note 18: Reserves



Foreign currency translation reserve



This reserve comprises all foreign currency
differences arising from the translation of the financial statements of foreign operations to Australian dollars.



Share-based payments reserve



This reserve was used to recognise the
value of share based payments.



|                                     |  | Consolidated |           
|------------------------------------ |  | ------------ | ----------
|                                     |  | 2016         |           
|                                     |  | $            |           
|                                     |  |              |           
|Foreign currency translation reserve |  |              |           
|Balance at beginning of the year     |  |              | 1,967,505 
|Currency translation differences     |  |              | 590,423   
|Balance at the end of the year       |  |              | 2,557,928 
|                                     |  |              |           
|Share-based payments reserve         |  |              |           
|Balance at beginning of the year     |  |              | 10,246,475
|Share-based payments                 |  |              | 1,249,075 
|Balance at the end of the year       |  |              | 11,495,550
|TOTAL RESERVES                       |  |              | 14,053,478



F-38


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 19: Accumulated losses



|                                                                        |  | Consolidated |            
|----------------------------------------------------------------------- |  | ------------ | -----------
|                                                                        |  | 2016         |            
|                                                                        |  | $            |            
|Accumulated losses brought forward                                      |  |              | (58,942,958
|Movement in accumulated losses from changes in non-controlling interest |  |              | (269,248   
|Loss after income tax expenses for the year                             |  |              | (21,457,299
|                                                                        |  |              | (80,669,505



Note 20: Share based payments



Below are summaries of the movements of
options during the year to key management personnel and employees:



|2016  Class                     |  | Grant  Date |   | Expiry  Date |  | Exercise
     Price * |          |      | Balance
    at  start of  the year |  |            | Granted |  |  | Exercised |      |  | Expired/
     forfeited/  other |   |      | Balance
    at  end of the  year ** | 
|------------------------------- |  | ----------- | - | ------------ |  | --------------------- | -------- | ---- | ---------------------------------- |  | ---------- | ------- |  |  | --------- | ---- |  | ------------------------------- | - | ---- | ----------------------------------- | 
|Director Options                |  | 14-Dec-12   |   | 30-Jul-16    |  | $                     | 0.042    |      |                                    |  | 10,000,000 |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 21-Feb-13   |   | 31-Jul-16    |  | $                     | 0.06     |      |                                    |  | 500,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 13-Sep-13   |   | 31-Jul-16    |  | $                     | 0.17     |      |                                    |  | 3,650,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 28-Nov-13   |   | 28-Nov-15    |  | $                     | 0.40     |      |                                    |  | 16,000,000 |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 28-Nov-13   |   | 28-Nov-15    |  | $                     | 0.10     |      |                                    |  | 6,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 19-Mar-14   |   | 31-Jul-16    |  | $                     | 0.17     |      |                                    |  | 600,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 5-May-14    |   | 28-Nov-15    |  | $                     | 0.10     |      |                                    |  | 400,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 5-May-14    |   | 31-Jan-16    |  | $                     | 0.20     |      |                                    |  | 2,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 26-Nov-14   |   | 26-Nov-17    |  | $                     | 0.19     |      |                                    |  | 7,500,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 26-Nov-14   |   | 26-Nov-16    |  | $                     | 0.19     |      |                                    |  | 3,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 26-Nov-14   |   | 31-Jan-17    |  | $                     | 0.20     |      |                                    |  | 1,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 19-Dec-14   |   | 20-Dec-16    |  | $                     | 0.20     |      |                                    |  | 1,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 13-Apr-15   |   | 31-Dec-16    |  | $                     | 0.17     |      |                                    |  | 700,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 1-May-15    |   | 31-Dec-16    |  | $                     | 0.08     |      |                                    |  | 750,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 26-Jun-15   |   | 30-Jun-16    |  |                       | US$0.05  |      |                                    |  | 1,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 26-Jun-15   |   | 30-Jun-16    |  |                       | US$0.075 |      |                                    |  | 1,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 22-Dec-14   |   | 31-Dec-15    |  |                       | US$0.15  |      |                                    |  | 1,000,000  |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Employee Options                |  | 22-Dec-14   |   | 30-Jun-16    |  |                       | US$0.17  |      |                                    |  | 250,000    |         |  |  | -         |      |  |                                 | - |      |                                     | 
|Director Options                |  | 1-Oct-15    |   | 27-Nov-18    |  | $                     | 0.15     |      |                                    |  | -          |         |  |  | 2,000,000 |      |  |                                 | - |      |                                     | 
|Director Options                |  | 28-Apr-16   |   | 28-Apr-18    |  | $                     | 0.02     |      |                                    |  | -          |         |  |  | 1,000,000 |      |  |                                 | - |      |                                     | 
|Director Options                |  | 28-Apr-16   |   | 28-Apr-18    |  | $                     | 0.03     |      |                                    |  | -          |         |  |  | 1,000,000 |      |  |                                 | - |      |                                     | 
|                                |  |             |   |              |  |                       |          |      |                                    |  | 56,350,000 |         |  |  | 4,000,000 |      |  |                                 | - |      |                                     | 
|Weighted average exercise price |  |             | $ | 0.21         |  |                       | $        | 0.09 |                                    |  |            | -       |  |  | $         | 0.32 |  |                                 | $ | 0.13 |                                    



* Exercise price is in AUD otherwise it
is in USD if it is indicated as US$.





** All above options are exercisable at
the end of the financial year 2016 apart from follows

1) 7,500,000 director options issued on
26 November 2014, with exercise price $0.19 and expiry date on 26 November 2017; and

2) 1,000,000 options issued on 28 April
2016, with exercise price $0.03 and expiry date on 28 April 2018.



F-39


Table of Contents






NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 20: Share based payments (continued)



|2015  Class                     |  | Grant  Date |   | Expiry  Date |  | Exercise
     Price * |           |      | Balance
    at  start of  the year |  |            | Granted |  |  | Exercised  |      |  | Expired/
     forfeited/  other |            |      | Balance
    at  end of the  year ** | 
|------------------------------- |  | ----------- | - | ------------ |  | --------------------- | --------- | ---- | ---------------------------------- |  | ---------- | ------- |  |  | ---------- | ---- |  | ------------------------------- | ---------- | ---- | ----------------------------------- | 
|Director Options                |  | 14-Dec-12   |   | 30-Jul-16    |  | $                     | 0.042     |      |                                    |  | 10,000,000 |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 21-Dec-12   |   | 30-Nov-15    |  | $                     | 0.10      |      |                                    |  | 500,000    |         |  |  | -          |      |  |                                 | (500,000   | )    |                                     | 
|Employee Options                |  | 21-Feb-13   |   | 30-Jul-16    |  | $                     | 0.06      |      |                                    |  | 750,000    |         |  |  | -          |      |  |                                 | (250,000   | )    |                                     | 
|Employee Options                |  | 13-Sep-13   |   | 31-Jul-16    |  | $                     | 0.17      |      |                                    |  | 3,650,000  |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 28-Nov-13   |   | 28-Nov-15    |  | $                     | 0.40      |      |                                    |  | 16,000,000 |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 28-Nov-13   |   | 28-Nov-15    |  | $                     | 0.10      |      |                                    |  | 6,000,000  |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 19-Mar-14   |   | 31-Jul-16    |  | $                     | 0.17      |      |                                    |  | 600,000    |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 5-May-14    |   | 28-Nov-15    |  | $                     | 0.10      |      |                                    |  | 400,000    |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 5-May-14    |   | 31-Jan-16    |  | $                     | 0.20      |      |                                    |  | 2,000,000  |         |  |  | -          |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 3-Nov-14    |   | 31-Dec-14    |  |                       | US$0.05   |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | (1,000,000 | )    |                                     | 
|Employee Options                |  | 3-Nov-14    |   | 31-Dec-14    |  |                       | US$0.10   |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | (1,000,000 | )    |                                     | 
|Employee Options                |  | 3-Nov-14    |   | 31-Dec-14    |  |                       | US$0.15   |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 3-Nov-14    |   | 30-Jun-16    |  |                       | US$0.1875 |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 3-Nov-14    |   | 31-Dec-14    |  |                       | US$0.17   |      |                                    |  | -          |         |  |  | 250,000    |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 26-Nov-14   |   | 26-Nov-17    |  | $                     | 0.19      |      |                                    |  | -          |         |  |  | 7,500,000  |      |  |                                 | -          |      |                                     | 
|Director Options                |  | 26-Nov-14   |   | 26-Nov-16    |  | $                     | 0.19      |      |                                    |  | -          |         |  |  | 5,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 26-Nov-14   |   | 31-Jan-17    |  | $                     | 0.196     |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 19-Dec-14   |   | 20-Dec-16    |  | $                     | 0.2       |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 13-Apr-15   |   | 31-Dec-16    |  | $                     | 0.17      |      |                                    |  | -          |         |  |  | 700,000    |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 1-May-15    |   | 31-Dec-16    |  | $                     | 0.075     |      |                                    |  | -          |         |  |  | 750,000    |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 26-Jun-15   |   | 30-Jun-16    |  |                       | US$0.05   |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 26-Jun-15   |   | 30-Jun-16    |  |                       | US$0.075  |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 22-Dec-14   |   | 31-Dec-15    |  |                       | US$0.15   |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 22-Dec-14   |   | 30-Jun-15    |  |                       | US$0.1875 |      |                                    |  | -          |         |  |  | 1,000,000  |      |  |                                 | -          |      |                                     | 
|Employee Options                |  | 22-Dec-14   |   | 30-Jun-16    |  |                       | US$0.17   |      |                                    |  | -          |         |  |  | 250,000    |      |  |                                 | -          |      |                                     | 
|                                |  |             |   |              |  |                       |           |      |                                    |  | 39,900,000 |         |  |  | 24,450,000 |      |  |                                 | (2,750,000 | )    |                                     | 
|Weighted average exercise price |  |             | $ | 0.22         |  |                       | $         | 0.18 |                                    |  | $          | 0.09    |  |  | $          | 0.21 |  |                                 | $          | 0.21 |                                    



* Exercise price is in AUD otherwise it
is in USD if it is indicated as US$.



** All above options are exercisable at
the end of the financial year 2015 apart from 7,500,000 director options issued on 26 November 2014, with exercise price $0.19
and expiry date on 26 November 2017.



F-40


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 20: Share based payments (continued)



The weighted average exercise price of
options that are outstanding at the end of the financial year was $0.13 (2015: $0.21).



The weighted average remaining contractual
life of options outstanding at the end of the financial year 2016 was 8.59 months (2015: 12.11 months).



Options granted over American Depositary
Shares (where one ADS = 40 Ordinary shares)



|2016  Class                           |  | Grant  Date |   | Expiry  Date |  | Exercise
     Price  (per ADS  in US$) |      |      | Balance
    at  start of  the year |  |         | Granted |  |  | Exercised |      |  | Expired/
     forfeited/  other |   |      | Balance
    at  end of the  year | 
|------------------------------------- |  | ----------- | - | ------------ |  | -------------------------------------- | ---- | ---- | ---------------------------------- |  | ------- | ------- |  |  | --------- | ---- |  | ------------------------------- | - | ---- | -------------------------------- | 
|ADS Options                           |  | 30-Jun-14   |   | 31-Dec-15    |  | $                                      | 4.07 |      |                                    |  | 25,000  |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 30-Jun-14   |   | 31-Dec-16    |  | $                                      | 6.29 |      |                                    |  | 25,000  |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 30-Jun-14   |   | 30-Jun-16    |  | $                                      | 7.50 |      |                                    |  | 41,750  |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 30-Jun-14   |   | 30-Jun-16    |  | $                                      | 6.66 |      |                                    |  | 2,500   |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 30-Jun-14   |   | 30-Jun-16    |  | $                                      | 7.50 |      |                                    |  | 11,250  |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 30-Jun-14   |   | 31-Dec-15    |  | $                                      | 5.55 |      |                                    |  | 7,500   |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 23-Dec-14   |   | 3-Dec-16     |  | $                                      | 4.58 |      |                                    |  | 7,500   |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 23-Dec-14   |   | 3-Nov-17     |  | $                                      | 4.58 |      |                                    |  | 7,500   |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 23-Dec-14   |   | 3-Nov-18     |  | $                                      | 4.58 |      |                                    |  | 7,500   |         |  |  | -         |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 27-Aug-15   |   | 31-Jul-17    |  | $                                      | 4.00 |      |                                    |  | -       |         |  |  | 20,000    |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 18-Sep-15   |   | 22-Sep-17    |  | $                                      | 3.00 |      |                                    |  | -       |         |  |  | 25,000    |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 1-Sep-15    |   | 27-Nov-19    |  | $                                      | 5.35 |      |                                    |  | -       |         |  |  | 150,000   |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 1-Sep-15    |   | 27-Nov-20    |  | $                                      | 5.35 |      |                                    |  | -       |         |  |  | 150,000   |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 1-Sep-15    |   | 27-Nov-18    |  | $                                      | 3.55 |      |                                    |  | -       |         |  |  | 75,000    |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 1-Sep-15    |   | 27-Nov-18    |  | $                                      | 3.55 |      |                                    |  | -       |         |  |  | 75,000    |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 1-Oct-15    |   | 27-Nov-18    |  | $                                      | 3.55 |      |                                    |  | -       |         |  |  | 50,000    |      |  |                                 | - |      |                                  | 
|ADS Options                           |  | 22-Dec-15   |   | 31-Dec-18    |  | $                                      | 1.14 |      |                                    |  | -       |         |  |  | 100,000   |      |  |                                 | - |      |                                  | 
|                                      |  |             |   |              |  |                                        |      |      |                                    |  | 135,500 |         |  |  | 645,000   |      |  |                                 | - |      |                                  | 
|Weighted average exercise price (US$) |  |             | $ | 6.04         |  |                                        | $    | 4.01 |                                    |  |         | -       |  |  | $         | 6.08 |  |                                 | $ | 4.10 |                                 



All above ADS options are exercisable at
the end of the financial year 2016 apart from the following.



F-41


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 20: Share based payments (continued)



1) 150,000 ADS options granted on 1 September
2016, with exercise price US$5.35 and expiry date on 27 November 2019; and

2) 150,000 ADS options granted on 1 September
2016, with exercise price US$5.35 and expiry date on 27 November 2020.



|2015  Class                           |  | Grant  Date |      | Expiry  Date |  | Exercise
     Price  (per ADS  in US$) |      |  | Balance
    at  start of  the year |  |         | Granted |  |   | Exercised |  |  | Expired/
     forfeited/  other |      |  | Balance
    at  end of the  year * | 
|------------------------------------- |  | ----------- | ---- | ------------ |  | -------------------------------------- | ---- |  | ---------------------------------- |  | ------- | ------- |  | - | --------- |  |  | ------------------------------- | ---- |  | ---------------------------------- | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 2.00 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 3.00 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 2.00 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 4.00 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-15    |  | $                                      | 6.00 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 7.50 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 3.70 |  |                                    |  | 5,000   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 1.85 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-15    |  | $                                      | 4.07 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-16    |  | $                                      | 6.29 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 7.50 |  |                                    |  | 41,750  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 6.29 |  |                                    |  | 25,000  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 6.66 |  |                                    |  | 2,500   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 7.50 |  |                                    |  | 11,250  |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 30-Jun-16    |  | $                                      | 6.80 |  |                                    |  | 6,250   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 5.55 |  |                                    |  | 7,500   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-14    |  | $                                      | 5.55 |  |                                    |  | 7,500   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 30-Jun-14   |      | 31-Dec-15    |  | $                                      | 5.55 |  |                                    |  | 7,500   |         |  |   | -         |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 1-Nov-17     |  | $                                      | 5.05 |  |                                    |  | -       |         |  |   | 6,666     |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 1-Nov-18     |  | $                                      | 5.05 |  |                                    |  | -       |         |  |   | 6,667     |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 1-Nov-19     |  | $                                      | 5.05 |  |                                    |  | -       |         |  |   | 6,667     |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 3-Dec-16     |  | $                                      | 4.58 |  |                                    |  | -       |         |  |   | 7,500     |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 3-Nov-17     |  | $                                      | 4.58 |  |                                    |  | -       |         |  |   | 7,500     |  |  |                                 | -    |  |                                    | 
|ADS Options                           |  | 23-Dec-14   |      | 03-Nov-18    |  | $                                      | 4.58 |  |                                    |  | -       |         |  |   | 7,500     |  |  |                                 | -    |  |                                    | 
|                                      |  |             |      |              |  |                                        |      |  |                                    |  | 339,250 |         |  |   | 42,500    |  |  |                                 | -    |  |                                    | 
|Weighted average exercise price (US$) |  | $           | 4.94 |              |  | $                                      | 4.80 |  |                                    |  | -       |         |  | $ | 4.31      |  |  | $                               | 6.04 | 



* All above ADS options are exercisable
at the end of the financial year 2015 apart from 15,000 ADS options issued on 23 December 2014, with exercise price $4.58, expiry
date on 3 November 2017 and 3 November 2018 respectively.



The weighted average exercise price of
ADS options issued to key management personnel and employees that are outstanding at the end of the financial year was US$4.10
(2015: US$6.04).



The weighted average remaining contractual
life of options outstanding at the end of the financial year was 35.46 months (2015: 14.38).



For the options granted to the key management
personnel and employees during the current financial year, the fair value was measured at grant date using a Black-Scholes model
that took account of the terms and conditions upon which the instruments were granted. Expected volatility reflects the historical
volatility of the Company’s share price over the historical period commensurate with the expected term.



F-42


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 20: Share based payments (continued)



The valuation model inputs used to determine
the fair value are as follows:



Options over fully paid ordinary shares
for the key management personnel and employees



|Grant date  |  | Expiry date |  | Maximum
    life |   |  | Exercise
    price  $ |   |      | Share price at
    grant date $ |  |   | Expected
    volatility |  |  | Risk free
    interest rate |       |   | Tradeable
    discount | 
|----------- |  | ----------- |  | ---------------- | - |  | --------------------- | - | ---- | ------------------------------- |  | - | ----------------------- |  |  | --------------------------- | ----- | - | ---------------------- | 
|1-Oct-15    |  | 27-Nov-18   |  |                  | 3 |  |                       | $ | 0.15 |                                 |  | $ | 0.11                    |  |  |                             | 68.06 | % |                        | 
|28-Apr-16   |  | 28-Apr-18   |  |                  | 2 |  |                       | $ | 0.02 |                                 |  | $ | 0.01                    |  |  |                             | 50.83 | % |                        | 
|28-Apr-16 * |  | 28-Apr-18   |  |                  | 2 |  |                       | $ | 0.03 |                                 |  | $ | 0.01                    |  |  |                             | 50.83 | % |                        | 



*All options were granted for no consideration
and vested immediately except for the options expiry date on 28 April 2018.



Options granted over American Depositary
Shares (where one ADS = 40 Ordinary shares)



|Grant date  |  | Expiry date |  | Maximum
    life |   |  | Exercise
    price  (US$) |   |      | Share price at
    grant date (US$) |  |   | Expected
    volatility |  |  | Risk free
    interest rate |       |   | Tradeable
    discount | 
|----------- |  | ----------- |  | ---------------- | - |  | ------------------------- | - | ---- | ----------------------------------- |  | - | ----------------------- |  |  | --------------------------- | ----- | - | ---------------------- | 
|27-Aug-15   |  | 31-Jul-17   |  |                  | 2 |  |                           | $ | 4.00 |                                     |  | $ | 3.45                    |  |  |                             | 40.16 | % |                        | 
|18-Sep-15   |  | 22-Sep-17   |  |                  | 2 |  |                           | $ | 3.00 |                                     |  | $ | 3.00                    |  |  |                             | 39.66 | % |                        | 
|1-Sep-15 ** |  | 27-Nov-19   |  |                  | 4 |  |                           | $ | 5.35 |                                     |  | $ | 3.41                    |  |  |                             | 39.98 | % |                        | 
|1-Sep-15 ** |  | 27-Nov-20   |  |                  | 5 |  |                           | $ | 5.35 |                                     |  | $ | 3.41                    |  |  |                             | 39.98 | % |                        | 
|1-Sep-15    |  | 27-Nov-18   |  |                  | 3 |  |                           | $ | 3.55 |                                     |  | $ | 3.41                    |  |  |                             | 39.98 | % |                        | 
|1-Sep-15    |  | 27-Nov-18   |  |                  | 3 |  |                           | $ | 3.55 |                                     |  | $ | 3.41                    |  |  |                             | 39.98 | % |                        | 
|1-Oct-15    |  | 27-Nov-18   |  |                  | 3 |  |                           | $ | 3.55 |                                     |  | $ | 3.10                    |  |  |                             | 39.42 | % |                        | 
|22-Dec-15   |  | 31-Dec-18   |  |                  | 3 |  |                           | $ | 1.14 |                                     |  | $ | 0.72                    |  |  |                             | 47.76 | % |                        | 



** All options were granted for no consideration
and vested immediately except for the options with exercise price expiry date on 27 November 2019 and 27 November 2020.



Those options granted to key management
personnel have been identified in key management personnel disclosures (Note 22) and the Remuneration Report in the Directors'
Report. Shareholder approval was obtained for the grants of options to directors on 27 November 2015.



Shares issued as compensation



Performance Shares



No Performance Shares were issued in 2016
(2015: Nil).



American Depositary Shares



In current fiscal year, the following American
Depositary Shares were issued to eligible participants of the US Omnibus Plan equity incentive scheme approved by shareholders
on 5 May 2014.

| | 1) | 10,000 ADSs (equivalent to 400,000 ordinary shares) for nil consideration were issued on 27 November
2015
| | -- | ---------------------------------------------------------------------------------------------------------



In 2015, the following American Depositary
Shares were issued to eligible participants.



| | 2) | 11,826 ADSs (equivalent to 473,040 ordinary shares) for nil consideration were issued on 13 April
2015
| | -- | ------------------------------------------------------------------------------------------------------

| | 3) | 6,000 ADSs (equivalent to 240,000 ordinary shares) for nil consideration were issued on 1 May 2015
| | -- | --------------------------------------------------------------------------------------------------



For details of shares and options issued
in lieu of services rendered, refer to issued capital disclosures (Note 17) and non-cash investing and financing activities disclosures
(Note 21(b)).



F-43


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 21: Cash flow information



|                                                                           |  | Consolidated |            
|-------------------------------------------------------------------------- |  | ------------ | -----------
|                                                                           |  | 2016         |            
|                                                                           |  | $            |            
|(a) Reconciliation of cash flow from operations with loss after income tax |  |              |            
|                                                                           |  |              |            
|Loss after income tax expense for the year                                 |  |              | (21,541,811
|                                                                           |  |              |            
|Adjustments for:                                                           |  |              |            
|                                                                           |  |              |            
|Depreciation and amortisation                                              |  |              | 446,068    
|Foreign exchange differences                                               |  |              | 610,504    
|Impairment expenses                                                        |  |              | 4,433,361  
|Share based payments and related costs                                     |  |              | 1,263,528  
|Loss on disposal of non-current assets                                     |  |              | 12,656     
|Income from Sale of Business                                               |  |              |            
|                                                                           |  |              |            
|Changes in operating assets and liabilities:                               |  |              |            
|Decrease in receivables                                                    |  |              | 462,812    
|Decrease / (Increase) in other assets                                      |  |              | 690,561    
|(Decrease) / Increase in trade and other payables                          |  |              | (410,225   
|(Decrease) / Increase in employee benefits                                 |  |              | (276,578   
|(Decrease) in current tax                                                  |  |              | -          
|Decrease in deferred tax assets                                            |  |              | -          
|                                                                           |  |              |            
|Net cash used in operating activities                                      |  |              | (14,309,124



(b) Non-cash investing and financing activities



On 1 October 2014, MOKO completed a business
combination by acquiring 80% of the ordinary shares as a controlling interest in Tagroom Pty Ltd (‘Tagroom’). In addition
to cash, the fair value consideration was settled via $200,000 in MOKO ordinary shares (1,242,263 shares) priced at the volume-weighted
average price of shares traded on the ASX over the 5 trading days up to and including the day before completion on 12 December
2014.



During the year, the Company issued the
following ADS (American Depositary Shares) for nil consideration, where one ADS = 40 Ordinary shares. They were issued to eligible
participants of the US Omnibus Plan equity incentive scheme approved by shareholders on 5 May 2014.



|2016             |  |                                    |  | ADS
    Price |      |  | Number
    of |  |        | Fair
    Value | 
|---------------- |  | ---------------------------------- |  | ------------- | ---- |  | ------------- |  | ------ | -------------- | 
|Date             |  | Details                            |  | (US$)         |      |  | ADS           |  |        | US$            | 
|27 November 2015 |  | Share issued under US Omnibus Plan |  | $             | 1.08 |  |               |  | 10,000 |                | 



In 2015, the Company issued the following
ADS.



|2015          |  |                                    |  | ADS
    Price |      |  | Number
    of |  |       | Fair
    Value | 
|------------- |  | ---------------------------------- |  | ------------- | ---- |  | ------------- |  | ----- | -------------- | 
|Date          |  | Details                            |  | (US$)         |      |  | ADS           |  |       | US$            | 
|13 April 2015 |  | Share issued under US Omnibus Plan |  | $             | 4.88 |  |               |  | 7,000 |                | 
|13 April 2015 |  | Share issued under US Omnibus Plan |  | $             | 5.18 |  |               |  | 4,826 |                | 
|1 May 2015    |  | Share issued under US Omnibus Plan |  | $             | 5.35 |  |               |  | 6,000 |                | 



F-44


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 21: Cash flow information (continued)



These transactions are not reflected in
the statement of cash flows.



Note 22: Key management personnel disclosures



| | (a) | Directors
| | --- | ---------



The following persons were Directors of MOKO Social Media Limited
during the financial year:





|Ian Rodwell     | - | Chief Executive Officer and Managing Director (resigned 18 February 2016)   
|--------------- | - | ----------------------------------------------------------------------------
|Shripal Shah    | - | Chief Executive Officer and Managing Director (appointed 16 May 2016)       
|Greg McCann     | - | Non-Executive Chairman                                                      
|Mark Hauser     | - | Non-Executive Director (resigned 24 May 2016)                               
|Jeff White      | - | Non-Executive Director (resigned 17 November 2015)                          
|Leo Hindery Jr  | - | Non-Executive Director (resigned 14 April 2016)                             
|Diana Rhoten    | - | Non-Executive Director (appointed 1 October 2015 and resigned 14 April 2016)
|Emma Waldon     | - | Non-Executive Director (appointed 1 October 2015)                           
|Edward Bralower | - | Non-Executive Director (appointed 30 June 2016)                             



| | (b) | Key management personnel compensation
| | --- | -------------------------------------



The aggregate compensation made to directors
and other members of key management personnel of the Consolidated Entity is set out below:



|                                          |  | Consolidated |          
|----------------------------------------- |  | ------------ | ---------
|                                          |  | 2016         |          
|                                          |  | $            |          
|                                          |  |              |          
|Short-term employee benefits              |  |              | 1,175,479
|Post-employment benefits                  |  |              | 17,749   
|Share based payments - Performance shares |  |              | 310,074  
|Share based payments - Options            |  |              | 342,233  
|                                          |  |              | 1,845,535



Note 23: Related party transactions



(a) Parent entity



MOKO Social Media Limited is the parent
entity.



(b) Subsidiaries



Interests in subsidiaries are set out in
Note 25.



(c) Key management personnel



Disclosures relating to key management
personnel are set out in Note 22 and the remuneration report filed with the Consolidated Entity’s Annual Report in Australia.



(d) Transactions with related parties



The following transactions occurred with
related parties:



F-45


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 23: Related party transactions (continued)



|                                       |  | Consolidated |      
|-------------------------------------- |  | ------------ | -----
|                                       |  | 2016         |      
|                                       |  | $            |      
|Amounts recognised as expense          |  |              |      
|Company secretarial and accounting (1) |  |              | -    
|Office rent (2)                        |  |              | 1,664
|Total                                  |  |              | 1,664



(1) Andrew Bursill, the former Company
Secretary who resigned on 31 January 2015, is also an associate of Franks & Associates Pty Ltd which provided accounting and
Company secretarial services to MOKO Social Media Limited. The contract between MOKO Social Media Limited and Franks & Associates
was based on normal commercial terms.

(2) Greg McCann, Non-Executive Chairman,
is an associate of Consortio Pty Limited (“Consortio”) who leases office space in Sydney to MOKO. The lease agreement
between MOKO and Consortio was based on normal commercial terms and terminated on 1 August 2015.



(e) Loans to/from related parties



Loans are made to/by the Parent Entity,
MOKO Social Media Limited, to its subsidiaries for capital purchases and working capital purposes. The loans outstanding between
the Parent Entity and its subsidiaries have no fixed date of repayment and are non-interest bearing. Details of the Parent Entity’s
interest in its subsidiaries are set out in Note 25.



|                                     |  | Company |  
|------------------------------------ |  | ------- | -
|                                     |  | 2016    |  
|                                     |  | $       |  
|Non-Current                          |  |         |  
|Loans to / (from) subsidiaries:      |  |         |  
|MOKO.mobi Inc (1)                    |  |         | -
|Deals I Love (Australia) Pty Ltd (2) |  |         | -
|Tagroom Pty Ltd (3)                  |  |         | -
|                                     |  |         |  
|Total                                |  |         | -



| | (1) | The outstanding balance to MOKO.mobi Inc is $21,376,220 as at 30 June 2016. There is no plan for
MOKO.mobi Inc to repay the loan in the future. The total amount is unrecoverable and impaired.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | MOKO sold Deals I Love (Australia) Pty Ltd (“DIL”) to Hedgeabelli Pty Ltd on 30 March
2016. As a condition to the occurrence of Completion, MOKO advanced $37,500 to DIL as part of the Completion Loan. On the completion
date, MOKO released DIL from any outstanding loan balances amounting to $1,092,084.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Tagroom Pty Ltd (“Tagroom”) was discontinued operation in October 2015. MOKO released
Tagroom from any outstanding loan balances amounting to $711,390.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



No dividends were received from the subsidiaries in the 2015
or 2016 financial years.



Terms and conditions



All transactions were made on normal commercial
terms and conditions and at market rates.



F-46


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 24: Parent entity information



Set out below is the supplementary information
about the parent entity.



|                                                               |  | Parent |            
|-------------------------------------------------------------- |  | ------ | -----------
|                                                               |  | 2016   |            
|                                                               |  | $      |            
|Statement of profit
    or loss and other comprehensive income |  |        |            
|Loss after income tax                                          |  |        | (36,026,645
|                                                               |  |        |            
|Total comprehensive income                                     |  |        | (36,026,645
|                                                               |  |        |            
|Statement of financial position                                |  |        |            
|Total current assets                                           |  |        | 1,197,872  
|                                                               |  |        |            
|Total assets                                                   |  |        | 1,805,836  
|                                                               |  |        |            
|Total current liabilities                                      |  |        | 463,660    
|                                                               |  |        |            
|Total liabilities                                              |  |        | 475,478    
|                                                               |  |        |            
|Equity                                                         |  |        |            
|Issued capital                                                 |  |        | 69,142,733 
|Reserves                                                       |  |        | 11,495,549 
|Accumulated losses                                             |  |        | (79,307,924
|                                                               |  |        |            
|Total equity                                                   |  |        | 1,330,358  



Contingent liabilities



The parent entity had no contingent liabilities
as at 30 June 2015 and 30 June 2016.



Capital commitments - Property, plant
and equipment



The parent entity had no capital commitments
for property, plant and equipment as at 30 June 2015 and 30 June 2016.



Significant accounting policies



The accounting policies of the parent entity
are consistent with those of the Consolidated Entity, as disclosed in note 1, except for the following:



| | · | Investments
in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
| | - | -------------------------------------------------------------------------------------------------



F-47


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 25: Subsidiaries



The consolidated financial statements incorporate the assets,
liabilities and results of the following wholly-owned subsidiaries in accordance with the accounting policy described in Note 1:



|                                    |  |                              |  | Entity
    interest |     
|----------------------------------- |  | ---------------------------- |  | ------------------- | ----
|                                    |  | Country
    of incorporation |  | 2016                |     
|MOKO Mobi Inc                       |  | United States of America     |  |                     | 100 
|MOKO Door Foundation *              |  | United States of America     |  |                     | -   
|All Night Media Limited *           |  | England                      |  |                     | -   
|Paper Tree Limited                  |  | British Virgin Islands       |  |                     | 100 
|Deals I Love (Australia) Pty Ltd ** |  | Australia                    |  |                     | -   
|Tagroom Pty Ltd                     |  | Australia                    |  |                     | 94.2



The consolidated financial statements incorporate the assets,
liabilities and results of the following subsidiary with non-controlling interests in accordance with the accounting policy described
in Note 1:



* Denotes entities deregistered during
the year.

** MOKO sold Deals I Love (Australia) Pty Ltd (“DIL”)
to Hedgeabelli Pty Ltd on 30 March 2016. As a condition to the occurrence of Completion, MOKO advanced $37,500 to DIL as part of
the Completion Loan. On the completion date, MOKO released DIL from any outstanding loan balances amounting to $1,092,084.



Summarised financial information



Summarised financial information of the
subsidiaries with non-controlling interests that are material to the Consolidated Entity are set out below:



F-48


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 25: Subsidiaries (continued)



|Tagroom Pty Ltd                                                         |  |            |          |   |      | 
|----------------------------------------------------------------------- |  | ---------- | -------- | - | ---- | 
|                                                                        |  | 2016
    * |          |   | 2015 | 
|                                                                        |  | $          |          |   | $    | 
|Summarised statement of financial position                              |  |            |          |   |      | 
|Current assets                                                          |  |            | -        |   |      | 
|Non-current assets                                                      |  |            | -        |   |      | 
|Total assets                                                            |  |            | -        |   |      | 
|                                                                        |  |            |          |   |      | 
|Current liabilities                                                     |  |            | -        |   |      | 
|Non-current liabilities                                                 |  |            | -        |   |      | 
|Total liabilities                                                       |  |            | -        |   |      | 
|Net liabilities                                                         |  |            | -        |   |      | 
|                                                                        |  |            |          |   |      | 
|Summarised statement of profit or loss and other comprehensive income   |  |            |          |   |      | 
|Revenue                                                                 |  |            | 7,194    |   |      | 
|Expenses                                                                |  |            | (111,757 | ) |      | 
|                                                                        |  |            |          |   |      | 
|Loss before income tax                                                  |  |            | (104,563 | ) |      | 
|Income tax expense                                                      |  |            | -        |   |      | 
|                                                                        |  |            |          |   |      | 
|Loss after income tax                                                   |  |            | (104,563 | ) |      | 
|Other comprehensive income                                              |  |            | -        |   |      | 
|                                                                        |  |            |          |   |      | 
|Total comprehensive income                                              |  |            | (104,563 | ) |      | 
|                                                                        |  |            |          |   |      | 
|Statement of cash flows                                                 |  |            |          |   |      | 
|Net cash used in operating activities                                   |  |            | (77,974  | ) |      | 
|Net cash provided by / (used in) investing activities                   |  |            | 5,471    |   |      | 
|Net cash provided by financing activities                               |  |            | 49,833   |   |      | 
|                                                                        |  |            |          |   |      | 
|Net (decrease) in cash and cash equivalents                             |  |            | (22,670  | ) |      | 
|                                                                        |  |            |          |   |      | 
|Other financial information                                             |  |            |          |   |      | 
|Loss attributable to non-controlling interests                          |  |            | (6,065   | ) |      | 
|Movement in accumulated losses from changes in non-controlling interest |  |            | 94,751   |   |      | 
|Accumulated non-controlling interests at the end of reporting period    |  |            | (44,765  | ) |      | 



* MOKO purchased additional 14.2% shareholders from previous
Tagroom shareholders and employees on 30 October 2015. MOKO released Tagroom from any outstanding loan balances amounting to $711,390
after its operation was discontinued from 31 October 2015.



5.8% of Loss during the year (2015: 20%) attributable to Non-controlling
interest, 94.2% of Loss during the year (2015: 80%) attributable to the Consolidated entity.



The “Profit and loss” and “Cash flow”
for the year ended 2016 was from 1 July 2015 till 31 October 2015 before discontinued.



F-49


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 25: Subsidiaries (continued)



|Deals I Love (Australia) Pty Ltd                                        |  |            |          |   |      |  |            |      | 
|----------------------------------------------------------------------- |  | ---------- | -------- | - | ---- |  | ---------- | ---- | 
|                                                                        |  | 2016
    * |          |   | 2015 |  |            | 2014 | 
|                                                                        |  | $          |          |   | $    |  |            |      | 
|Summarised statement of financial position                              |  |            |          |   |      |  |            |      | 
|Current assets                                                          |  |            | -        |   |      |  | 140,551    |      | 
|Non-current assets                                                      |  |            | -        |   |      |  | 2,485      |      | 
|Total assets                                                            |  |            | -        |   |      |  | 143,036    |      | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Current liabilities                                                     |  |            | -        |   |      |  | 1,266,592  |      | 
|Non-current liabilities                                                 |  |            | -        |   |      |  | -          |      | 
|Total liabilities                                                       |  |            | -        |   |      |  | 1,266,592  |      | 
|Net liabilities                                                         |  |            | -        |   |      |  | (1,123,556 | )    | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Summarised statement of profit or loss and other comprehensive income   |  |            |          |   |      |  |            |      | 
|Revenue                                                                 |  |            | 708,314  |   |      |  | 1,990,291  |      | 
|Expenses                                                                |  |            | (868,411 | ) |      |  | (2,290,837 | )    | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Loss before income tax                                                  |  |            | (160,097 | ) |      |  | (300,546   | )    | 
|Income tax expense                                                      |  |            | -        |   |      |  | -          |      | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Loss after income tax                                                   |  |            | (160,097 | ) |      |  | (300,546   | )    | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Other comprehensive income                                              |  |            | -        |   |      |  | -          |      | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Total comprehensive income                                              |  |            | (160,097 | ) |      |  | (300,546   | )    | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Statement of cash flows                                                 |  |            |          |   |      |  |            |      | 
|Net cash used in operating activities                                   |  |            | (82,893  | ) |      |  | (390,975   | )    | 
|Net cash used in investing activities                                   |  |            | (31,724  | ) |      |  | -          |      | 
|Net cash provided by financing activities                               |  |            | 97,500   |   |      |  | 385,000    |      | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Net (decrease) in cash and cash equivalents                             |  |            | (17,117  | ) |      |  | (5,975     | )    | 
|                                                                        |  |            |          |   |      |  |            |      | 
|Other financial information                                             |  |            |          |   |      |  |            |      | 
|Loss attributable to non-controlling interests                          |  |            | (78,448  | ) |      |  | (147,268   | )    | 
|Movement in accumulated losses from changes in non-controlling interest |  |            | 349,814  |   |      |  | -          |      | 
|Accumulated non-controlling interests at the end of reporting period    |  |            | -        |   |      |  | (271,366   | )    | 



* MOKO sold Deals I Love (Australia) Pty Ltd (“DIL”)
to Hedgeabelli Pty Ltd on 30 March 2016. As a condition to the occurrence of Completion, MOKO advanced $37,500 to DIL as part of
the Completion Loan. On the completion date, MOKO released DIL from any outstanding loan balances amounting to $1,092,084.



The “Profit and loss” and “Cash flow”
for the year ended 2016 was from 1 July 2015 till 30 March 2016 before sold.



49% of Loss during the period from 1 July 2015 till 30 March
2016 attributable to Non-controlling interest, 51% of Loss during the period attributable to the Consolidated entity.



F-50


Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 26: Earnings per share



|                                                                                                              |  | 2016 |             |   | 2015 (restated) |  |             | 2014 | 
|------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | --------------- |  | ----------- | ---- | 
|                                                                                                              |  | $    |             |   | $               |  |             | $    | 
|(a) Earnings per share from continuing operations                                                             |  |      |             |   |                 |  |             |      | 
|Loss after income tax attributable to owners of MOKO Social Media Limited                                     |  |      | (20,803,136 | ) |                 |  | (18,995,935 | )    | 
|Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share |  |      | 976,674,881 |   |                 |  | 609,883,178 |      | 
|                                                                                                              |  |      |             |   |                 |  |             |      | 
|                                                                                                              |  |      | cents       |   |                 |  | cents       |      | 
|Basic earnings per share                                                                                      |  |      | (2.13       | ) |                 |  | (3.11       | )    | 
|                                                                                                              |  |      |             |   |                 |  |             |      | 
|(b) Earnings per share from discontinued operations                                                           |  |      |             |   |                 |  |             |      | 
|Loss after income tax attributable to owners of MOKO Social Media Limited                                     |  |      | (654,163    | ) |                 |  | (1,017,353  | )    | 
|Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share |  |      | 976,674,881 |   |                 |  | 609,883,178 |      | 
|                                                                                                              |  |      |             |   |                 |  |             |      | 
|                                                                                                              |  |      | cents       |   |                 |  | cents       |      | 
|Basic earnings per share                                                                                      |  |      | (0.07       | ) |                 |  | (0.17       | )    | 
|                                                                                                              |  |      |             |   |                 |  |             |      | 
|(c) Total Earnings per share from loss                                                                        |  |      |             |   |                 |  |             |      | 
|Loss after income tax attributable to owners of MOKO Social Media Limited                                     |  |      | (21,457,299 | ) |                 |  | (20,013,288 | )    | 
|Weighted average number of shares used as the denominator in calculating basic and diluted earnings per share |  |      | 976,674,881 |   |                 |  | 609,883,178 |      | 
|                                                                                                              |  |      |             |   |                 |  |             |      | 
|                                                                                                              |  |      | cents       |   |                 |  | cents       |      | 
|Basic earnings per share                                                                                      |  |      | (2.20       | ) |                 |  | (3.28       | )    | 



(b)
Diluted earnings per share



Options issued to shareholders and related
parties are considered to be potential ordinary shares and have been considered in the determination of diluted earnings per share.
The calculation of dilutive earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares
that would have an antidilutive effect on earnings per share. Diluted earnings per share are therefore not different from basic
earnings per share



Note 27: Contingencies



There were no contingent liabilities at 30 June 2016 (2015:
$nil).



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Table of Contents




NOTES
TO THE FINANCIAL STATEMENTS



For the year ended 30 June 2016



Note 28: Commitments



Lease commitments - rental



|                     |  | Consolidated |        
|-------------------- |  | ------------ | -------
|                     |  | 2016         |        
|                     |  | $            |        
|Within one year      |  |              | 218,203
|One and five years   |  |              | 54,950 
|More than five years |  |              | -      
|                     |  |              | 273,153



The Consolidated Entity leases its offices
in United States of America and Australia. The US lease includes a three-year lease commitment for a New York office until November
2017 and a three-year lease commitment for an office in Alexandria, VA until September 2017.



During the year an amount of $487,941 (2015:
$453,673) was recognised as an expense in profit or loss in respect of operating rental leases.



Note 29: Events occurring after the statement of financial
position date



Sales agreement:



On 16 August 2016, MOKO entered into an
asset sales agreement with Competitor Group, Inc. (“CGI”), under which CGI will acquire RunHaven, MOKO’s running
website and social media assets for an undisclosed amount.



MOKO and CGI have also entered a marketing
alliance in which they will facilitate introductions to each other’s partners to explore potential sponsorship and media
opportunities.



Board changes:



On 7 October 2016, MOKO
announced that Malcolm James would be appointed as a Non-Executive Chairman effective from 7 October 2016. Mr. James replaces
Greg McCann who is retiring as Chairman also effective 7 October 2016. On 7 October 2016, MOKO announced that James Ross
would be appointed as Non-Executive Director.



No other matter or circumstance has arisen
since 30 June 2016 that has or may significantly affect:



(a) MOKO Social Media Limited operations in future financial
years, or

(b) The results of those operations in future financial years,
or

(c) MOKO Social Media Limited’s state of affairs in future
financial years.



Note 30: Auditor’s remuneration



During the year the following fees were paid or payable for
services provided by the auditor:



|                                            |  | Consolidated |        
|------------------------------------------- |  | ------------ | -------
|                                            |  | 2016         |        
|                                            |  | $            |        
|Audit services                              |  |              |        
|Audit and review of financial reports – BDO |  |              | 175,680
|F1 review of financial reports – BDO        |  |              | 30,434 
|                                            |  |              |        
|                                            |  |              | 206,114



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