UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549





FORM 20-F





☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE
ACT OF 1934


OR


☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934For the fiscal year ended June 30, 2017


OR


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


OR


☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934Date of event requiring this shell company report
___________________











Commission file number: 001-35022


Mission NewEnergy Limited


(Exact
name of Registrant as specified in its charter)





N/A


(Translation
of Registrant’s name into English)


Western Australia, Australia


(Jurisdiction
of incorporation or organization)


Unit B9, 431 Roberts Rd,


Subiaco, Western Australia 6008, Australia


(Address
of principal executive offices)





Guy Burnett


Chief Financial Officer and Company Secretary


+61 8 6313 3975; guy@missionnewenergy.com


Unit B9, 431 Roberts Rd,


Subiaco, Western Australia 6008, Australia


(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

Name of each exchange on which registeredNone

None





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


Ordinary
Shares, no par value(Title
of Class)





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


None(Title
of Class)





Indicate
the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of June 30, 2017:
40,870,275 Ordinary Shares


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


☐
Yes      ☒ No


If this
report is an annual or transition report, indicate by check mark if
the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of
1934.


☐
Yes      ☒ No


Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements
for the past 90 days.


☒ Yes      ☐
No





Indicate
by check mark whether the registrant has submitted electronically
and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such
files).


☐
Yes      ☐ No


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


☐
Large accelerated filer

☐
Accelerated filer

☒ Non-accelerated filer





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


US GAAP
☐


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


Other
☐


If
“Other” has been checked in 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      ☒ No








TABLE OF CONTENTS














PageCONVENTIONS THAT APPLY TO THIS ANNUAL
REPORT
3SPECIAL
NOTE REGARDING FORWARD-LOOKING
STATEMENTS
3INDUSTRY AND MARKET
DATA
4PART I
4Item 1. Identity of
Directors, Senior Management and Advisers
4Item 2. Offer Statistics and Expected
Timetable
4Item 3. Key Information
4Item 4. Information on the Company
11Item 4A. Unresolved Staff
Comments
15Item 5. Operating and Financial Review and
Prospects
16Item 6. Directors, Senior Management and
Employees
19Item 7. Major
Shareholders and Related Party Transactions
24Item 8. Financial Information
24Item 9. The Offer
and Listing
25Item 10. Additional
Information
25Item 11. Quantitative and Qualitative Disclosures About
Market Risk
31Item 12.
Description of Securities Other than Equity
Securities
32PART
II
32Item 13. Defaults, Dividend Arrearages and
Delinquencies
32Item 14. Material
Modifications to the Rights of Security Holders and Use of
Proceeds
32Item 15. Controls
and Procedures
32Item
16.
[Reserved]
33Item
16A. Audit Committee Financial Expert
33Item
16B. Code of Ethics
33Item
16C. Principal Accountant Fees and Services
33Item 16D.
Exemptions from the Listing Standards for Audit
Committees
33Item 16E. Purchases
of Equity Securities by the Issuer and Affiliated
Purchasers
33Item 16F. Change in
Registrant’s Certifying Accountant
33Item 16G. Corporate
Governance
33Item 16H. Mine
Safety Disclosures
33PART
III
33Item
17. Financial Statements
33Item 18. Financial
Statements
33Item 19. Exhibit 8.1
-Item 19. Exhibit
12.1
-Item 19. Exhibit
12.2
-Item 19. Exhibit
13.1
-





























CONVENTIONS THAT APPLY TO THIS ANNUAL
REPORT





Unless
otherwise indicated or the context clearly implies otherwise,
references to “we,” “us,”
“our,”, “Mission NewEnergy”,
“Mission”, “the Group” and “the
Company” are to Mission NewEnergy Limited, an Australian
corporation, and its subsidiaries. In this annual report
“shares” or “ordinary shares” refers to our
ordinary shares.





In this
annual report, references to “$,” “US$” or
“U.S. dollars” are to the lawful currency of the United
States and references to “Australian dollars” or
“A$” are to the lawful currency of
Australia.





Solely
for the convenience of the reader, this annual report contains
translations of certain Australian dollar amounts into U.S. dollars
at specified rates. Except as otherwise stated in this annual
report, all translations from Australian dollars to U.S. dollars
are based on the noon buying rate of 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 the date or year
indicated. No representation is made that the Australian dollar
amounts referred to in this annual report 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
following table sets out relevant conversion measures for Mission
NewEnergy’s business:





1
Tonne                  =       2,204.6226
Pounds biodiesel


1
Tonne                  =       1.1023
Tons (short) biodiesel


1
Tonne                  =       298
Gallons biodiesel


1
Tonne                  =       7.4
Barrels biodiesel


1
Barrel                  =       42
Gallons biodiesel





Unless
otherwise indicated, the consolidated financial statements and
related notes as of and for the fiscal years ended June 30, 2015,
2016 and 2017 included elsewhere in this annual report have been
prepared in accordance with Australian Accounting Standards and
also comply with International Financial Reporting Standards
(“IFRS”) and interpretations issued by the
International Accounting Standards Board.





References to a
particular “fiscal year” are to our fiscal year ended
June 30 of that year. References to a year other than a
“fiscal” year are to the calendar year ended December
31. References to “our refinery,” “the
refinery”, “our business” and “the joint
venture company” refer to a 20% shareholding held by our
wholly owned subsidiary M2 Capital Sdn Bhd in a Malaysian Joint
Venture Company, named FGV Green Energy Sdn Bhd, which owns a
250,000 tpa biodiesel refinery which is currently undergoing a
technology change retrofitto produce biodiesel from lower cost
feedstock.








SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS





This
annual report contains forward-looking statements that relate to
our current expectations and views of future events. All
statements, other than historical fact or present financial
information, may be deemed to be forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements relate to events that involve known and
unknown risks, uncertainties and other factors, including those
listed under “Item 3.D — Key Information — Risk
Factors,” “Item 4 — Information on the
Company” and “Item 5 — Operating and Financial
Review and Prospects,” all of which are difficult to predict
and many of which are beyond our control, which may cause our
actual results, performance or achievements to be materially
different from any future results, performances or achievements
expressed or implied by the forward-looking
statements.





In some
cases, these forward-looking statements can be identified by words
or phrases such as “may,” “will,”
“expect,” “anticipate,” “aim,”
“estimate,” “intend,” “plan,”
“believe,” “potential,”
“continue,” “predict,”
“forecast,” “budget,”
“project,” “target,” “likely
to” or other similar expressions. These forward-looking
statements are subject to risks, uncertainties and assumptions,
some of which are beyond our control. In addition, these
forward-looking statements reflect our current views with respect
to future events and are not a guarantee of future performance.
Actual outcomes may differ materially from the information
contained in the forward-looking statements.








We have
based these forward-looking statements largely on our current
expectations and projections about future events and financial
trends that we believe may affect our financial condition, results
of operations, business strategy and financial needs. These
forward-looking statements include, among other things, statements
relating to:








●
 our beliefs
regarding the design, technology, operation and maintenance of our
associates’ refinery;


●
 our beliefs
regarding increased demand for our associates’ refined
product;


●
 our
associates’ ability to procure a sufficient supply of raw
materials, in particular, suitable and cost competitive
feedstocks;


●
 our beliefs
regarding the competitiveness of our associates’
products;.


●
 our beliefs
regarding the advantages of our business model;


●
 our expectations
related to our ongoing restructure;


●
 our expectations
regarding the scaling and expansion or reduction of our
associates’ production capacity;


●
 our expectations
regarding our associates’ ability to procure customers and
expand them;


●
 our expectations
regarding increased revenue growth and our ability to achieve
profitability resulting from increases in our associates’
production volumes;


●
 our beliefs
regarding our and our associates’ ability to successfully
implement strategies;


●
 our beliefs
regarding our and our associates’ abilities to secure
sufficient funds to meet our cash needs for our operations and
capacity expansion;


●
 our future business
development, results of operations and financial
condition


●
 the effects of
weather;


●
 government
regulatory and industry certification, approval and acceptance of
our associates’ product and its derivatives; and


●
 government
policymaking and incentives relating to renewable
fuels.











The
forward-looking statements made in this annual report relate only
to events or information as of the date on which the statements are
made in this annual report. Except as required by law, we undertake
no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, after the date on which the statements are made or to
reflect the occurrence of unanticipated events.











INDUSTRY AND MARKET
DATA





This
annual report includes information with respect to market and
industry conditions and market share from third party sources or
that is based upon estimates using such sources when available. We
believe that such information and estimates are reasonable and
reliable. We also believe the information extracted from
publications of third party sources has been accurately reproduced
and, so far as we are able to ascertain from information published
by the third party sources, no facts have been omitted which would
render the reproduced information inaccurate or misleading.
However, we have not independently verified any of the data from
third party sources. Similarly, our internal research is based upon
the understanding of industry conditions, and such information has
not been verified by any independent sources.





PART I





Item 1. Identity of Directors,
Senior Management and Advisers





Not
applicable.





Item 2. Offer Statistics and
Expected Timetable





Not
applicable.





Item 3. Key Information





A.
 Selected
Financial Data.


The
following selected consolidated statements of operations and other
consolidated financial data for the fiscal years 2017, 2016, and
2015 have been derived from our audited consolidated financial
statements included elsewhere in this annual report. You should
read the selected consolidated financial data in conjunction with
our consolidated financial statements and related notes and
“Item 5 — Operating and Financial Review and
Prospects” included elsewhere in this annual report. Our
historical results do not necessarily indicate our expected results
for any future periods.


Our
financial statements have been prepared in Australian dollars and
in accordance with International Financial Reporting Standards, as
issued by the International Accounting Standards
Board.





Income
statement data for the fiscal years ended June 30, 2017, 2016 and
2015 and the balance sheet data as at June 30, 2017 and 2016 have
been derived from our audited financial statements that are
included elsewhere in this annual report. Income statement data for
the fiscal years ended June 30, 2014 and 2013 and the balance sheet
data as at June 30, 2015, 2014, and 2013 have been derived from our
audited financial statements that are not included in this annual
report.








$2017US(1)
2017
A$
2016
A$
2015 A$
2014 A$
2013 A$(in
thousands, except share and per share data)Income
Statement data:Total sales
revenue


-
-
-
169Total other
income
6
8
42
7,271
9,684
8,244Cost of
sales
-
-
-
-
-
(368)Employee benefits
expense
(352)
(467)
(1091)
(1,574)
(1,377)
(1,618)Other income/
(expenses)
(3,055)
(4,050)
(1,169)
311
(4,053)
8,375Finance
costs

-
-
(1,815)
(4,863)
(4,048)Profit/(loss) from
operations before income tax
(3,401)
(4,509)
(2,218)
4,193
(609)
10,754Income tax
(expense)/ benefit
(2)
(3)
(1)
(6)
-
20Profit/(loss) from
continuing operations
(3,403)
(4,512)
(2,219)
4,187
(609)
10,774Share of net
(loss)/profit of associate accounted for using the equity
method
(29)
(38)
(110)
37
-
-Profit/(loss) for
the year from discontinued operations
-
-
-
24,133
(485)
(717)Net Profit /
(loss)
(3,432)
(4,550)
(2,329)
28,357
(1,094)
10,057Profit/(loss)
attributable to non-controlling interests


-
-
17
(14)Profit/(loss)
attributable to members of the parent
(3,432)
(4,550)
(2,329)
28,357
(1,077)
10,043Basic and diluted
earnings / (loss) per share (2)
(0.08)
(0.11)
(0.06)
0.91
(0.08)
0.96Weighted average
ordinary number of shares outstanding (3)
40,870,275
40,870,275
40,870,275
31,253,837
13,377,124
10,481,820Balance
Sheet data:Total current
assets
306
399
2,522
8,851
4,002
5,486Total
assets
306
399
6,171
12,621
4,049
20,105Total current
liabilities
157
205
1,406
5,852
276
31,051Total non-current
liabilities
-
-
-
-
15,125
1,558Total
liabilities
157
205
1,406
5,852
15,400
32,609Retained earnings/
(accumulated losses)
(1,161)
(1,513)
3,037
5,366
(141,618)
(136,188)Total
equity
149
194
4,765
6,770
(11,351)
(12,504)Other
financial data:Dividends per
share
—
-
—
—
—
—











(1)
 The balance sheet
data has been translated into U.S. dollars from Australian dollars
based upon the noon buying rate of 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, 2017, which
exchange rate was A$1.00 = US$0.7676. The income
statement data has been translated into U.S. dollars from
Australian dollars based upon the weighted average of the noon
buying rate of the City of New York for cable transfers of
Australian dollars, as certified for customs purposes by the
Federal Reserve Bank of New York for the period from July 1, 2016
to June 30, 2017 which was A$1.00 = US$0.7544. These
translations are merely for the convenience of the reader and
should not be construed as representations that the Australian
dollar amounts actually represent such U.S. dollar amounts or could
be converted into U.S. dollars at the rate indicated.





(2)
 Net (loss)/profit
per ordinary share — basic and diluted is
calculated as net loss or net profit for the period divided by
adjusted weighted average number of ordinary shares outstanding for
the same period.





Exchange Rate Information


The
Australian dollar is convertible into U.S. dollars at freely
floating rates. There are no legal restrictions on the flow of
Australian dollars between Australia and the United
States.


For
your convenience, we have translated some Australian dollar amounts
into U.S. dollar amounts at the noon buying rate in The City of New
York for cable transfers in Australian dollars as certified for
customs purposes by the Federal Reserve Bank of New York (the
“noon buying rate”). On June 30, 2017, the noon buying
rate for Australian dollars into U.S. dollars was A$1.00 =
US$0.7676. On September 22, 2017, the noon buying rate for
Australian dollars into U.S. dollars was A$1.00 = U.S $
0.7975.


We make
no representation that any Australian dollar or U.S. dollar amounts
could have been, or could be, converted into U.S. dollars or
Australian dollars, as the case may be, at any particular rate, the
rates stated below, or at all.


The
following table contains information for the noon buying rate for
the Australian dollar into U.S. dollars for the periods
indicated.





At
PeriodEnd
AverageRate
(1)
High
LowFiscal
year ended June 30,2012
1.0236
1.0323
1.1026
0.94532013
0.9165
1.0272
1.0591
0.91652014
0.9427
0.9186
0.9705
0.87152015
0.7704
0.8365
0.9488
0.75662016
0.7432
0.7289
0.7817
0.68552017
0.7676
0.7544
0.7680
0.7387Month
endedApril 30,
2017
0.7475
0.7534
0.7604
0.7452May 31,
2017
0.7437
0.7437
0.7534
0.7352June 30,
2017
0.7676
0.7562
0.7680
0.7387July 31,
2017
0.7988
0.7807
0.7991
0.7584August 31,
2017
0.7932
0.7915
0.7983
0.7822September 30, 2017
(through September 22, 2017
0.7975
0.8008
0.8071
0.7940(1)
(For the fiscal years, determined by averaging noon buying rates on
the last day of each full month during the fiscal
year.)








B.
 Capitalization
and Indebtedness.


Not
applicable.


C.
 Reasons
for the Offer and Use of Proceeds.


Not
applicable.











D.
 Risk
Factors.





Set forth below are certain risks that we believe are applicable to
our business. You should carefully consider the risks described
below and the other information in this annual report, including
our consolidated financial statements and related notes included
elsewhere in this annual report, before you decide to buy, sell or
hold our ordinary shares. If any of the following risks actually
occurs, our business, prospects, financial condition and results of
operations could be materially harmed. Additional risks not
presently known to us, or risks that do not seem significant today,
may also impair our business operations in the future.





Risks Related to Our Business





We may not be able to continue as a going concern.





We
incurred an operating loss for the year ended June 30, 2017 of
A$4.6 million (2016: A$2.3 million loss), we have a history of net
losses and there is a substantial doubt about our ability to
continue as a going concern. Net cash used by operating activities
was A$1.0 million (2016: A$2.1 million used in operating
activities). At balance date, the current assets less current
liabilities were A$0.2 million (2016: A$1.1 million) and the net
assets were A$0.2 million (2016: A$4.8 million).





At June
30, 2017, the Company has current liabilities of A$0.2 million
(2016: A$1.4 million), The high current liabilities in last year is
primarily stemming from a provision for a legal settlement at
period end of A$1.1 million, and this liability is specifically
supported by other receivables of A$1.1 million.





The
ability of the Group to continue as a going concern is dependent on
securing additional funding through the issue of further equity
(either via an equity raise or via the proposed reverse takeover
transaction as discussed later in this report) or debt, generating
positive cash flows from new operations, and/or realizing cash
through the sale of its 20% share in the associate, the asset has
been written down to $zero as it is not believed this asset can be
sold. These conditions indicate a material uncertainty that may
cast a significant doubt about the Group’s ability to
continue as a going concern and, therefore, that it may be unable
to realize its assets and discharge its liabilities in the normal
course of business.


Management believe
there are sufficient funds to meet the Group’s working
capital requirements as at the date of this report, and that there
are reasonable grounds to believe that the Group will continue as a
going concern as a result of a combination of the following
reasons:


●
 raise additional
funding through debt and/or equity;


●
 reduction of
expenditure where Directors have agreed to not draw a fee or accrue
a salary;


●
 generate positive
cash flows from new operations.


Should
the Group not be able to continue as a going concern, it may be
required to realize its assets and discharge its liabilities other
than in the ordinary course of business, and at amounts that differ
from those stated in the financial statements. The financial report
does not include any adjustment relating to the recoverability and
classification of recorded assets or liabilities that might be
necessary should the entity note continue as a going
concern.





If we are unable to generate sufficient earnings to offset the
costs from our primary business, our business and financial
condition will suffer a significant adverse effect.





We are
in the process of disposing of our investment, this investment has
been written down to zero the investment is dormant and is not
generating cash


Earnings (in the
form of dividends) from our investment into FGV Green Energy, a
refinery joint venture company, may not exceed our expenses and
therefore we may not be able to generate enough revenue to reverse
our pattern of historical losses and negative cash flow, which
would have a significant adverse effect on our business and
financial condition.





We may not be able recover any funds from intercompany
loans.





The
parent company in our corporate structure advances funds to
subsidiaries to fund working capital requirements. The
company’s subsidiaries may not be able to repay or service
these intercompany loans, which would have a significant adverse
effect on our business and financial condition.





We may not be able to generate sufficient cash or raise further
cash through debt or equity means to fund new business
strategies.





Our
ability to enter into new business opportunities is limited by our
existing cash levels and/or our ability to raise further funding
through debt or equity. If we are unable to enter into a new
business based on our existing capital or if we are unable to raise
further debt or equity to enable us to enter into a new business,
we may suffer a significant adverse effect on our business and
financial condition.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that if the refinery of FGV
Green Energy does not meet prescribed international biofuels
legislative requirements, including the EPA requirements under
Renewable Fuels Standard (“RFS”), fuels produced from
palm oil may not be eligible for the subsidies which make it
economically feasible to sell biodiesel internationally, including
into the United States, which would limit the market opportunity
and would negatively impact our financial viability.





Under
the International Biofuels legislation, including the USA National
Renewable Fuel Standard, palm based (or palm based waste products)
biodiesel may not qualify as an approved biodiesel and be eligible
for economic subsidies or biofuel related benefits, including the
USA EPA’s EPA RINs. A RIN is a numeric code that is generated
by the producer or importer of renewable fuel representing gallons
of renewable fuel produced/imported and assigned to batches of
renewable fuel that are transferred or sold to others. RINs are
then turned into the EPA each year by petroleum refiners to prove
that they have blended the required amount of renewable fuel under
RFS. Therefore, biodiesel that does not generate a RIN may have a
very limited market in the U.S. If the refinery of FGV Green
Energy, in which we hold a 20% stake, is not able to meet these
requirements, our earnings from our investment in FGV Green Energy
will be reduced and we may suffer a significant adverse effect on
our business, financial performance and financial condition and
could cease operations.





If Mission has of not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the refinery, in which
we hold a 20% stake, carried at $zero , and which Mission is in the
process of disposing of, may not be compliant under the European
Renewable Energy Directive, and, if so, our ability to sell
palm-based biodiesel into the European Union will be significantly
constrained and the results of our operations will be adversely
impacted.





Under
the Renewable Energy Directive, the entire pathway for palm based
biodiesel including the suppliers of raw materials and the
production pathway must be certified. Failure for the production
facility to meet such certification or failure by the suppliers of
palm oil based feedstock to satisfy the Renewable Energy Directive
could affect the refinery’s ability to sell palm-based
biodiesel into the European Union. The European Union has been and
remains a key market for the refinery. Any limitation on the
refinery’s ability to sell biodiesel into the European Union
could reduce our earnings from our investment in FGV Green Energy
and have a significant adverse effect on our business, financial
performance and financial condition and could cause us to cease
operations.





If Mission has of not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk in respect of the design and
technology of the refinery may be unable to meet future biodiesel
specifications and further capital expenditures may be
required.





The
specifications for biodiesel are continually evolving and are
subject to further change. Further capital expenditures may be
required by FGV Green Energy to ensure that the refinery meets new
specifications. There is also no assurance that the equipment and
technology used in capital improvements will achieve performance
specifications. The failure of utilized equipment and technology in
this regard may adversely affect the refinery, and as a result
reduce our earnings. In particular, the joint venture company, in
which we own a 20% interest, is retrofitting the refinery with
technology to be able to utilize alternative feedstocks to produce
biodiesel. If this technology does not work as designed, this may
reduce our earnings from FGV Green Energy and adversely affect our
financial performance and financial position. Such capital
expenditure is likely to be significant in value.











If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk if the joint venture company
refinery is unable to be retrofitted as planned it may not be able
to produce biodiesel.





The
refinery owned by the joint venture company is currently unable to
produce biodiesel and requires a significant technology retrofit,
which if not successful may result in the inability to produce
biodiesel and related products as anticipated. The inability to
produce products would significantly reduce our earnings and
adversely affect our financial performance and financial
position.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk if the joint venture company
refinery is unable to raise debt or equity funding to complete the
retrofit, it would be unable to complete the project.





The
refinery owned by the joint venture company requires a significant
amount of capital to complete the technology retrofit, which if it
is unable to fund may result in the inability to complete the
project as anticipated. The inability to complete the project would
significantly adversely affect our financial performance and
financial position.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk in respect of the operation
and maintenance of the refinery involves significant risks that
could result in disruptions in production or reduced
output.





If the
refinery becomes operational the operations of the refinery will be
exposed to significant risks, including:





●
 failure of
equipment or processes;


●
 operator or
maintenance errors;


●
 labor
disruptions;


●
 extended and
unscheduled interruptions to production;


●
 accidents;
and


●
 damage to equipment
and disaster whether arising from the actions or omissions by the
joint venture’s employees or from external
factors.





There
are operational hazards inherent in chemical manufacturing
industries, such as fires, explosions, abnormal pressures,
blowouts, pipeline ruptures, and transportation accidents. Some of
these operational hazards may cause personal injury or loss of
life, severe damage to or destruction of property and equipment or
environmental damage, and may result in suspension or termination
of operations and the imposition of civil or criminal penalties. In
addition, insurance may not be adequate to fully cover the
potential operation hazards described above, and the joint venture
company may not be able to renew its insurance on commercially
reasonable terms or at all. See “Item 3.D — Key
Information — Risk Factors — The joint venture company
and/or our insurance coverage may not be sufficient to cover our
liability risks.”





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk in respect of We have a 20%
interest in the refinery and hence we may have limited control over
the financial and operating policies of the joint venture
company.





Our
limited shareholding and representation on the Board of the joint
venture company may limit our ability to influence the financial
and operating procedures of the company which may limit our ability
to generate a positive return for the Group.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk in respect if the joint
venture company is unable to generate profitable sales, this will
significantly reduce its ability to pay dividends, which may harm
our results of operations.





In
2017, our earnings from our investment into FGV Green Energy was
NIL due to the shut-down of the refining operations in financial
year end 2015. In February 2015, we concluded the sale of our
250,000 tpa refinery to the joint venture company, in which we now
hold a 20% interest. We have not received any dividends from our
investment into the joint venture company which purchased our
refinery in 2015. The historic revenue contracts have since
expired, and we cannot assure you that the joint venture company
will be able to source new customers and establish and maintain
long-term relationships with such customers. If the joint venture
company is unable to source new customers, we may not be issued any
earnings dividend and our results of operationscould be adversely
affected.





The
refitting of the refinery has stalled and is awaiting a positive
decision from its owners as to whether to progress the project. The
Company has written the investment to $zero and are actively trying
to dispose of its 20% stake in the joint venture
company.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk if the joint venture company
cannot find suitably qualified personnel to run the refinery, they
may be unable to enter into sales contracts which may result in
lost revenues and incurred costs.





The
operation of the refinery requires suitably qualified personnel.
With the current status of the refinery being retrofitted with new
technology, the majority of personnel have been retrenched. The
ability to restart the refinery may be affected by an inability to
employ suitably trained staff by the joint venture
company.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that if the joint venture
company cannot get the refinery to run successfully after being
retrofitted with new technology, they may be unable to enter into
sales contracts which may result in lost revenues and incurred
costs.





With
the refinery currently being planned to be retrofitted with new
technology, such non-operation may result in significant costly
technical and mechanical delays if the decision were made to
restart production.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that if an increase in cost
or an interruption in the supply of feedstock to the refinery may
inhibit production and adversely affect our financial
performance.





The
operation of the refinery is dependent on the ability of the joint
venture company to procure substantial quantities of suitable
quality feedstock.





If the
retrofit with the new technology proceeds and should the refinery
return to operations, the failure to procure a sufficient supply of
raw materials satisfying quality, quantity and cost requirements in
a timely manner could impair its ability to produce product or
could increase costs. Any interruption to the supply of suitable
quality feedstock may result in disruptions in production or
reduced output, which may materially and adversely affect the joint
venture company’s financial performance, which may be unable
to issue us dividends.





Additionally, the
joint venture company’s financial results, if retrofitting is
completed, will be substantially dependent on the prices of
feedstock. A substantial increase in feedstock price relative to
the value of the end saleable products would adversely affect
financial performance. Although the joint venture company may
attempt to offset the effects of fluctuations in prices by entering
into arrangements with its customers on a feedstock price plus
contract basis through which a predetermined margin over the price
of the feedstock is received, or by engaging in transactions that
involve exchange-traded futures contracts (or other contractual
arrangements securing future commodity prices), the amount and
duration of these hedging and risk mitigation activities may vary
substantially over time. These activities also involve substantial
risks.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the joint venture
company may in the future experience, volatile capacity utilization
which may adversely affect the results of operations of the joint
venture company.





The
joint venture company remains reliant on palm oil and associated
by-products as a feedstock. If the price of these products is
greater than the value of biodiesel, the joint venture company may
not be able to profitably sell biodiesel into the immediate cash
payment and delivery market. Its ability to supply biodiesel
profitably is based on having positive margins where the input
costs are lower than the value of refined product. The joint
venture company is unable to influence the price of input raw
materials or the price of biodiesel. Resultantly, the joint venture
company’s biodiesel profitability is reliant on the existence
of a positive spread between these two commodities. As the joint
venture company can only operate when a positive operating margin
exists, it has and expects to continue to have in the future
erratic capacity utilization, which may adversely affect its
results of operations and its ability to distribute earnings to
us.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the joint venture
company may continue to suffer, low capacity utilization if the
joint venture company is unable to secure term
contracts.





Given
the volatility of profit margins on biodiesel production due to
fluctuations in commodity pricing for palm oil and associated
products and the value of the finished product, we did not
historically produce biodiesel unless we had a committed contract
customer willing to accept pricing based on our cost of purchasing
feedstock and earning a positive margin from refining. The refinery
is currently planned to be retrofitted with new technology, and the
joint venture company currently has no customers and no visibility
on its ability to attract customers.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the joint venture
company may continue to suffer, low capacity utilization if the
joint venture company is unable to secure material volumes of
biodiesel sales under the Malaysian Biodiesel mandate.





After
numerous years discussing the possible implementation of a
biodiesel blending mandate in Malaysia, the Malaysian Government
introduced a scheme to mandate a biodiesel blend into commercial
diesel sales in some areas of Malaysia. This scheme may grow or
reduce depending on Government support. In addition, the scheme was
for a lower volume than previously communicated to Malaysian
Biodiesel producers. Accordingly, in the past we secured relatively
low volumes of biodiesel sales under this scheme. Due to
insufficient and unprofitable sales volumes under this mandate, we
terminated the arrangements to supply biodiesel. If the scheme is
not extended, or cancelled altogether, or commercially viable
quantities are not secured by the joint venture company, this may
adversely affect results of operations. The joint venture company
currently has no biodiesel sales contracts in Malaysia and has no
visibility towards further sales in Malaysia.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the joint venture
company may be unable to perform under an offtake
agreement.





The
joint venture companymay not be
able to perform under any new offtake agreements, given that its
refinery is currently planned to be retrofitted with new
technology. Additionally, any changes in legislation in the local
jurisdiction of the off-taker may prohibit such sales, including
into the United States.





The joint venture company may be unable to sell biodiesel if the
planned retrofit does not proceed.


The
joint venture companymay not be
able to produce and sell biodiesel and make a profit if the planned
retrofit does not proceed due to economic or other
considerations.














The joint venture company’s inability to meet margin calls on
hedged positions would adversely affect its financial
condition.





To
maximize and protect the profitability of the offtake agreement,
the joint venture companymay enter into
hedging positions to protect against commodity risk. Upon entering
the hedging positions and the inherent volatility in the commodity
markets, it will likely be required to make margin call payments
from time to time. Inability to meet such margin calls would
adversely affect the financial condition and financial performance
of the joint venture company.





The joint venture company may suffer losses due to sales of
competing products that infringe on its intellectual
property.





The
joint venture company willrely on a
combination of patents, trademarks, domain names and contractual
rights to protect its intellectual property. It cannot be assured
that the measures taken to protect the intellectual property rights
will be sufficient to prevent any misappropriation of the
intellectual property, or that competitors will not independently
develop alternative technologies that are equivalent or superior to
technologies based on the intellectual property. In the event that
the steps taken and the protection afforded by law do not
adequately safeguard the proprietary technology, the joint venture
company could suffer losses due to the sales of competing products
that exploit the intellectual property, and the joint venture
company’s profitability would be adversely affected, which
would in turn adversely affect our return on
investment.





If the joint venture company is subject to claims of infringement
of the intellectual property of others, the defense of these claims
could drain resources and any adverse determination could adversely
impact or halt biodiesel production.





The
retrofit and operation of the biodiesel refinery will include
contracts for the supply of proprietary systems, over which such
suppliers have intellectual property that they have licensed to the
joint venture company. This intellectual property includes the
operating procedures and technical schematics of the retrofit to
the biodiesel refinery, which are required to operate and maintain
the plants. The unauthorized use or the infringement by the joint
venture company of another person’s intellectual property
right may adversely affect its financial performance and in turn
our financial performance.





To the
best of our knowledge, the patented refining process does not
infringe on any third party’s intellectual property rights.
However, intellectual property rights are complex and there exists
the risk that the process may infringe, or be alleged to infringe,
another party’s intellectual property rights.





The
defense and prosecution of intellectual property suits, patent
opposition proceedings and related legal and administrative
proceedings can be both costly and time consuming and may
significantly divert the efforts and resources of the joint venture
company’s technical and management personnel. An adverse
determination in any such litigation or proceedings to which the
joint venture company may become a party could subject it to
significant liability to third parties, require the joint venture
company to seek licenses from third parties, to pay ongoing
royalties, or to redesign products or manufacturing processes or
subject the joint venture company to injunctions prohibiting the
manufacture and sale of products or the use of
technologies.





Any inability to obtain and maintain all the required licenses and
permits related to the joint venture
company’s business and the resulting
increased compliance costs may adversely affect financial
performance.





The
joint venture company is required to hold or obtain a number of
licenses and permits, including environmental and those related to
materials handling, in various jurisdictions in order to implement
and operate the business. We have no reason to believe that the
licenses will not be renewed, although renewal is not
assured.





The joint venture company is subject to environmental
regulations, the compliance with which imposes substantial costs on
the joint venture company and the violation of which
could result in penalties and other
liabilities.





Laws
dealing with protection of the environment provide for penalties
and other liabilities for the violation of such laws and establish,
in certain circumstances, obligations to remediate facilities and
locations where operations are conducted. The joint venture company
will incur substantial costs in the future as part of continued
efforts to comply with these environmental laws and to avoid
violations of them.





The
joint venture company may experience a significant chemical or
biodiesel spill at the refinery. If any of these events occur or if
the joint venture company otherwise fails to comply with the
applicable environmental or other regulations, the joint venture
company could be subject to significant monetary damages and fines
or suspensions of our operations, and the business reputation and
profitability could be adversely affected.





Any
amendments to the environmental laws could impose substantial
pollution control measures that could require the joint venture
company to make significant expenditures to modify production
process or change the design of the products to limit actual or
potential impact to the environment. Moreover, new laws, new
interpretations of existing laws, increased governmental
enforcement of environmental laws or other developments could
require the joint venture company to make significant additional
expenditures, which may adversely affect the business, results of
operations and financial condition.





The joint venture company and/or our insurance coverage may
not be sufficient to cover our liability risks.





The
joint venture company and/or our insurance arrangements (if any)
may not adequately protect against liability for all losses,
including but not limited to environmental losses, property damage,
public liability or losses arising from business interruption and
product liability risk. Additionally, the existing insurance
arrangements may have lapsed and/or be unable to be renewed on
commercially reasonable terms or at all. Should sufficient
insurance coverage be unable to be maintained in the future or
experience losses in excess of the scope of the insurance coverage,
the joint venture company and/or our financial performance could be
adversely affected.





Changes in government policy could adversely affect the joint
venture company’s business.





The
refinery and its feedstock are located in Malaysia, and possible
biodiesel sales may be in the United States, Malaysia and Europe.
In addition, the equipment for the plant is imported from, and the
products are sold in various other countries. There is a risk that
actions of a government in any of these countries may adversely
affect the joint venture company’s ability to implement and
operate its business.





Government action
or policy change in relation to access to lands and infrastructure,
import and export regulations, environmental regulations, taxation,
royalties and subsidies could adversely affect the operations and
financial performance of the joint venture company. Generally,
however, a policy change in any of the jurisdictions in which the
joint venture companyoperates, or
intends to operate, may inhibit its ability or the financial
viability of its operations to export feedstock oil or the refined
products that is marketed. This, in turn, could adversely affect
operations and financial performance.





The joint venture company and our financial performance may be
adversely affected by fluctuations in exchange rates.





The
joint venture company’s potential revenues and expenditures
are potentially denominated in a number of currencies, including
U.S. dollars, Euros, Australian dollars, Indonesian rupiah, and
Malaysian Ringgit. In addition our future earnings, which may be in
the form of dividends, are likely to be earned in Malaysian
Ringgit, and we hold cash in U.S. dollars to fund operations.
Historically, we have experienced losses due to un-hedged negative
changes in exchange rate. Additionally, we have experienced foreign
currency translation differences (which are held on our balance
sheet in the foreign currency translation reserve) as a result of
reporting consolidation of non-Australian subsidies. We have no
foreign currency hedging arrangements currently in place. As a
result, our financial performance may be adversely affected by
fluctuations in exchange rates.








If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that we may be unable to
retain our investment in our Malaysian biodiesel
project.





The
Malaysian biodiesel project joint venture agreement allows for
capital calls from shareholders where additional funds are required
by the joint venture company. The investment we hold in the
Malaysian biodiesel project may require us to inject further
capital funds into the project. If we have insufficient funds to
meet such a capital call, our shareholding may be diluted. This, in
turn, could adversely affect our operations and financial
performance.











Risks Related to Our Strategy








The proposed acquisition of Aus Group may not
materialize.





The
proposed acquisition of the Aus Group as discussed in detail in
Item 4 may not materialize due a number of factors outside our
control including but not limited to conditions precedent not being
met. Aus Group may not be able to restructure their business units
as planned, and they may not be able to raise the working capital
requirements needed to complete the transaction. In addition, the
Company may not be able to dispose of its stake in the Joint
venture and it may not be able to obtain the requisite Shareholder
and Australian Securities Exchange approvals to affect the
transaction. Further, regardless of either the AUS Group or the
Company being able to meet its conditions precedent in order for
the acquisition of Aus Group to materialize it will require the
raising of significant acquisition capital. At this point in time
the company has no visibility on its ability to raise this
requisite capital.





The proposed acquisition of Aus Group will introduce new risks to
the Company.





Should
the proposed acquisition of the Aus Group (as discussed in detail
in Item 4) proceed, the Company and the group will be exposed to a
number of new risks, including (but not limited to) operational and
management risk of running the new operations, product supply
risks, sales of product risks, key man risks, various forms of
finance risk, including liquidity risks, foreign exchange risks,
commodity risks and interest rate risks.





The joint venture company may not be able to restart refining
operations.





If we
do not dispose of the refining operations and if refitting of the
refinery commences and should more profitable opportunities present
themselves to the joint parties, there can be no assurance that the
joint venture company would be able to restart refining operations.
Further the joint venture company can make no assurances as to its
ability or cost thereof to attract necessary staff, obtain working
capital lines and re-commission the equipment. As at October 2017
there are no firm plans for such retrofitting to
commence.








If Mission has not disposed of its interest in its associate
(currently carried at $zero) there is a risk that, should the joint
venture company decide to sell the assets, the joint venture
company may be unable to sell its assets for fair market value or
sell them at all.





If the
joint venture company sells its assets, it may not be able to
realize its original investment and as such upon the sale of its
assets can provide no assurance as to the realization of proceeds
for us or our shareholders.





We may be unable to sell our stake in the Joint Venture which may
affect our ability to proceed with the proposed Reverse take Over
(RTO)





The
Company may not be able to dispose of its stake in the Joint
Venture. A condition precedent in the currently proposed RTO is for
the Company to dispose of the investment in the joint venture
company. A failure to dispose the stake in the Joint Venture may
affect the ability of the Company to conclude the currently
proposed RTO. The Company has approached prospective buyers without
success to date.








If Mission has not disposed of its interest in its associate
(currently carried at $zero) there is a risk that we may be unable
to continue our business in renewable energy or any other
industry.





If the
Company has not sold its stake in the joint venture company and if
the joint venture company sells all its assets, the Company may not
be able to find suitable projects to continue business in the
renewable energy sector. If this is the case, we may require
shareholder approval to change our strategic direction, may not
qualify for ASX listing and may not have sufficient capital beyond
settling our obligations to launch any new business
activities.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk that the joint venture
company’s future growth will depend on its ability to
establish and maintain strategic relationships with distributors
and feedstock suppliers.





The
joint venture company’s future growth, after it has managed
to successfully refit the plant, depends on its ability to
establish and maintain relationships with third parties, including
distributors and feedstock suppliers. It may not be able to
establish strategic relationships with third parties on
satisfactory terms or at all, and any arrangements that are entered
into may not result in the type of collaborative relationship with
the third party that is expected. Further, these third parties may
not place sufficient importance on their relationship with the
joint venture companyand may not
perform their obligations as agreed. Any failure to develop and
maintain satisfactory relationships with distributors and feedstock
suppliers would have a material adverse effect on the
business.





We currently are not generating revenue or earnings from operations
and thus we may be unable to fund our operational and capital
requirements and we may be unable to obtain adequate financing on
favorable terms to meet these needs.





We
currently expect that our cash resources will be used to fund
operating losses. If Mission has not disposed of its interest in
its associate (currently carried at $zero), or should the proposed
RTO proceed, we may require substantial working capital. We cannot
assure you that we will be successful in generating sufficient
revenue and we may require financing to meet our
needs.





Our
ability to access equity and debt capital and trade financing on
favorable terms may be limited by factors such as:





●
 general economic
and market conditions;


●
 if Mission has not
disposed of its interest in the associate (currently carried at
$zero), conditions in energy markets;


●
 credit availability
from banks or other lenders for us and our industry
peers;


●
 if Mission has not
disposed of its interest in the associate (currently carried at
$zero), the operation of the refinery by the joint
venture;


●
 our financial
performance;


●
 our levels of
indebtedness; and


●
 ability to meet any
ASX listing rule requirements.





Our ability to access equity capital is limited without shareholder
approval and we may be unable to obtain the required shareholder
approval to obtain financing in future equity
offerings.





Our
ability to access equity capital is also limited by ASX Listing
Rule 7.1, which provides that a company must not, subject to
specified exceptions (including approval by shareholders), issue or
agree to issue during any 12-month period any equity securities, or
other securities with rights to conversion to equity, if the number
of those securities exceeds 15% of the number of securities in the
same class on issue at the commencement of that 12-month period.
Our ability to issue shares in certain subsequent offerings will be
restricted by this 15% annual placement capacity to the extent that
we are unable to obtain shareholder approval of the additional
offerings. In addition, due to or suspension from trading on the
ASX, there may be additional restrictions on the ability for the
Company to raise capital from the issue of shares.


We are
currently looking beyond the energy sector for new revenue
generating projects which will require shareholder approval and may
require re-compliance with the Australian Securities Exchange
listing rules specified in chapters 1, 2 and 11.














Risks Related to Our Industry





The proposed acquisition of Aus Group will introduce new industry
risks to the Company.





Should
the proposed acquisition of the Aus Group (as discussed in detail
in Item 4) proceed, the Company and the group will be exposed to a
number of new industry risks, including (but not limited to)
changes in the demand profile of Aus Group range of products,
changes in manufacturing processes for these products, changes in
supply of raw material for these products and changes in
legislation related to the manufacture and sale of the Aus Group
range of products.








If Mission has of not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further exposure to industry risk in
respect of a decline in the price of diesel or other fuel sources
or an increase in their supply could constrain the selling price of
the joint venture company’s biodiesel.





Biodiesel prices
are influenced by market prices for petroleum diesel, the pricing
of which is affected by global and domestic market prices for crude
oil. The pricing of petroleum diesel is also subject to typical
market movements and decreases when there is an increase in supply
in the face of unchanged or decreased demand. To remain
competitive, the price of biodiesel tends to decrease as the price
of petroleum diesel decreases. As a result, any decline in
petroleum prices will likely lead to lower prices for biodiesel. If
the price of inputs, such as palm oil (or other) feedstock, is
greater than the price of biodiesel in the market, the joint
venture companywill be unable
to make profitable sales and production would likely be halted. We
did not operate the refinery in fiscal years 2017, 2016, 2015 and
2014 due to shut down of the refinery. We only operated the
refinery for the six months in fiscal 2012 and nine months in
fiscal 2011 due to negative spreads that existed between the
potential sales price of biodiesel and the input costs to produce
the biodiesel. Since selling the refinery to the joint venture
company earlier this year, the refinery has remained shut down.
Declines in the pricing of biodiesel relative to the cost of the
inputs for production may cause the joint venture company to
continue the halt in production in the future, which may materially
and adversely affect the joint venture company’s
performance.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further risk in respect of the biodiesel
industry being a relatively new industry and its continued
development is subject to a number of risks and
obstacles.





The
joint venture company’s intended primary product is
biodiesel. The global biodiesel industry is still developing as
compared to petroleum-based fuels. Biodiesel has experienced
significant fluctuations in growth during that last few years and
demand for biodiesel as the primary product may not grow as rapidly
as expected or at all. Biodiesel and the global biodiesel industry,
as a whole, also face a number of obstacles and drawbacks,
including:





●
 gelling at lower
temperatures than petroleum diesel, which can require the use of
low percentage biodiesel blends in colder climates or the use of
heated fuel tanks;


●
 potential water
contamination that can complicate handling and long-term
storage;


●
 reluctance on the
part of some auto manufacturers and industry groups to endorse
biodiesel and their recommendations against the use of biodiesel or
high percentage biodiesel blends;


●
 potentially reduced
fuel economy due to the lower energy content of biodiesel as
compared with petroleum diesel;


●
 development of
alternative fuels and energy sources may reduce the demand for
biodiesel; and


●
 potentially
impaired growth due to a lack of infrastructure such as dedicated
rail tanker cars and truck fleets, sufficient storage facilities,
and refining and blending facilities.





Delayed
market acceptance of the products may adversely affect pricing and
profitability. The lack of infrastructure to store, ship and
distribute the products may also increase logistical costs and
diminish profitability for the joint venture company.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further exposure to risk as the joint
venture company may be subjected to new or amended standards for
biodiesel from time to time and required to modify our production
process or procure alternate or additional feedstock.





New
standards may be introduced and existing standards may be amended
or repealed from time to time. The production of biodiesel that
meets stringent quality standards is complex. Concerns about fuel
quality may impact the ability to successfully market and sell
biodiesel. If the joint venture company is unable to produce
biodiesel that meets the industry quality standard, its credibility
and the market acceptance and sales of its biodiesel could be
negatively affected. In addition, actual or perceived problems with
quality control in the industry generally may lead to a lack of
consumer confidence in biodiesel. This could result in a decrease
in demand or mandates for biodiesel, with a resulting decrease in
revenue for the joint venture company.





A
change to the quality standards for biodiesel in any market in
which the joint venture company sells biodiesel may require it to
modify its production process or procure alternate or additional
feedstock, which may affect the joint venture company’s
revenue and expenditure and adversely affect its results of
operations.





If Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences there is further exposure to risk as the joint
venture company faces significant competition from existing and new
competitors, as well as competing technologies and other clean
energy sources.





The
primary product is a substitute for mineral diesel and a global
commodity and as such is highly cost competitive. There are already
many global producers of biodiesel with which the joint venture
company will compete. While these existing competitors are limited
by installed refining capacity, it is expected that there may be
further new entrants into the market if economic opportunities
present themselves thereby increasing competition. In addition to
existing and new direct competitors, as a relatively new industry
with distribution channels still in the development stage, market
forces may limit the joint venture company’s access to end
markets or make costs of delivering product to end-users
uncompetitive. Future financial performance and earnings growth of
the joint venture company may be adversely affected if either of
the above occurs.





In
addition, new technologies may be developed or implemented for
alternative energy sources and products that use such energy
sources. Advances in the development of fuels other than biodiesel,
or the development of products that use energy sources other than
diesel, such as gasoline hybrid vehicles and plug-in electric
vehicles, could significantly reduce demand for biodiesel and thus
affect the joint venture company’s sales. Biodiesel also
faces competition from fuel additives that help petroleum diesel
burn cleaner and therefore reduce the comparative environmental
benefits of biodiesel in relation to petroleum diesel.





Other
clean energy sources such as liquefied petroleum gas, hydrogen and
electricity from clean sources may be more cost-effective to
produce, store, distribute or use, more environmentally friendly,
or otherwise more successfully developed for commercial production
than the joint venture company’s products. These other energy
sources may also receive greater government support than these
products in the form of subsidies, incentives or minimum use
requirements. As a result, demand for the products may decline and
the business model may no longer be viable and results of
operations and financial condition of the joint venture company may
be materially adversely affected. The introduction, increase in the
availability or reduction in costs of alternative energy sources
may materially and adversely affect the demand for products and
financial performance.





Any
increase in competition arising from an increase in the number or
size of competitors or from competing technologies or other clean
energy sources may result in price reductions, reduced gross profit
margins, loss of market share and departure of key management, any
of which could adversely affect the joint venture company’s
financial condition and profitability.











Risks Related to Our Ordinary Shares





We may be unable to regain trading status on the Australian
Securities Exchange (ASX) for our shares.





Under
ASX listing rules, the Company was required to place its securities
traded on the ASX into suspension upon announcement of the proposed
takeover discussed in Item 4. A condition precedent in the
transaction is for the Company to obtain shareholders’
approval (as required under the ASX Listing rules) and for the
Company to re-comply with the ASX Listing rules. Should the Company
not be able to obtain these approvals (both from shareholders and
ASX) then the ordinary shares of the Company may not be available
again for trading on the ASX.


In
addition, if the acquisition of Aus Group does not proceed, the
Company will still have to re-comply with the ASX Listing rules in
order for its securities to be traded on the ASX. The Company may
not be able to regain re-compliance approval and trading status on
the ASX.





Unless an active trading market develops for our securities, you
may not be able to sell your ordinary shares.


Our
ordinary shares were delisted from trading on The NASDAQ Global
Market effective July 9, 2012 and currently trade on the OTC
Markets Pink Sheets under the symbol “MNELF”. In
addition, our shares were suspended from trading on the Australian
Stock Exchange on November 25, 2016. There is currently no active
market for the shares of the Company and we can provide no
assurances as to when or if there will be a market for the shares
in the Company. Although we are a reporting company, currently
there is only a limited trading market for our ordinary shares and
a more active trading market may never develop or, if it does
develop, may not be maintained. Failure to develop or maintain an
active trading market will have a generally negative effect on the
price of our ordinary shares, and you may be unable to sell your
ordinary shares or any attempted sale of such ordinary shares may
have the effect of lowering the market price, and therefore, your
investment could be a partial or complete loss.





We may not be able to continue to have our shares actively traded
on alternative stock markets


Our
ordinary shares are currently suspended from trading on the ASX.
Any change in ASX’s policy or position as it relates to
either the resumption of quotation, continued quotation or
continued authorization to trade company securities may adversely
affect the ability to trade the Company’s
securities.





As a foreign private issuer, we follow certain home country
corporate governance practices which 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. As a company incorporated
in Australia and listed (but suspended from trading) on the ASX, we
expect to follow our home country practice with respect to the
composition of our board of directors and nominations committee and
executive sessions. The corporate governance practice and
requirements in Australia do not require us as to have a majority
of our board of directors to be independent, do not require us to
establish a nominations committee, and do not require us to hold
regular executive sessions where only independent directors shall
be present. Such Australian home country practices may afford less
protection to holders of our ordinary shares.





We may be classified as a passive foreign investment company, which
could result in adverse U.S. federal income tax consequences to
U.S. holders of our ordinary shares.





We may
be a passive foreign investment company, or PFIC, for U.S. federal
income tax purposes for our current fiscal year ending June 30,
2017. A non-U.S. corporation will be considered a PFIC for any
fiscal year if either (1) at least 75% of its gross income is
passive income or (2) at least 50% of the value of its assets
(based on an average of the quarterly values of the assets during
the fiscal year) is attributable to assets that produce or are held
for the production of passive income. If we are a PFIC for any
fiscal year during which a U.S. holder (as defined in “Item
10.E - Additional Information Taxation — U.S.
Federal Income Tax Considerations”) holds an ordinary share,
certain adverse U.S. federal income tax consequences could apply to
such U.S. holder. See “Item 10.E - Additional Information
Taxation — U.S. Federal Income Tax
Considerations — Passive Foreign Investment Company
Considerations.”


Investors may be unable to enforce your legal rights against
us.





We
are incorporated in Australia. Substantially all of our assets are
located outside of the United States. It may be difficult for
investors to enforce, outside of the United States, judgments
against us that are obtained in the United States in any such
actions, including actions predicated on civil liability provisions
of securities laws of the United States. In addition, all of our
directors and officers are nationals or residents of countries
outside of the United States, and all, or a substantial portion of,
their assets are outside of the United States. As a result, it may
be difficult for investors to serve process on these persons in the
United States or to enforce judgments against them obtained in
United States courts, including judgments predicated on civil
liability provisions of the securities laws of the United
States.





Currency fluctuations may adversely affect the price of our
ordinary shares.





Our
ordinary shares are quoted in Australian dollars on the ASX
(currently suspended from trading) and in U.S. dollars on the OTC
Markets Pink Sheets. Movements in the Australian dollar/U.S. dollar
exchange rate may adversely affect the U.S. dollar price of our
ordinary shares. In the past year the Australian dollar has
generally remained depreciated against the U.S. dollar. Any
continuation of this trend may affect the U.S. dollar price of our
ordinary shares, even if the price of our ordinary shares in
Australian dollars increases or remains unchanged. However, this
trend may not continue and may be reversed.








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, or 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 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.





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 company, we are subject to different corporate
requirements than a corporation organized under the laws of the
United States. Our Constitution, as well as the Corporations Act,
set forth various rights and obligations that are unique to us as
an Australian company. These requirements operate differently than
from many U.S. companies and may limit or otherwise adversely
affect our ability to take actions that could be beneficial to our
shareholders. For more information, you should carefully review the
summary of these matters set forth under the section entitled,
“Item 10.B — Additional Information — Memorandum
and Articles of Association” as well as our
Constitution.











Item 4. Information on the
Company





A.
 History
and Development of the Company.





Our
legal and commercial name is Mission NewEnergy Limited, which was
incorporated in Western Australia under the laws of Australia
(specifically, the Australian Corporations Act) in November 2005.
We are an Australian public company, limited by
shares.





In May
2006, we conducted an initial public offering in Australia, raising
A$27.0 million, and listed on the Australian Securities
Exchange.





In
August 2006, we commenced construction of our first biodiesel
refinery with a 100,000 tonnes (30 million gallons) per year
nameplate capacity at an industrial hub in Port Kuantan, Malaysia
along the eastern coast of Malaysia.





In
early calendar 2007, we commenced non-food biodiesel feedstock
cultivation operations in India. We focused on the cultivation of
Jatropha Curcas, or Jatropha, an inedible, low cost dedicated
energy crop with the intention to become self-sufficient with
respect to our feedstock supply and not in competition with the
food supply.





In
April 2007, recognizing the need to scale up both our feedstock
cultivation and biodiesel production operations, we completed a
convertible note offering and raised A$65.0 million in new capital.
These funds were raised to fund the expansion of our feedstock
cultivation operations in India and the construction of a second
larger biodiesel refinery in Port Kuantan with a 250,000 tonnes (75
million gallons) per year nameplate capacity.





In
mid-2008, we commenced commercial operations of our first biodiesel
refinery, using locally sourced palm oil as feedstock.





Between
May 2006 and January 2009, we raised approximately A$35.1 million
in equity capital from institutional investors in private
placements to complete the funding requirement for our second
biodiesel refinery and provide working capital.





In
December 2009, we entered into a long term biodiesel offtake
agreement with Valero.





In
mid-2010, we received our first commercial quantities of Jatropha
oil from our feedstock cultivation operations.





Also in
mid-2010, we commissioned our second biodiesel trans-esterification
refinery with a 250,000 tonnes (75 million gallons) per year
nameplate capacity.





In
April 2011, we conducted our initial public offering in the U.S.,
raising US$25.1 million, and listed on the NASDAQ Global
Market.





On
January 27, 2012, the Company launched a major re-structure
including a reduction in operating expenditure on all fronts,
divestment of non-core assets and efforts to raise additional
capital. At the same time, the Company announced that it would
cease planting further Jatropha acreage and dramatically downscale
its field operations.





On
February 20, 2012, the Company announced a major initiative with
the acquisition of 85% of Oleovest, a special purpose company with
a 70% interest in a Joint Venture with PTPN111 (a state owned major
palm oil plantation company) to set up a downstream palm oil and
oleo-chemical complex in Indonesia.





On May
4, 2012, the Company announced the final production runs in its
Malaysian refining operation. The refining assets were put in care
and maintenance.





On the
July 9, 2012, the Company’s ordinary shares were formally
delisted from trading on the NASDAQ Global Market.





On July
11, 2012, the Company announced that due to failure of material
obligations by PTPN111, it had terminated its joint venture in
Indonesia.





On
October 8, 2012, the Company announced that a placement of
approximately 15% of its outstanding equity raising approximately
US$100,000 before placement costs.





On
October 19, 2012, the Company announced that its Indian operations
had been significantly downsized and that the Company was focused
on divesting its remaining Indian assets.





On
November 23, 2012, the Company announced that it had successfully
completed a substantial restructuring of the convertible notes,
with the key changes being the elimination of the 4% annual cash
coupon and a change in the conversion ratio from 1:4 to 1:433
ordinary shares.





On
February 25, 2013, the Company announced that it had secured a US$5
million working capital facility, which is to be used to fund the
business through the completion of the Company’s
re-structure.





On 17
April 2013, the Company secured a short term financing facility to
meet operating costs in India secured over all shares in the Indian
subsidiary. Subsequently, the lender exercised its option to take
all shares in the Indian operations as full and final settlement of
the defaulted debt obligation.





On
October 11, 2013, the Company completed the sale of its 100,000 tpa
refinery to Felda Global Group for US$11.5 million and A$7.5
million of convertible note debt was settled from the
proceeds.





On
December 30, 2013, the Company announced that it had successfully
completed a substantial restructuring of the convertible notes,
with the key changes being the extension of the maturity date to
December 31, 2018 and a 6% annual coupon, with coupon payments
deferred to December 31, 2015.





On
April 30, 2014, the Company announced that it had successfully
completed an equity raise of A$120,000 pursuant to shareholder
approval to issue up to 100m shares.





On
September 1, 2014, the Company announced that it had signed a joint
venture and plant purchase agreement for the sale of its 250,000
tpa refinery.





On
December 2, 2014, the Company announced that it successfully
completed the Indonesian Arbitration, receiving a US$3.36 million
award. US$2 million was utilized to settle a portion of the
convertible notes.





On
February 19, 2015, the Company announced that it successfully
completed the company transformation, including the sale of the
250,000 tpa refinery to FGV Green Energy Sdn, a Malaysian
registered Company. The Company simultaneously acquired 100% of M2
Capital Sdn Bhd, a Malaysian registered Company, which retains a
20% interest in FGV Green Energy. Mission Biofuels Sdn Bhd is 100%
owned by the Company and now operates as the Malaysian
administrative entity.US$12 million of the proceeds from the sale
of the refinery was used to fully settle the convertible notes.
Also included was the settlement of a material retention bonus for
executives in the form of cash and fifteen million ordinary shares
(as approved by shareholders at the annual meeting held on October
27, 2014), saving the company a material amount of
cash.





On
March 1, 2015, Oleovest PL and Mission Agro Energy Limited have
been deconsolidated from the Group financials pursuant to an
agreement with the Groups convertible note holders who took
effective control on that date.





On
August 5, 2015, the Company announced that it successfully settled
the long-standing dispute with the EPCC contractor of the 250,000
tpa refinery with a payment of A$4 million.





On
November 25, 2016, the Company announced its securities traded on
the Australian Securities Exchange (ASX) would be placed into
suspension, at the request of the Company, pending receipt of an
announcement regarding its proposed change of activities. The
Companies securities are to stay suspended on the ASX until the
Company has either provided information regarding its proposed
change of activities as required by Annexure A of ASX Guidance Note
12, or until the Company has complied with Chapters 1 and 2 of the
ASX Listing rules in accordance with Listing Rule
11.1.3.











On
December 5, 2016, the Company announced that it has entered into a
heads of agreement to acquire 100% of the business operations of
AUS Group, a leading manufacturer of buildings materials produced
in Australia. The transaction will involve the Company wholly
acquiring the business operations of AUS Group with consideration
comprising the issue of shares in Mission and the provision of
cash, more commonly known as a reverse merger (“RTO”)
whereby existing shareholders of the Company are expected to be
diluted by 90%. The RTO shall be effected by completion of a
funding round and compliance with relevant ASX listing rules. A
shareholder notice of meeting and prospectus will be issued by
Mission with the basic resolutions to:


●
 Dispose of
Mission’s two subsidiaries, Mission Biofuels Sdn Bhd and M2
Capital Sdn Bhd, with all proceeds (cash or shares) to be
distributed to Mission’s existing Shareholders


●
 Change of Directors
and Executives


●
 Change of Company
Name


●
 Change of ASX
Code


●
 Capital Raise
target of A$17 million


●
 Consolidation of
existing MBT Shares


●
 Change of nature of
business and compliance with the market trading rules upon
commencement of trading of the new vehicle on the ASX.





Key
Terms of the acquisition





●
 AUS group shall
receive A$12 million in cash and shares equaling approximately
47.5% of MBT assuming a capital raising of $17
million.


●
 Mission shall be
responsible for co-ordination and execution of the RTO with the
detailed assistance of the existing owners of AUS;


●
 Mission shall
assist with building an appropriate ASX listed Executive team and
Board to support existing AUS management team;


●
 Mission shall
provide systems, protocols and corporate intellectual property
consistent with ASX best practices;


●
 Existing
shareholders of Mission shall retain approximately 10% of the
merged company on a fully diluted basis; and





The
acquisition is subject to conditions precedent by both AUS and
Mission being namely:


●
 The completion of a
re-structure of AUS business operations and a pre-RTO funding round
by AUS to meet immediate growth working capital requirements. This
restructure and pre-funding shall be at the sole discretion of AUS
and shall not require any action by MBT.


●
 The completion of
shareholder and ASX approval by Mission





Regulatory
Note:


●
 the transaction
requires security holder approval under the Listing Rules and
therefore may not proceed if that approval is not
forthcoming;


●
 MBT is required to
re-comply with ASX’s requirements for admission and quotation
and therefore the transaction may not proceed if those requirements
are not met;


●
 ASX has an absolute
discretion in not deciding whether or not to re-admit the entity to
the official list and to quote its securities and therefore the
transaction may not proceed if ASX exercises that discretion;
and


●
 the ASX takes no
responsibility for the contents of this announcement;
and


●
 MBT is in
compliance with its continuous disclosure obligations under Listing
Rule 3.1.








On June
15, 2017 the Company announced that Datuk Mohamed Zain bin Mohamed
Yusuf (Chairman), Admiral (Ret) Tan Sri Dato’ Seri Mohd Anwar
bin Haji Mohd Nor and Mohd Azlan Bin Mohammed retired from the
Board on June 14, 2017. In addition, MBT’s Advisor to the
Board, Mohamed Nizam Abdul Razak has also retired. As from the date
of the resignations Dato’ Nathan Mahalingam shall become
Company Executive Chairman.


In
addition, the Company announced that the acquisition of AUS Group
as announced on 5 December 2016 has been delayed. The Company will
provide further updates as and when a definitive timeline is known
to the Company.








In 2016
to date minimum expenditure has occurred in respect of the refinery
refurbishment and there are no firm plans in place to complete the
refinery.


In
December 2016 the Company started actively seeking buyers for its
stake in the biodiesel plant. No buyers have been found and Mission
impaired its held for sale investment to $zero.





We have
incurred the following capital expenditures over the last three
fiscal years:





2017
2016
2015$A'000
$A'000
$A'000Biodiesel
refinery
-
-
-Land &
buildings
-
-
-IT systems &
office equipment
-
3
-Vehicles &
sundry equipment
-
-
-





Our
principal office is located at Unit B9, 431 Roberts Rd, Subiaco,
Western Australia 6008 Australia. Our telephone number is
+61-8-6313-3975. Our website address is www.missionnewenergy.com.
Information on our website and websites linked to it do not
constitute part of this annual report.

















B.
 Business
Overview.





Recent Developments





As part
of an ongoing restructuring, the Company previously sold the
100,000 tpa refineryto
Felda Global Group in October 2013. In addition, the
Company’s terminated Indonesian joint venture project, which
had been referred to arbitration in Indonesia, was settled pursuant
to an arbitrational award in December 2014.In February 2015, the Company sold
its 250,000 tpa refinery to a newly created entity FGV Green Energy
and retained a 20% share in this new joint venture entity. In
December 2016 the Company announced that it has entered into a
heads of agreement to acquire 100% of the business operations of
AUS Group, a leading manufacturer of buildings materials produced
in Australia. The transaction will involve the Company wholly
acquiring the business operations of AUS Group with consideration
comprising the issue of shares in Mission and the provision of
cash, more commonly known as a reverse merger (“RTO”)
whereby existing shareholders of the Company are expected to be
diluted by 90%.





In
December 2016 the Company started actively seeking buyers for its
stake in the biodiesel plant, no buyers have been found and Mission
impaired its held for sale investment to $zero.








Overview





Mission’s
only asset is its 20% share in a joint venture company. In December
2016 the Company started actively seeking buyers for its stake in
the biodiesel plant, no buyers have been found and Mission impaired
its held for sale investment to $zero.





The
joint venture company, in which Mission owns a 20% share, owns a
250,000 tpa refinery which is currently in care and maintenance
pending a decision by the joint venture company to proceed with a
technology refit. Should the technology refit proceed, the joint
venture company intends to be a producer of biodiesel and wholesale
biodiesel distribution, focused on the government mandated markets
of the United States, Europe and Malaysia. The biodiesel refinery
is currently shut down. The biodiesel refinery is located at Port
Kuantan, Malaysia, and has a nameplate capacity of 75 million
gallons-per-year. The production facility in Kuantan is connected
by two-way pipelines to a dedicated jetty 200 meters away at an
all-weather, deep sea, international port. The refinery is
currently non-operational and in care and maintenance.





Mission
have been actively seeking to dispose of this interest since
December 2016 and to date no offers for this business have been
received and the asset is recorded at $zero.








The
business operation of the Aus Group, being the potential business
to be acquired under the proposed RTO, include the business units
of Polyurethane Chemicals and Coatings, Insulation foams,
Polystyrene foam and CUPOLEX® structural domes. These business
units provide a vertically integrated platform for the manufacture
and distribution of products from three manufacturing locations in
Australia, and sales and distribution operations in Australia and
New Zealand. CUPOLEX® provides a cost effective and
environmentally friendly alternative to traditional concrete slab
construction.





Our Competitive Strengths





Nil





Next Generation Transesterification Technology





The
refinery technology will be based on Benefuel International
Holdings S.A.R.L.’s, or Benefuel’s technology which
makes it potentially an attractive technology for certain retrofit
bolt on technology providers. Should such technology providers
emerge, the joint venture company may be well positioned as
partner, thereby enabling it to operate its refining asset in a
beneficial manner.








Our Strategies





The
Company is focused on maximizing shareholder value through a
positive return from:


●
 the acquisition of
Aus Group via a Reverse Takeover,


●
 our
investment in the joint venture company owning a 250,000 tpa if
Mission has not disposed of its interest in its associate
(currently carried at $zero) and if refitting of the biodiesel
plant commences, and


●
 looking for new
business opportunities.





Malaysian Asset





The
Company sell its investment in the joint venture company as part of
the transaction of acquiring Aus Group.





Should
this transaction not proceed, the Company would consider keeping
its investment in the Malaysian joint venture company while
awaiting a favourable change in operating conditions, or if deemed
to be economically beneficial to shareholders at that time, the
Company may still consider disposing its interest in the joint
venture.





Corporate Opportunities





The
Company will continue to look at other related opportunities and
projects on a continued basis to enhance shareholder
value.











Biodiesel Production (the following information is relevant should
the Company not succeed in selling the investment in the joint
venture company and should the joint venture company proceed with
the technology retrofit)


Refinery overview


The
Company owns a 20% stake in a joint venture company that owns a
250,000 tpa biodiesel refinery. The refinery is currently in care
and maintenance and is shut down.





For
general market acceptance, biodiesel sold to customers in the
United States must meet the technical standards of ASTM D6751,
which specifies multiple required properties of pure biodiesel
(sometimes referred to herein as B100)
for use as a blend component with petroleum-based diesel fuel. This
standard of ASTM International, an open forum for the development
of high-quality, market-relevant international standards,
specifies, among other parameters, the maximum amounts of certain
residual by-products that can remain in the finished product after
the conversion process, including acid, free glycerin, total
glycerin, water and sediment content, sulphated ash, total sulphur,
carbon residue and phosphorous. The standard also specifies minimum
flash point, cetane numbers and copper corrosivity and ASTM has
revised the standards to include specifications for a Cold Soak
Filter Test. The test is intended to replicate performance of the
biodiesel in cold climates.





Biodiesel Conversion Process


The
biodiesel conversion process (transesterification) shown in the
diagram below is based on the Benefuels technology planned to be
retrofitted to the 250,000 tpa refinery.





The
biodiesel plant consists of three process units: Pretreatment,
Biodiesel Production, and Biodiesel Distillation. The pretreatment
unit provides degumming, bleaching and water removal for feedstock,
which can include Crude Palm Oil (CPO), CPO blends with higher FFA
materials such as Palm Fatty Acid Distillates (PFAD), and other
waste oils such as Used Cooking Oil.


The
Biodiesel Production process uses a proprietary solid catalyst
technology to convert the pretreated oils and methanol into crude
methyl esters (biodiesel) and Glycerin. Glycerin is separated by
gravity decanting and purified in a falling film evaporator. The
crude biodiesel is flash evaporated in a falling film evaporator
and then distilled in a Vacuum Distillation Unit to remove
impurities. The finished biodiesel goes into proving tanks for
final QA/QC testing prior to transfer into storage tanks ready for
shipment.





Quality control


The
joint venture company if in production will typically employ strict
quality control procedures at each stage of the manufacturing
process.





The
joint venture company will establish systematic inspections at
various manufacturing stages, from raw material procurement to
finished product testing. Raw materials that fail to pass incoming
inspection will be returned to suppliers. We believe that the joint
venture company will be able to maintain the quality and
reliability of products through close monitoring of the
manufacturing processes by a quality control team and scheduled
maintenance of the equipment.





To
ensure the effectiveness of the quality control procedures, the
joint venture company will also provide periodic training to
production line employees. The quality control team will also
consist of experienced equipment maintenance technicians that
oversee the operation of the production facilities to avoid
unintended interruptions and minimize the amount of time required
for scheduled equipment maintenance.





The joint venture company’s management team
will implement policies to proactively safeguard against accidents.
In addition, the joint venture company management team will conduct
regular inspections and maintenance of the facilities to help
ensure product quality and safety.








Plant Utilization & Operating History


Historic Biofuel Sales





When we
owned our own refineries, we sold our products via our own direct
sale force in the wholesale market. We historically have only sold
our biodiesel to oil trading companies. Generally, oil traders
aggregate biodiesel, blend it with mineral diesel and sell the
blended product to major oil companies who distribute the product
via their distribution channel to the end market. Sales to oil
trading companies are highly competitive and pricing fluctuates
with market conditions. Because we have not historically had
control of the costs of our feedstock, there have been few times
when we could procure feedstock at a price which we could convert
to biodiesel and sell profitably. Consequently, we have not fully
utilized our biodiesel production capacity, and in 2012, we put the
refinery into care and maintenance due to an inability for the
profit margin on limited sales to cover costs and subsequently sold
the refinery.





The
following chart shows actual sales production and utilization of
the refining complex.


2015
2016
2017Production
(tons)
NIL
NIL
NILCapacity
Utilization
NIL
NIL
NIL


All
previous contracts with customers have expired.





Refining By-product Sales





When we
owned our own refineries, we historically sold our glycerin and
fatty acid distillates ex works into the immediate cash payment and
delivery market.





Summary of Historic Sales





The
group historically generated operational revenue from agricultural
income, wind mill electricity generation and sale of crude jatropha
oil in India and the sale of biofuels and biofuel by products in
Malaysia. The Group has generated NIL operational income in the
last three financial years. The Indian operations were closed down
in 2012 and the Malaysian operations were put into care and
maintenance in the June 30, 2012 financial period with the 100,000
tpa refiner sold in October 2013 and the 250,000 tpa refinery sold
to the joint venture company in February 2015.





Competition and Competitive Dynamics





When we
had our own refineries, our primary product, biodiesel, sold in the
liquid fuels market. The liquid fuels market was and is a highly
competitive, large global market with many well established market
participants.





Historically, there
have been many entrants into the biodiesel market in the United
States and elsewhere in the world as governments encourage the use
of renewable energy and seek to reduce greenhouse gas emissions,
thus inviting new entrants into the market. Despite the over
capacity of biodiesel refining in much of the world, much of the
built capacity is rendered either uneconomic or non-competitive by
the limited number of long term offtake agreements, the limited
access to necessary working capital and the limited access to
sustainable feedstock.





Competitive Forces





We
believe the principal competitive factors for biodiesel producers
are as follows:


●
 Scale. Considerable refining
capacity to attract long term significant offtake
agreements.


●
 Pricing.   A producer’s
ability to set pricing of products and the ability to use economies
of scale to secure competitive cost advantages to be able to price
biofuels below prevailing oil prices.


●
 Technology.   A
producer’s ability to produce biodiesel and by-products
efficiently and to utilize low cost raw materials.


●
 Sustainability.   Bearing in
mind social responsibility towards the environment, a
producer’s ability to produce biodiesel from sustainable
feedstock.


●
 Access to Working Capital & Commodities
Risk Management.   A producer’s ability to
take advantage of positive spreads depends on having access to
working capital.














Production Safety and Environmental Matters





Safety





We had
no material safety issues while we operated our refineries, and
none were reported to us last year by the joint venture
company.





Environment





When we
had our own refineries, we were committed to environmental
protection that complied with or exceeded local environmental
standards, and we will work to ensure the joint venture company
does so as well.





C.
 Organizational
Structure.





Our
principal subsidiaries at 30 June 2017 are set out below. Unless
otherwise stated, they have share capital consisting solely of
ordinary shares that are held directly by the Group, and the
proportion of ownership interests held equals the voting rights
held by the Group. The country of incorporation or registration is
also their principal place of business.





Set
forth below is the organizational structure of Mission
NewEnergy:






















Oleovest PL and
Mission Agro Energy Limited were deconsolidated from the Group
financials with effect from March 1, 2015 pursuant to an agreement
with the Group’s convertible note holders who took effective
control on that date.





The
Company owns 100% of M2 Capital Sdn Bhd, a Malaysian registered
Company, which in turn owns 20% of FGV Green Energy Sdn, a
Malaysian registered Company formed to own the 250,000 tpa refinery
sold by the Group during that financial period. Mission Biofuels
Sdn Bhd is 100% owned and is now the Malaysian administrative
entity.





For a
list of our wholly-owned and indirectly owned subsidiaries, see
Exhibit 8.1 filed hereto.





D.
 Property,
Plant and Equipment.





We own
a 20% stake in a joint venture company that owns a biodiesel
production facility (with a lease for the underlying land) that is
located at Port Kuantan, Malaysia. Which is up for sale and carried
at $zero.





The
following is further information about the facility:


Biodiesel
Facility
Site
area(Acres)
Total
Planned Capacity (1) (million gallonsper
year)
Capacity
Utilization (2)(percentage)
Commissioning
Date250,000
tpa refinery owned by FGV Green Energy Sdn Bhd
6.0
75
0%
Not known at this
stage(1)
Nominal operating
capacity.(2)
The
total tonnage produced during this period was NIL.





Our
registered administrative offices are located on premises
comprising approximately 60 square meters in an office building in
Perth, Australia.





We also
lease properties for purposes of office quarters in
Malaysia.





Item 4A. Unresolved Staff
Comments


None.

















Item 5. Operating and Financial
Review and Prospects





A.
 Operating
Results.





You should read the following discussion and analysis of our
financial condition and results of operations in conjunction with
“Item 3.A — Selected Financial Data” and our
consolidated financial statements and related notes included
elsewhere in this annual report. This discussion contains
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, but not
limited to, those set forth under “Item 3.D — Risk
Factors” and elsewhere in this annual report.





Overview





We
historically have been a producer of biodiesel that integrates
sustainable biodiesel feedstock cultivation, biodiesel production
and wholesale biodiesel distribution, focused on the government
mandated markets of the United States and Europe and Malaysia. We
currently own a 20% share in a joint venture company that owns a
biodiesel refinery that is in care and maintenance and was not
operated during the fiscal year.


The
Companies 20% stake in the joint venture company is currently being
actively marketed for sale, no buyers have been found and the asset
has been written down to $zero.





During
fiscal 2017, we made a net loss of A$4.6 million (2016: A$2.3
million loss). We recognized revenues of A$0.007 million (A$0.04
million in fiscal 2016). The income in fiscal 2017 and 2016 was
predominately comprised of interest income. During the 2015 fiscal
year, we materially completed our restructuring commenced in 2012,
which included the sale of our refinery assets and subsequent
settlement of all debt facilities and convertible note liabilities.
In addition, the long standing dispute with the EPCC contractor was
settled in August 2015, and as of the date of this report, we have
no non-current liabilities. On December 5, 2016, the Company
announced that it has entered into a heads of agreement to acquire
100% of the business operations of AUS Group, a leading
manufacturer of buildings materials produced in Australia. If the
new ventures do not generate sufficient revenue to fund the ongoing
operating costs of the business, and if we are unable to achieve
our business strategies and objectives, we may need to raise
further equity or loan capital for the business.





Biodiesel refining





Our
first biodiesel refinery plant began operations in fiscal 2008
under immediate cash payment and delivery market and term
contracts. Due to unattractive refining margins and a slower than
expected implementation of a biodiesel mandate in Malaysia,
capacity utilization was low and the revenue generated from
biodiesel sales and associated by-products was insufficient to
cover costs, and the refinery was put into care and maintenance and
ultimately sold.





The
EPCC contractor of our second biodiesel refinery had significant
issues in handing over a fully completed pre-treatment plant and
the transesterification unit to the Group and the matter ultimately
ended in arbitration. In February 2015, the sale of this refinery
was completed and in August 2015 a final settlement of the dispute
was agreed between the EPCC contractor and the Group. The Group
retained a 20% shareholding in the joint venture company to which
this refinery was sold.


The
plant is currently in care and maintenance and Mission is actively
seeking buyers for its 20% stake, to date no buyer has been found
and the asset has been impaired to $zero.





Discontinued operations : Jatropha feedstock and palm oil
processing business


We
commenced the shutdown of our Jatropha feedstock business in fiscal
2012. This process has been completed.





Due to
breach by our business partner in the Indonesian joint venture to
build, own and operate a palm oil oleo chemical complex in Sumatra,
Indonesia, we took the matter to arbitration. An award of US$3.36
million was made by the arbitrators in favor of the Group in July
2014 and received by the Group during the 2015 fiscal
year.





Critical Accounting Policies





Our
discussion and analysis of our operating and financial performance
and prospects are based upon our consolidated financial statements.
The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts
of revenue, assets, liabilities and expenses. We re-evaluate our
estimates on an on-going basis. Our estimates are based on
historical experience and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results
may differ from these estimates under different assumptions or
conditions.





Our
significant accounting policies are more fully described in the
notes to our audited consolidated financial statements included
elsewhere in this annual report. However, critical accounting
policies that affect our more significant judgments and estimates
used in the preparation of our financial statements are set forth
below.





Principles of Consolidation


The
consolidated financial statements comprise the financial statements
of Mission NewEnergy Limited and its subsidiaries, as defined in
Accounting Standard AASB 127 ‘Separate Financial
Statements’. These include Mission Biofuels Sdn Bhd and M2
Capital Sdn Bhd. All controlled entities have a 30 June financial
year-end. The Associate company has a 31 December year
end.





All
inter-company balances and transactions between entities in the
Consolidated Group, including any unrealized profits or losses,
have been eliminated on consolidation. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies applied by the parent
entity.





Where
controlled entities have entered or left the Consolidated Group
during the year, their operating results have been
included/excluded from the date control was obtained or until the
date control ceased.





Non-controlling
interests in the equity and results of the entities that are
controlled are shown as a separate item in the consolidated
financial report.





Investments in associates/Non-Current Assets held for
sale


The
Group owns 100% of M2 Capital Sdn Bhd, a Malaysian subsidiary,
which owns a 20% stake in FGV Green Energy Sdn Bhd (FGVGE), a
refinery joint venture company. Investments in associates held by
the parent entity, Mission NewEnergy Limited, are reviewed for
impairment if there is any indication that the carrying amount may
not be recoverable. It was determined that there were no such
indicator in fiscal year 2016.





During
the current financial year the Group announced an intention to
undertake a Reverse Take Over (refer to the Director’ Report
for further details). Under the RTO arrangement the Group is
required to dispose of the shares held in the Associate Joint
Venture Company. The accounting standards require assets held for
sale to be separately disclosed on the statement of financial
position with the value of the investment into the joint venture
company to be accounted for at the lower of carrying value or fair
value less costs to sell.





In
assessing the carrying value of the investment, the following
factors were considered by the Directors:


o
 Mission
does not hold a refining asset, however it holds a 20% share in the
refining JV,


o
 This
refining JV is not a listed publically traded entity with a readily
determinable share price, nor is there a ready market to sell the
20% holding,


o
 Mission
does not have the voting or management rights to force any actions
on the JV company, (be that to commence refurbishment, sell the
asset as a going concern or for sell for scrap value),


o
 Should
the JV company require further equity funding to undertake the
refurbishment the group has insufficient current cash proceeds to
protect its equity position and hence our shareholding position
would likely be diluted.





Given
that the Group has entered into this agreement in December 2016
which requires the sale of its 100% stake in M2 Capital, which owns
the 20% stake in the JV company and the delays being experienced
with the project, management has been unsuccessful to date in
disposing of the investment, however continues to actively seek
buyers. Accordingly the Directors have deemed it prudent to impair
the carrying value of the investment to NIL during the current
financial year. Should the Group sell the refinery an impairment
reversal is expected to be recognised in the financial records of
the Group.


Since
that date Mission has been actively looking to dispose of its 20 %
stake, no such buyers were identified.








2017
2016$
$Impairment of
investment in associate
3,608,038
-3,608,038
-








Impairment of assets





We
assess impairment of assets by evaluating conditions that may lead
to impairment of particular assets. Where an impairment trigger
exists, the recoverable amount of the asset is
determined.











Property, Plant and Equipment





Each
class of property, plant and equipment is carried at cost less,
where applicable, any accumulated depreciation and impairment
losses. The cost of fixed assets constructed within the Group
includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable
overheads.


Subsequent costs
are included in the asset’s carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the Statement of profit or
loss during the financial period in which they are
incurred.


At each
reporting date, the Group reviews the carrying values of its
tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an
indication exists, the recoverable amount of the asset, being the
higher of the asset’s fair value less costs to sell and value
in use, is compared to the asset’s carrying value. Any excess
of the asset’s carrying value over its recoverable amount is
expensed to the Statement of profit or loss.


Impairment testing
is performed at each reporting date for goodwill and intangible
assets with indefinite lives.


Where
it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.





There
is a risk of the actual outcomes being different from those
forecast due to changes in economic, market and agricultural
conditions and/or assumption regarding events, which may result in
the carrying value of biodiesel plants exceeding the recoverable
amount.





We are
required, under International Financial Reporting Standards, to
assess the refineries ability to generate revenue based on existing
conditions. During fiscal 2010, the lack of profitable sales
contracts or evidence that would indicate that profitable sales
contracts were imminently achievable, forced us to provide for an
impairment of the refining assets. Additional impairment of assets
was made in the following fiscal years relating to asset
expenditure additions incurred in the year. A portion of these
impairments was reversed in fiscal year 2015 when the 250,000 tpa
refinery was sold.





Recently issued accounting pronouncements


There
are no recently issued accounting pronouncements that have had any
material impact to the financial reported position of the
Company.





Comparison of Results of Operations





Fiscal 2017 compared with fiscal 2016





Revenue. Revenue
decreased by A$0.033 million (81% reduction) from A$0.04 million in
fiscal 2016 to A$0.007 million in fiscal 2017. There was no revenue
generated from sales of product in these periods due to the
refinery having been shutdown and sold.





Cost of sales. (being material feedstocks,
inputs and raw materials). Nil.





Expenses. Total
expenses increased by A$2.3 million (100% increased) from A$2.3
million in fiscal 2016 to A$4.5 million in fiscal 2017 principally
due to impairment of investment in associate company in fiscal
2017. Employee benefits expenses decreased A$0.7 million from A$1.1
million in fiscal 2016 to A$0.4 million in fiscal 2017 primarily as
a result of the continued Group restructure and cost management.
Foreign currency losses decreased by A$0.3 million from a loss in
fiscal 2016 of A$0.3 million to a loss in fiscal 2017 of A$0.01
million, primarily as a result of non cash fair valuation of
intercompany loans. Other expense decreased by A$0.3 million from
A$0.6 million in fiscal 2016 to A$0.3 million in fiscal 2017
primarily due to a reduction in legal costs and costs associated
with the sale of the refinery incurred in the 2016 fiscal
year.





Finance cost


No
finance cost incurred in fiscal 2016 and fiscal 2017.





Income tax.
  Income tax expense increased by A$2,408 from A$844 in
fiscal 2016 to an expense of A$3,252 in fiscal 2017.





Discontinued
operations.   There were no discontinued
operations in fiscal 2016 and fiscal 2017.





Loss for the year.
  As a result of the foregoing, fiscal 2017 registered a
loss for the year of A$4.6 million, an increase of A$2.3 million
from A$2.3 million loss in fiscal 2016.





Fiscal 2016 compared with fiscal 2015





Revenue. Revenue
decreased by A$7.2 million (99% reduction) from A$7.2 million in
fiscal 2015 to A$0.04 million in fiscal 2016, principally as a
result of a gain from period to period realized from the settlement
of convertible notes completed in fiscal 2015.


There
was no revenue generated from sales of product in these periods due
to the refinery having been shutdown and sold.





Cost of sales. (being material feedstocks,
inputs and raw materials). Nil due to non-operation of the
refinery during this period.





Expenses. Total
expenses decreased by A$0.8 million (27% decrease) from A$3.1
million in fiscal 2015 to A$2.3 million in fiscal 2016 principally
due to a reduction in legal fees due to the settlement of the legal
matters early in fiscal year 2016. Employee benefits expenses
decreased A$0.5 million from A$1.6 million in fiscal 2015 to A$1.1
million in fiscal 2016 primarily as a result of the continued Group
restructure and cost management. Foreign currency losses increased
by A$3.6 million from a gain in fiscal 2015 of A$3.2 million to a
loss in fiscal 2016 of A$0.3 million, primarily as a result of non
cash fair valuation of intercompany loans. Other expense decreased
by A$1.4 million from A$2.0 million in fiscal 2015 to A$0.6 million
in fiscal 2016 primarily due to the reduction in legal
costs.





Finance cost


Finance
costs reduced by A$1.8m from A$1.8 million in fiscal 2015 to Nil in
fiscal 2016 as a result of the settlement of the convertible loan
debt in fiscal 2015.





Income tax.
  Income tax expense decreased by A$4,653 from A$5,497 in
fiscal 2015 to an expense of A$844 in fiscal 2016.





Discontinued
operations.   The gain from discontinued
operations reduced by A$24.1 million in fiscal 2015 to NIL in
fiscal 2016 as there were no discontinued operations in fiscal
2016. The positive result in fiscal 2015 is primarily as a result
of the reversal of impairment on the sale of the 250,000 tpa
refinery, with the profit shown in discontinued
operations.





Loss for the year.
  As a result of the foregoing, fiscal 2016 registered a
loss for the year of A$2.3 million, a decrease of A$30.7 million
from A$28.4 million profit in fiscal 2015.











Impact of Inflation


We do
not believe that inflation has had a material effect on our
business.





Effects of Currency Fluctuations





Our
reporting currency is the Australian dollar. In accordance with
IFRS, costs not denominated in Australian dollars are re-measured
in Australian dollars, when recorded, at the prevailing exchange
rates for the purposes of our financial statements. Consequently,
fluctuations in the rates of exchange between the Australian
dollar, Malaysian Ringgit, Indian Rupee and the U.S. dollar affect
our results of operations. An increase in the value of a particular
currency relative to the Australian dollar will reduce the
Australian dollar reporting value for transactions in that
particular currency, and a decrease in the value of that currency
relative to the Australian dollar will increase the Australian
dollar reporting value for those transactions.





The
effect of foreign currency translation is reflected in our
financial statements in the statements of changes in
shareholders’ equity and is reported as accumulated foreign
currency translation reserve. We have not entered into any hedging
arrangements to mitigate the effects of currency
fluctuations.











B.
 Liquidity
and Capital Resources.





Overview


Our
operations have been financed primarily from the issuance of
convertible notes and equity securities to investors.





The
following table sets forth our consolidated cash flows since fiscal
2015.


2017
2016
2015$A’000
$A’000
$A’000Net cash (used in)
provided by operating activities
(979)
(2,078)
391Net cash provided
by investingactivities
-
330
19,692Net cash (used in)
financingactivities
-
-
(17,731)Effect of exchange
rate changes on cash held in foreign currency
(34)
(2)
347Net movement in
cash and cash equivalents
(1,013)
(1,750)
2,699Cash and cash
equivalents at the beginning of the year
1,401
3,151
452Cash and cash
equivalents at the end of the year
388
1,401
3,151





Fiscal 2017 compared with fiscal 2016





Net
cash used in operating activities is as a result of ongoing
operating costs with limited group revenue.


There
were NIL investing or financing activities in fiscal year
2017.





Fiscal 2016 compared with fiscal 2015





Net
cash used in operating activities is as a result of ongoing
operating costs with limited group revenue.


Net
cash inflow from investing activities is primarily as a result of
an inflow from a release of a retention deposit relating to the
sale of the 250,000 tpa refinery which was sold in fiscal year
2015.


There
were NIL financing activities in fiscal year 2016.





Credit terms for receivables





Historically, the
receipt of payment for sales to biodiesel customers was required on
the date the ship was loaded with biodiesel. Credit risk was
managed through the use of letters of credit. However market
conditions dictate that future sales to customers may be made on
credit terms of up to 60 days, depending on our assessment of
customers’ creditworthiness, and we may have to maintain
ownership of products during transit to customers which could
extend our cash collection cycle well beyond our historical
experience and increase our need for working capital.


For
sales of Jatropha saplings to contract farmers, the receivable
arose and was recorded as of the date of delivery of the saplings,
with credit risk mitigated by our right to offset the receivable
for each farmer against amounts we may owe that farmer for future
purchases of seeds. Due to the scale back of operations we have
written off all Jatropha segment receivables.


With
the sale of the refineries and the discontinuance of the Jatropha
segment there are no receivables remaining on balance sheet from
these operating segments. In fiscal 2014 a receivable was held on
balance sheet relating to monies to be recovered through the
Malaysian arbitration process which resulted from a dispute between
the Group and the 250,000 tpa refinery EPCC contractor about the
handover of the refinery. This amount was impaired in fiscal 2015
as a net result of the settlement agreement signed with the EPCC
contractor.





Convertible Notes





We
issued 50,000,000 convertible notes at a price of A$1.30 per note
in May 2007 (Series 1 convertible notes). During the 2011 fiscal
year, the majority of these notes (75.33%) were restructured into
Series 2 Convertible Notes with an extension of the maturity date
from May 2012 to May 2014. Holders could convert all or part of the
notes at any time until maturity (May 16, 2014) at a conversion
price of A$65.00 per note. The series one convertible note, with a
nominal value of A$15 million, was due in May 2012. We settled the
liability relating to the remaining Series 1 Convertible Note
holder in September 2011 for A$5 million after mutual agreement
with the note-holder. Each remaining Series 2 note was convertible
into four ordinary shares (subject to adjustment for customary
events, such as share consolidation). The Series 2 notes carried
interest at a rate of 4.0% per annum and interest was payable
semi-annually. Mission NewEnergy could convert some or all of the
notes at any time if the daily volume weighted average price of
Mission NewEnergy’s ordinary shares on the Australian
Securities Exchange, or ASX, for a period of 90 consecutive days is
1.5 times the face value of the notes. At no stage during the
period have any covenants on these convertible notes been
breached.





During
2012, 198,885 convertible notes were converted into ordinary
shares.





The
remaining Series 2 notes totaling 505,904 convertible notes were
convertible into an aggregate of 2,023,616 ordinary shares at a
conversion price of A$16.25 per share.





In
November 2012, we successfully converted the Series 2 notes into
Series 3 notes, bearing NIL interest, and a revised conversion
ratio of 1:433 ordinary shares. The Series 3 notes totaling 505,904
convertible notes are convertible into an aggregate of 219,056,432
ordinary shares.





In
October 2013, we settled A$7,500,000 of the convertible note debt
from proceeds of the sale of our 100,000 tpa refinery, leaving
390,520 notes with a nominal debt value of A$25,383,800
owing.





On
December 30, 2013, we completed a substantial restructuring of the
convertible notes, with the key changes being the extension of the
maturity date to December 31, 2018 and a 6% pa coupon, with coupon
payments deferred to December 31, 2015.





On
December 2, 2014, we utilized US$2 million of the proceeds from the
Indonesian arbitration settlement to settle a portion of the
convertible notes.





On
February 19, 2015, we successfully settled all outstanding
convertible note liability through a final payment of US$12
million, being a portion of the proceeds from the sale of the
250,000 tpa refinery. In addition, a portion of the proceeds from
the refinery sale were held back on deposit pending the outcome of
legal proceedings with the refinery EPCC contractor. Note holders
retain a residual claim on any cash withheld and not required to be
paid out to as part of any legal settlement.On August 5, 2015, we successfully
settled the long-standing dispute with the EPCC contractor with a
payment of A$4 million of cash held back from the sale of the
refinery.





For
accounting purposes, the convertible notes are treated as compound
financial instruments. The liability component of a compound
financial instrument is recognised initially at the fair value of a
similar liability that does not have an equity conversion option.
The equity component is recognised initially at the difference
between the fair value of the compound financial instrument as a
whole and the fair value of the liability component. Any directly
attributable transaction costs are allocated to the liability and
equity components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound
financial instrument is not remeasured subsequent to initial
recognition.





Bank facility





We do
not currently have any bank credit facilities.





Secured loans





We do
not currently have any secured loans.





Other material commitments





We do
not have any material commitments.





Warrants





There
are no outstanding warrants.





C.
 Research
and Development, Patents and Licenses, etc.





Our
expenditure on research and development was Nil in fiscal years
2017, 2016 and 2015.





D.
 Trend
Information.





Other
than as disclosed elsewhere in this annual report, we are not aware
of any trends, uncertainties, demands, commitments or events that
are reasonably likely to have a material effect on our revenue,
income, profitability, liquidity or capital resources or that would
cause reported financial information not necessarily to be
indicative of future operating results or financial
condition.





E.
 Off-Balance
Sheet Arrangements.





We do
not have any material off-balance sheet commitments or
arrangements.





F.
 Tabular
Disclosure of Contractual Obligations.





We do
not have any contractual commitments at June 30, 2017.

















Item 6. Directors, Senior Management and Employees





A.
 Directors
and Senior Management.





The
following table sets forth information of our directors and
executive officers as of the date of this annual report. The
directors have served in their respective capacities since their
election or appointment and will serve until the next annual
general shareholders meeting or until a successor is duly
elected.





Name
Age
PositionDato’ Nathan
Mahalingam
59
Executive Chairman,
Chief Executive Officer and DirectorGuy
Burnett
49
Chief Financial
Officer, Director and Company SecretaryJames
Garton
40
Director and Head
of Corporate Finance/Mergers and Acquisitions





Dato’ Nathan Mahalingam.
Dato’ Nathan has been Chief Executive Officer (formerly
having the title of Managing Director) and a Director of Mission
NewEnergy since 2005. He has over 25 years of management experience
in banking and finance, heavy industries and infrastructure
development. He has successfully implemented numerous start up
manufacturing operations in Malaysia during his tenure of service
with a large Malaysian conglomerate. Between 1995 and 2000, he
served as project director in the Westport Group, developers of one
of Malaysia’s largest privatized port and transhipment
facility. Dato’ Nathan has gained extensive project advisory,
corporate finance, mergers and acquisitions experience while
running his own boutique corporate advisory practice between 2000
and 2004. Dato’ Nathan took over the role of Executive
Chairman in June 2017 upon the retirement of the past
Chairman.


Guy Burnett. Mr. Burnett
has been Chief Financial Officer (formerly having the title of
Finance Director) since 2008, a Director since 2009 and Company
Secretary of Mission NewEnergy since September 2010. He is a
Chartered Accountant and has worked as a financial professional in
several large corporations. Prior to joining Mission NewEnergy, Mr.
Burnett was Manager, Corporate Accounting & Tax with Western
Power (an electricity networks corporation owned by the Western
Australian government) from 2006 to 2008 and, before that, worked
as a financial accountant for Water Corporation from 2004 to 2005
and served as a Manager with KPMG from 2005 to 2006 where he
assisted clients with implementing International Financial
Reporting Standards.








James Garton.Mr.
Garton Mr. Garton has over 15 years’ experience in corporate
finance, working in investment banking. Prior to his current role,
James was has been Head of Corporate Finance and Mergers
and


Acquisitions
for Mission since 2008. Mr. Garton joined Mission NewEnergy from
U.S. investment bank, FBR Capital Markets, where he was Vice
President, Investment Banking. Prior to FBR Capital Markets, he
worked in corporate finance and equity capital markets with
Australian firm BBY Limited. Before BBY, Mr. Garton worked in
private equity with the Australian advisory firm Investment Capital
Limited.





The
following Directors retired during the 2017 fiscal
year:








Datuk Zain Yusuf. Datuk Zain has over 25
years’ experience in Shell Malaysia. From 1986 to 1988, he
was seconded to Shell International, United Kingdom and worked as
Marketing Consultant in Shell UK and Shell Caribbean. Upon his
return to Malaysia, he was made Marketing Director of Shell
Malaysia. He subsequently served on the Board of Directors of Shell
Group Malaysia as Executive Director, with responsibility over a
total of 18 group subsidiaries involved in both the upstream and
downstream petrochemical business. Datuk Zain is a Director of WSA
Group of Companies and Chairman of Malacca Securities Sdn Bhd, past
chairman of the Malaysian Australia Business Council and served as
a Director of Airod Sdn Bhd, NADI Bhd, Faber Group Bhd, PJ Bumi Bhd
and as chairman of Confoil (Malaysia) Bhd, a Malaysian - Australian
joint venture company in Malaysia.


Admiral (Ret) Tan Sri Dato’ Seri Mohd
Anwar bin Haji Mohd Nor (Tan Sri Anwar). Tan Sri Anwar made
history in April 2005 when he became the first naval chief in the
Malaysian Armed Forces (MAF) to ascend to its highest military
office of the Chief of Defence Force, commanding workforce strength
of nearly 130,000. With nearly 40 years of military experience with
the Royal Malaysian Navy (RMN) and MAF, he has acquired a massive
portfolio of achievements. His outstanding performance extends to
the academic arena as well inclusive of stints at the Naval Staff
College (Rhode Island, USA), Navigation and Direction Course and
Principal Warfare Officers Course (HMS DRYAD, United Kingdom). He
also holds a Master of Science in Engineering Business Management
from the University of Warwick, United Kingdom. Tan Sri Anwar has
received numerous commendations, awards and accolades in
recognition of his talents, and was bestowed the Panglima Mangku
Negara (PMN), which carries the title of Tan Sri, by His Majesty
the Yang Di-Pertuan Agong (the King of Malaysia). He has also
received distinguished medals from foreign governments such as the
Ordre National De La Legion D'Honneur from France and the Command
of the Legion of Merit from the US. Most recently he was appointed
as a Senator to the Upper House of Malaysia.





Mr. Mohd Azlan bin Mohammed. Mr Mohd
Azlan is currently the Managing Director of Wasco Oilfield Services
Sdn Bhd, which is principally involved in the provision of oil and
gas services internationally. Wasco is a subsidiary of Bursa
Malaysia listed Wah Seong Corporation Berhad and also sits on the
board of its various subsidiaries. He is also the Chairman of Indra
Technology Solutions Malaysia Sdn Bhd, a subsidiary of Indra
Sistemas, S.A. of Spain. In May 2015, Mohd Azlan was appointed as
Independent Chairman of Multi-Purpose Generali Insurans Bhd, a
leading Malaysian insurance company.








Family Relationships





There
are no family relationships between any directors or executive
officers of Mission NewEnergy.





Arrangements





There
are no known arrangements or understandings with any major
shareholders, customers, suppliers or others pursuant to which any
of our officers or directors was selected as an officer or director
of Mission NewEnergy.





B.
 Compensation.





In
fiscal year 2017, the aggregate remuneration we paid and that
accrued to our directors and senior management was A$0.3
million.








2017
Salary
$
Non-cash
Benefits
$
Long-term
Bonus
$
Share based
payments
$
Post-employment Super
Contribution $
Total
$Non-Executive
DirectorsDatuk Zain
Yusuf
22,916
-
-
-
-
22,916Admiral (Ret) Tan
Sri Dato’ Sri Mohd Anwar bin Haji Mohd Nor
14,583
-
-
-
139
14,722Mohd
Azlan
14,583
-
-
-
139
14,722Total
Non-executive Directors
52,082
-
-
-
278
52,360Dato’ Nathan
Mahalingam
104,167
-
-
-
-
104,167Mr. Guy
Burnett
87,948
4,353
-
-
8,709
101,010Mr. James
Garton
83,333
-
-
-
7,917
91,250TOTAL
KEY MANAGEMENT PERSONNEL
327,530
4,353
-
-
16,904
348,787














2016Salary
$
Non-cash Benefits
$
Long-termBonus
$
Share based
payments$
Post-employmentSuper
Contribution1
$
Total
$Non-Executive
DirectorsDatuk Zain
Yusuf
55,000
-
-
-
-
55,000Admiral (Ret) Tan
Sri Dato’ Sri Mohd Anwar bin Haji Mohd Nor
35,000
-
-
-
333
35,333Mohd
Azlan
35,000
-
-
-
333
35,333Total
Non-executive Directors
125,000
-
-
-
666
125,666Dato’ Nathan
Mahalingam
290,000
3,782
-
-
-
293,782Mr. Guy
Burnett
216,319
10,429
-
-
20,900
247,648Mr. James
Garton
200,000
-
-
-
19,000
219,000TOTAL
KEY MANAGEMENT PERSONNEL
831,319
14,211
-
-
40,566
886,096





Share Based Compensation Plans


At the
date of this report, the Group has no Share Based Compensation
Plans.





Performance Rights


At the
date of this annual report, the Group has no Performance Right
Plans and there were no performance rights issued in fiscal years
2015, 2016 and 2017.





Options


At the
date of this annual report, the Group has no Option Plans and there
were no options issued in fiscal years 2015, 2016 and
2017.





Retirement Benefits


All
employees employed by Mission NewEnergy and its subsidiaries belong
to appropriate retirement schemes for each jurisdiction in which it
operates. All such employee retirement schemes are defined
contribution schemes and thus no amounts are required to be set
aside by us to meet any future retirement benefit
obligations.





1 Superannuation is a mandatory retirement plan for
employees in Australia.











C.
 Board
Practices.





Role of the Board of Directors





The
Board of Mission is responsible for setting the Company’s
strategic direction and providing effective governance over
Mission’s affairs in conjunction with the overall supervision
of the Company’s business with the view of maximising
shareholder value. The Board’s key responsibilities are
to:





●
 chart the
direction, strategies and financial objectives for Mission and
monitor the implementation of those policies, strategies and
financial objectives;


●
 keep updated about
the Group’s business and financial status;


●
 provide oversight
and monitor compliance with regulatory requirements, ethical
standards, risk management, internal compliance and control, code
of conduct, legal compliance and external commitments;


●
 appoint, evaluate
the performance of, determine the remuneration of, plan for the
succession of and, where appropriate, remove the Managing
Director/Group Chief Executive Officer, the Company Secretary and
the Finance Director/Chief Financial Officer;


●
 exercise due care
and diligence and sound business judgment in the performance of
those functions and responsibilities; and


●
 ensure that the
Board continues to have the mix of skills and experience necessary
to conduct Mission’s activities, and that appropriate
directors are selected and appointed as required.





The
Group has a formal process to educate new directors about the
nature of the business, current issues, the corporate strategy, the
culture and values of the Group, and the expectations of the Group
concerning performance of the directors. In addition directors are
also educated regarding meeting arrangements and director
interaction with each other, senior executives and other
stakeholders. Directors also have the opportunity to visit Group
facilities and meet with management to gain a better understanding
of business operations. Directors are given access to continuing
education opportunities to update and enhance their skill and
knowledge.





The
Board has adopted a Board Charter, which sets out in more detail
the responsibilities of the Board. The Board Charter sets out the
division of responsibility between the Board and management to
assist those affected by decisions to better understand the
respective accountabilities and contribution to Board and
management.





In
accordance with Mission’s Constitution, the Board delegates
responsibility for the day–to–day management of Mission
to the Executive Chairman/Managing Director/Group Chief Executive
Officer (subject to any limits of such delegated authority as
determined by the Board from time to time). Management as a whole
is charged with reporting to the Board on the performance of the
Company.





Board structure and composition





The
Board currently is comprised of three directors, all of which are
non-independent executive directors. Details of each
director’s skills, expertise and background are contained
within the directors’ report included with the
company’s annual financial statements lodged with the
Australian Securities Exchange. The Board considers the mix of
skills and the diversity of Board members when assessing the
composition of the Board. The Board assesses existing and the
potential director’s skill to ensure they have appropriate
industry expertise in the Group’s operating segments. In
addition, the Board has considered the current Board composition
based on the existing level of operations within the
group.





Independence, in
this context, is defined to mean a non–executive director who
is free from any interest and any business or other relationship
that could, or could reasonably be perceived to, materially
interfere with the directors ability to act in the best interests
of Mission. The definition of independence in ASX Recommendation
2.1 is taken into account for this purpose.





Apart
from the Group CEO, Mission’s directors may not hold office
for a continuous period in excess of three years or past the third
annual general meeting following their appointment, whichever is
longer, without submitting for re–election. Directors are
elected or re–elected, as the case may be, by shareholders in
a general meeting. Directors may offer themselves for
re–election. A Director appointed by the directors (e.g., to
fill a casual vacancy) will hold office only until the conclusion
of the next annual general meeting of Mission but is eligible for
re–election at that meeting.





Under
Mission’s Constitution, voting requires a simple majority of
the Board. The Chairman does not hold a casting vote.





Board Diversity





The
Board has a formal diversity policy which states that Mission
NewEnergy Limited is committed to embedding a corporate culture
that embraces diversity through:





●
 Recruitment on the
basis of competence and performance and selection of candidates
from a diverse pool of qualified candidates,


●
 Maintaining
selection criteria that does not indirectly disadvantage people
from certain groups,


●
 Providing equal
employment opportunities through performance and flexible working
practices,


●
 Maintaining a safe
working environment and supportive culture by taking action against
inappropriate workplace and business behavior that is deemed as
unlawful (discrimination, harassment, bullying, vilification and
victimization),


●
 Promoting diversity
across all levels of the business,


●
 Undertaking
diversity initiatives and measuring their success,


●
 Regularly surveying
our work climate, and


●
 Establishing
measurable objectives in achieving gender diversity.





Since
the Company’s incorporation, given its cross-jurisdictional
operations in Australia and Malaysia, a diversity practice is
naturally in place.





Board and management effectiveness





Responsibility for
the overall direction and management of Mission, its corporate
governance and the internal workings of Mission rests with the
Board, notwithstanding the delegation of certain functions to the
Managing Director/Group Chief Executive Officer and management
generally (such delegation effected at all times in accordance with
Mission’s Constitution and its corporate governance
policies). The Board has access, at the company’s expense, to
take independent professional advice after consultation with the
Chairman.





An
evaluation procedure in relation to the Board, individual directors
and Company executives was completed during the 2016 financial
year. The evaluation of the Board as a whole was facilitated
through the use of a questionnaire required to be completed by each
Board member, the results of which were summarised, discussed with
the Chairman of the Board and tabled for discussion at a Board
Meeting. Similarly each individual director was required to self
assess his performance and discuss the results with the Chairman.
Individual directors’ performance is evaluated by reference
to the Director’s contribution to monitoring and assessing
management performance in achieving strategies and budgets approved
by the Board (among other things). A similar process for review of
committees was undertaken during the 2015 and 2014 financial
year.





To
ensure management, as well as Board effectiveness, the Remuneration
and Nomination Committee has direct responsibility for evaluating
the performance of the Managing Director/Group Chief Executive
Officer and other executives.





Internal control, risk management and financial
reporting





The
Board has overall responsibility for Mission’s systems of
internal control. These systems are designed to ensure effective
and efficient operations, including financial reporting and
compliance with laws and regulations, with a view to managing the
risk of failure to achieve business objectives. It must be
recognized, however, that internal control systems can provide only
reasonable and not absolute assurance against the risk of material
loss.





The
Board reviews the effectiveness of the internal control systems and
risk management on an ongoing basis, and monitors risk through the
Audit and Risk Management Committee (see the Audit and Risk
Management Committee). The Board regularly receives information
about the financial position and performance of Mission. For annual
and half-yearly accounts released publicly, the Managing
Director/Group Chief Executive Officer and the Finance
Director/Chief Financial Officer sign-off to the
Board:





●
 the accuracy of the
accounts and that they represent a true and fair view, in all
material respects, of Missions financial condition and operational
results, and have been prepared in accordance with applicable
accounting standards; and


●
 that the
representations are based on a system of risk management and
internal compliance and control relating to financial reporting
which implements the policies adopted by the Board, and that those
systems are operating efficiently and effectively in all material
respects.





In
addition, management has reported to the Board on the effectiveness
of the Company’s management of its material business
risks.





Internal audit





The
Group does not have an Internal Auditor due to the restructure and
significant downsizing of the Group since fiscal year
2012.





Our
risk management policy is included in the Corporate Governance
section of the Company’s website.














Committees of the Board of Directors





The
Board has established two permanent Board committees to assist the
Board in the performance of its functions:





●
 the Audit and Risk
Management Committee; and


●
 the Remuneration
and Nomination Committee.





Each
committee has a charter that sets out its purpose and
responsibilities. The committees are described further
below.





The
names of the members of the two committees are set out in the
directors’ report contained within the Company’s annual
financial statements.





Audit and Risk Management Committee





The
purpose of the Audit and Risk Management Committee is to provide
assistance to the Board in its review of:





●
 Mission’s
financial reporting, internal control structure and risk management
systems’;


●
 the internal and
external audit functions; and


●
 Mission’s
compliance with legal and regulatory requirements in relation to
the above.





The
Audit and Risk Management committee has specific responsibilities
in relation to Missions’ financial reporting process; the
assessment of accounting, financial and internal controls; the
appointment of the external auditor; the assessment of the external
audit; the independence of the external auditor; and setting the
scope of the external audit.





During
the 2017 fiscal year, the Audit and Risk Management Committee
comprised two independent non–executive directors and one
non-independent non–executive director that have diverse and
complementary backgrounds. Since the retirement of the
non-executive Directors, the three executive Directors form the
members of the Audit and Risk Committee.





Messrs.
Tan Sri Anwar (Chairman), Mohd Azlan and Datuk Zain Yusuf were
members of the Audit and Risk Management Committee.





Remuneration and Nomination Committee





The
purpose of the Remuneration and Nomination Committee is to
discharge the Board’s responsibilities relating to the
nomination and selection of directors and the compensation of the
Company’s executives and directors.





The key
responsibilities of the Remuneration and Nomination Committee are
to:





●
 ensure the
establishment and maintenance of a formal and transparent procedure
for the selection and appointment of new directors to the Board;
and


●
 establish
transparent and coherent remuneration policies and practices, which
will enable Mission to attract, retain and motivate executives and
Directors who will create value for shareholders and to fairly and
responsibly reward executives.





During
the 2017 fiscal year, the Remuneration and Nomination Committee
comprised two independent non–executive directors and one
non-independent non–executive director. Since the retirement
of the non-executive Directors, the three executive Directors form
the members of the Nomination and Remuneration
Committee.





Messrs.
Datuk Zain Yusuf (Chairman), Tan Sri Anwar, and Mohd Azlan were
members of the Remuneration and Nomination Committee.





We have
a remuneration policy that sets out the terms and conditions for
the Managing Director and other senior executives.





Mission Advisor to the Board





Dato’ Mohamed
Nizam bin Abdul Razak was an advisor to the Board during the 2017
fiscal year. He retired in June 2017. Dato’ Nizam Razak, a
Malaysian, was attached to Bumiputra Merchant Bankers Bhd, an
investment bank, from 1981 to 1984 and to PB Securities Sdn Bhd, a
stockbroking firm from 1984 to 1998. He is an independent and
Non-Executive Director of Yeo Hiap Seng Limited and Mamee-Double
Decker (M) Sdn Bhd. He also serves on the board of several private
limited companies engaged in a wide range of activities and is
actively involved in several charitable foundations such as Noah
Foundation, National Children Welfare Foundation, Yayasan
Cemerlang, Yayasan Rahah and Yayasan Wah Seong. In March 2012, he
was appointed Pro-Chancellor of University Tun Abdul Razak and in
July 2013, he was appointed Chancellor of Unitar International
University. In the past he has held directorships in companies
involved in a wide range of activities such as banking, insurance,
mutual funds, steel,


auto
parts manufacturing, health care, IT, retail and food production.
Dato’ Nizam graduated in 1980 with a Bachelor of Arts (Oxon)
degree in Politics, Philosophy and Economics from the Oxford
University, United Kingdom.





Disclosure policy





Mission
is committed to promoting investor confidence and ensuring that
shareholders and the market have equal access to information and
are provided with timely and balanced disclosure of all material
matters concerning the Company. Additionally, Mission recognizes
its continuous disclosure obligations under the ASX Listing Rules
and the Corporations Act. To assist with these matters, the Board
has adopted a Continuous Disclosure and Shareholder Communication
Policy.





The
Continuous Disclosure and Shareholder Communication Policy
allocates roles to the Board and management in respect of
identifying material information and coordinating disclosure of
that information where required by the ASX Listing
Rules.





The
Policy also identifies authorized company spokespersons and the
processes Mission has adopted to communicate effectively with its
shareholders. In addition to periodic reporting, Mission will
ensure that all relevant information concerning the Company is
placed on its website.





Code of Conduct





The
Board has created a framework for managing the Company including
internal controls, business risk management processes and
appropriate ethical standards.





The
Board has adopted practices for maintaining confidence in the
Company’s integrity including promoting integrity, trust,
fairness and honesty in the way employees and directors’
conduct themselves and Mission’s business, avoiding conflicts
of interest and not misusing company resources. A formal Code of
Conduct has been adopted for all employees and directors of
Mission.





Securities Trading Policy





A
Securities Trading Policy has been adopted by the Board to set a
standard of conduct, which demonstrates Mission’s commitment
to ensuring awareness of the insider trading laws, and that
employees and directors’ comply with those laws. The
Securities Trading Policy imposes additional share trading
restrictions on Directors, the Company Secretary, executives and
employees involved in monthly financial accounting processes
(“specified persons”).





Under
the Securities Trading Policy, specified persons are only permitted
to buy and sell securities if they do not possess non–public
price sensitive information and trading occurs outside of specified
restricted periods. These periods are the periods commencing on the
first day of the month before the end of the half–year or
full year period and ending on the next business day after the
announcement of the results for that period. In addition, before a
specified person can deal in Mission’s securities they must
obtain clearance from the appropriate officer, confirming that
there is no reason why they cannot trade.





Ownership of Equity settled Options and Performance
rights





There
are no options or performance rights at the date of this
report.





D.
 Employees.





As of
June 30, 2017, we had three employees. The following table provides
a breakdown of our employees by main category of activity and
geographic location:





USA
Australia
MalaysiaFinance, legal and
other administrative functions
0
2
1Engineering,
operations, R&D and information systems
0
0
0





Historic
Employees





For
the fiscal year ended June 30,
USA
Australia
Malaysia
India2014

2
6
-2015
-
2
5
-2016
-
2
4
-2017
-
2
1
-





We
believe that our relations with employees are good and we have not
experienced any significant labor stoppages or disputes. Our
employees are not represented by labor unions or covered by a
collective bargaining agreement.





We
typically enter into a standard confidentiality and non-competition
agreement with our management and research and development
personnel. Each of these contracts includes a covenant that
prohibits the relevant personnel from engaging in any activities
that compete with our business during his or her employment with us
and for two years after their employment with us.











Insurance





We have
insurance policies covering all normal aspects of our business in
line with industry practices and the current state of
operations.





We
believe that our overall insurance coverage is consistent with the
market practice or the jurisdiction of operation. However,
significant damage to any of our buildings, whether as a result of
fire or other causes, could have a material adverse effect on our
results of operations. See “Risk Factors — Risks
Related to Our Business and Our Industry — We have limited
insurance coverage and may incur losses resulting from product
liability claims, business interruption or natural
disasters.” We also maintain appropriate Directors and
Officers Liability Insurance.





E.
 Share
Ownership.





The
following table presents certain information regarding the
beneficial ownership of our ordinary shares based on total issued
ordinary shares of 40,870,275 as of October 10, 2017
by:





●
 each person known
by us through substantial shareholder notices filed with the
Australian Securities Exchange and SEC to be the beneficial owner
of more than 5% of our ordinary shares;


●
 each of our
directors in office during the 2017 fiscal year;


●
 each of our named
executive officers; and


●
 all of our current
directors and executive officers as a group.





Number
ofShares
% of
issued ordinary sharesPrincipal
ShareholdersMuralidhar
Menon
5,000,000
12.23%Kajaintharan
Sithambaran
5,000,000
12.23%Directors
and Executive Officers:Dato’ Nathan
Mahalingam (1)
5,612,956
13.73%James
Garton
5,112,051
12.51%Guy
Burnett
5,112,001
12.51%Datuk Zain Yusuf
(3)
—
—Admiral (Ret) Tan
Sri Dato’ Sri Mohd Anwar bin Haji Mohd Nor (3)
—
—Mohd Azlan Bin
Mohammed (2)
(3)
5,000,000
12.23%All directors and
executive officers as a group





(1)
Includes
492,957 shares held by Mission Equities Sdn Bhd., a company which
Dato’ Nathan Mahalingam, Mission NewEnergy’s Chief
Executive Officer, owns.(2)
Held by
Karisma Inegrasi Sdn Bhd, which Mohd Azlan controls and is
considered the beneficial owner of the shares it
holds.(3)
Datuk
Zain Yusuf, Admiral (Ret) Tan Sri Dato’ Sri Mohd Anwar bin
Haji Mohd Nor and Mohd Azlan Bin Mohammed retired from the Board of
the Company on 14 June 2017.





Beneficial
ownership is determined according to the rules of the SEC and
generally means that a person has beneficial ownership of a
security if he or she possesses sole or shared voting or investment
power of that security, and includes options that are exercisable
within 60 days. Information with respect to beneficial ownership
has been furnished to us by each director, executive officer or 5%
or more shareholder, as the case may be.





Unless
otherwise indicated, to our knowledge, each shareholder possesses
sole voting and investment power over the ordinary shares listed,
subject to community property laws where applicable. None of our
shareholders has different voting rights from other shareholders
after the closing of this offer.





To the
best of our knowledge, there have not been any significant changes
in the ownership of our ordinary shares by major shareholders over
the past three years, except the beneficial ownership
of:


●
Muraldir
Menon, Kajaintharan Sithambaran and Karisma Integrasi Sdn Bhd were
each issued 5,000,000 shares on April 30, 2014.●
Nathan
Mahalingam, James Garton and Guy Burnett were each issued 5,000,000
shares on February 19, 2015.


As of
October 9, 2017, we had forty three holders of record in the United
States with a combined holding of 4,045,684 shares, representing
9.9% of our total outstanding shares as of that date.











Item 7. Major Shareholders and
Related Party Transactions





A.
 Major
Shareholders and Related Party Transactions.





See
“Item 6.E—Directors, Senior Management and
Employees—Share Ownership.”





B.
 Related
Party Transactions.





Other
than as disclosed below, from July 1, 2016 through to June 30,
2017, we did not enter into any transactions or loans between us
and any (a) enterprises that directly or indirectly through one or
more intermediaries, control or are controlled by, or are under
common control with us; (b) associates; (c) individuals owning,
directly or indirectly, an interest in our voting power that gives
them significant influence over us, and close members of any such
individual’s family; (d) key management personnel and close
members of such individuals’ families; or (e) enterprises in
which a substantial interest in the voting power is owned, directly
or indirectly by any person described in (c) or (d) or over which
such person is able to exercise significant influence. Refer to
note 23 of the financial statements included at the end of this
report for details of any related party transactions.





Loans





From
time to time, we have made loans to or received loans from our
wholly owned subsidiaries, including M2 Capital Sdn Bhd and Mission
Biofuels Sdn Bhd. Loans are repaid where possible and are given on
interest free terms. These inter-company loans are eliminated on
consolidation.





Management rights with subsidiaries





From
time to time, we have been involved in transactions with wholly
owned and controlled subsidiaries. Such transactions between
related parties are on commercial terms and conditions no more
favorable than those available to other parties.





C.
 Interests
of Experts and Counsel.





Not
applicable.








Item 8. Financial Information





A.
 Consolidated
Statements and Other Financial Information.





Our
consolidated financial statements are set out in Item 18 of this
annual report.





Legal Proceedings





We are
not involved in any significant legal proceedings.





Dividend Distributions





We have
never declared or paid any cash dividends on our ordinary shares
and we do not anticipate paying any cash dividends in the
foreseeable future. Our Board’s current intention is to
reinvest any income in the continued development and operation of
our business.





Except
as permitted by the Corporations Act, under our Constitution
dividends may only be paid out of our profits.





Payment of cash
dividends, if any, in the future will be at the discretion of our
Board or, if our directors do not exercise their power to issue
dividends, our shareholders in a general meeting may exercise the
powers.





Even if our Board
decides to pay dividends, the form, frequency and amount will
depend upon our future operations and earnings, capital
requirements and surplus, general financial conditions, contractual
restrictions and other factors that the Board may deem
relevant.








B.
 Significant
Changes.





Except
as disclosed elsewhere and below in this annual report, we have not
experienced any significant changes since the date of our audited
consolidated financial statements included in this annual
report.











Item 9. The Offer and
Listing





A.
 Offer
and Listing Details.





OTC
Markets Pink Sheets
NASDAQ
ASXHigh
Low
High
Low
High
LowFiscal
year ended
US$
US$
US$
US$
$A
$AJune
30, 2018First Quarter
(through September 29, 2017)
0.01
0.01
-
-
0.04(1)
0.036(1)June
30, 2017




0.04(1)
0.036(1)First
Quarter
0.06
0.02
-
-
0.04(1)
0.036(1)Second
Quarter
0.03
0.02
-
-
0.04(1)
0.036(1)Third
Quarter
0.02
0.02
-
-
0.04(1)
0.036(1)Fourth
Quarter
0.02
0.01
-
-
0.04(1)
0.036(1)June
30, 2016




0.04(1)
0.036(1)First
Quarter
0.06
0.03
-
-
0.07
0.04Second
Quarter
0.06
0.02
-
-
0.06
0.03Third
Quarter
0.06
0.02
-
-
0.04
0.03Fourth
Quarter
0.04
0.02
-
-
0.04
0.03June
30, 2015First
Quarter
0.02
0.01
-
-
0.01
0.01Second
Quarter
0.02
0.01
-
-
0.01
0.01Third
Quarter
0.16
0.01
-
-
0.26
0.001Fourth
Quarter
0.12
0.03
-
-
0.15
0.04June
30, 2014First
Quarter
0.02
0.01
-
-
0.01
0.01Second
Quarter
0.06
0.01
-
-
0.05
0.01Third
Quarter
0.03
0.01
-
-
0.03
0.01Fourth
Quarter
0.02
0.01
-
-
0.01
0.01Month
endedApril
2017
0.02
0.01
-
-
0.04(1)
0.036(1)May
2017
0.02
0.01
-
-
0.04(1)
0.036(1)June
2017
0.01
0.01
-
-
0.04(1)
0.036(1)July
2017
0.01
0.01
-
-
0.04(1)
0.036(1)August
2017
0.02
0.02
-
-
0.04(1)
0.036(1)Fiscal
year ended June 30,2017
0.06
0.01
-
-
0.04(1)
0.036(1)2016
0.07
0.02
-
-
0.07
0.032015
0.12
0.035
-
-
0.15
0.042014
0.023
0.007
-
-
0.01
0.012013
0.02
0.02
-
-
0.05
0.052012
0.07
0.06
-
-
0.08
0.07








The
table above presents, for the periods indicated, the high and low
market prices for our ordinary shares reported on the ASX (symbol:
“MBT”) and the NASDAQ (symbol: MNEL) and the OTC
Markets Pink Sheets (symbol: MNELF) for the periods indicated. Our
ordinary shares were delisted from trading on the Nasdaq on July 9,
2012.


(1) Our ordinary
shares were suspended from trading on the ASX on 25 November 2016.
All prices for the ASX values are in Australian dollars and do not
give effect to the 50-1 share consolidation that became effective
on April 4, 2011. All prices for the NASDAQ and OTC are in US
Dollars.








B.
 Plan
of Distribution.





Not
applicable.





C.
 Markets.





See
“Item 9.A—The Offer and Listing—Offer and Listing
Details.”





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.





Our Constitution





We are
a public company limited by shares registered under the
Corporations Act by the Australian Securities and Investments
Commission, or ASIC. Our constituent document is a Constitution,
which is similar in nature to the by-laws of a company incorporated
under the laws of a U.S. state. Our Constitution does not provide
for or prescribe any specific objectives or purposes of Mission
NewEnergy. Our Constitution is subject to the terms of the ASX
Listing Rules and the Corporations Act. Our Constitution may be
amended or repealed and replaced by special resolution of
shareholders, which is a resolution passed by at least 75% of the
votes cast by shareholders entitled to vote on the
resolution.





Under
Australian law, a company has the legal capacity and powers of an
individual both inside and outside Australia. The material
provisions of our Constitution are summarized below. This summary
is not intended to be complete, nor to constitute a definitive
statement of the rights and liabilities of our shareholders and is
qualified in its entirety by reference to the Constitution, which
is available on request.





Directors





Interested Directors





Except
where permitted by the Corporations Act, a director may not vote in
respect of any contract or arrangement in which the director has,
directly or indirectly, any material interest according to our
Constitution. Such director must not be counted in a quorum, must
not vote on the matter and must not be present at the meeting while
the matter is being considered.





Unless
a relevant exception applies, the Corporations Act requires
directors of Mission NewEnergy to provide disclosure of certain
interests and prohibits directors of companies listed on the ASX
from voting on matters in which they have a material personal
interest and from being present at the meeting while the matter is
being considered. In addition, the Corporations Act and the ASX
Listing Rules require shareholder approval of any provision of
related party benefits to our directors.











Directors’ Compensation





Our
directors are paid remuneration for their services as directors,
which is determined in a general meeting of shareholders. The
aggregate, fixed sum for directors’ remuneration is to be
divided among the directors in such proportion as the directors
themselves agree, and in accordance with our Constitution. The
fixed sum remuneration for directors may not be increased except at
a general meeting of shareholders and the particulars of the
proposed increase are required to have been provided to
shareholders in the notice convening the meeting. In addition,
executive directors may be paid remuneration as employees of
Mission NewEnergy.





Pursuant to our
Constitution any director who devotes special attention to our
business or who otherwise performs services which in the opinion of
our Board are outside the scope of the ordinary duties of a
director may be paid extra remuneration which is determined by the
Board.





In
addition to other remuneration provided in our Constitution, all
directors are entitled to be paid by us for reasonable travel
accommodation and other expenses incurred by the directors in
attending company meetings, board meetings, committee meetings or
while engaged on our business.





Additionally in
accordance with our Constitution, a director may be paid a
retirement benefit as determined by the Board subject to the limits
set out in the Corporations Act and the ASX Listing
Rules.





Borrowing Powers Exercisable by Directors





Pursuant to our
Constitution, the management and control of our business affairs
are vested in our Board. The Board has the power to raise or borrow
money. The Board may also charge any of our property or business or
any uncalled capital and may issue debentures or give any other
security for any of our debts, liabilities or obligations or of any
other person, in each case, in the manner and on terms it deems
fit.





Retirement of directors





Pursuant to our
Constitution, one third of directors other than the director who is
the Chief Executive Officer, must retire from office at every
annual general meeting. If the number of directors is not a
multiple of three then the number nearest to but not less than one
third must retire from office. The directors who retire in this
manner are required to be the directors or director longest in
office since last being elected. A director, other than the
director who is the Chief Executive Officer, must retire from
office at the conclusion of the third annual general meeting after
which the director was elected.





Share Qualifications





Our
Constitution provides that we may fix a share qualification for our
directors in general meeting. However, there are currently no
requirements for directors to own our shares in order to qualify as
directors.





Rights and Restrictions on Classes of Shares





Subject
to the Corporations Act and the ASX Listing Rules, rights attaching
to our shares are detailed in our Constitution. Our Constitution
provides that any of our shares may be issued with preferred,
deferred or other special rights, whether in relation to dividends,
voting, return of share capital, payment of calls or otherwise as
the Board may determine from time to time. Except as provided by
contract or by our Constitution to the contrary, all unissued
shares are under the control of the Board which may grant options
on the shares, allot or otherwise dispose of the shares on the
terms and conditions and for the consideration it deems fit.
Currently our outstanding share capital consists of only one class
of ordinary shares.





Dividend Rights





The
Board may from time to time determine to pay dividends to
shareholders. All unclaimed dividends may be invested or otherwise
made use of by the Board for our benefit until claimed or otherwise
disposed of in accordance with our Constitution.





Voting Rights





Under
our Constitution, each shareholder has one vote determined by a
show of hands at a meeting of the shareholders. On a poll vote each
shareholder shall have one vote for each fully paid share and a
fractional vote for each share which is not fully paid, such
fraction being equivalent to the proportion of the amount which has
been paid to such date on that share. Under Australian law,
shareholders of a public company are not permitted to approve
corporate matters by written consent. Our Constitution does not
provide for cumulative voting.





Right to Share in our Profits





Subject
to the Corporations Act and pursuant to our Constitution, our
shareholders are entitled to participate in our profits only by
payment of dividends. The Board may from time to time determine to
pay dividends to the shareholders, however no dividend is payable
except out of our profits. A declaration by the Board as to the
amount of our profits is conclusive.





Rights to Share in the Surplus in the Event of
Liquidation





Our
Constitution provides for the right of shareholders to participate
in a surplus in the event of our liquidation. In certain
circumstances, any division may be otherwise than in accordance
with the legal rights of the contributories, and in particular, any
class may be given preferential or special rights or may be
excluded altogether or in part from participation in a surplus in
the event of liquidation.





Redemption Provisions





There
are no redemption provisions in our Constitution in relation to
ordinary shares. Under our Constitution and subject to the
Corporations Act, any preference shares may be issued on the terms
that they are, or may at our option be, liable to be
redeemed.





Sinking Fund Provisions





There
are no sinking fund provisions in our Constitution in relation to
ordinary shares.





Liability for Further Capital Calls





According to our
Constitution, the Board may make any calls from time to time upon
shareholders in respect of all monies unpaid on partly-paid shares,
subject to the terms upon which any of the partly-paid shares have
been issued. Each shareholder is liable to pay the amount of each
call in the manner, at the time, and at the place specified by the
Board. Calls may be made payable by installment.





Provisions Discriminating Against Holders of a Substantial Number
of Shares





There
are no provisions under our Constitution discriminating against any
existing or prospective holders of a substantial number of our
shares.





Variation of Share Rights





Our
Constitution provides that, unless otherwise provided by the terms
of issue of the shares of such class, the rights attaching to any
class of shares may, subject to the ASX Listing Rules, be varied
with the consent in writing of members with at least 75% of the
votes in the class or with the sanction of a special resolution
passed at a separate meeting of the holders of the shares of such
class. These conditions are not more significant than that required
by the Corporations Act.





General Meetings of Shareholders





General
meetings of shareholders may be called by the Board. Except as
permitted under the Corporations Act, shareholders may not convene
a meeting. Under the Corporations Act, shareholders with at least
5% of the votes which may be cast at a general meeting may call and
arrange to hold a general meeting. The Corporations Act requires
the directors to call and arrange to hold a general meeting on the
request of shareholders with at least 5% of the votes that may be
cast at a general meeting or at least 100 shareholders who are
entitled to vote at the general meeting. Twenty-eight days notice
of the proposed meeting of our shareholders is required under the
Corporations Act.





According to our
Constitution, the chairman of the general meeting may refuse
admission to or exclude from the meeting, any person who is in
possession of a picture recording or sound recording device, in
possession of a placard or banner, in possession of an object
considered by the chairman to be dangerous, offensive or liable to
cause disruption, any person who refuses to produce or permit
examination of any object, any person who behaves or threatens to
behave in a dangerous, offensive or destructive manner, or any
person who is not a director or one of our auditors, one of our
shareholders or a proxy, attorney or representative of one of our
shareholders.











Foreign Ownership Regulation





There
are no limitations on the rights to own securities imposed by our
Constitution. However, acquisitions and proposed acquisitions of
shares in Australian companies may be subject to review and
approval by the Australian Federal Treasurer under the Foreign
Acquisitions and Takeovers Act 1975 (Commonwealth of Australia).
Generally this Act applies to acquisitions or proposed
acquisitions:





●
by a
foreign person, as defined in the Foreign Acquisitions and
Takeovers Act, or associated foreign persons which would result in
such persons having an interest in 15% or more of the issued shares
of, or control of 15% or more of the voting power in, an Australian
company; and





●
by
non-associated foreign persons which would result in such foreign
person having an interest in 40% or more of the issued shares of,
or control of 40% or more of the voting power in, an Australian
company.





The
Australian Federal Treasurer may prevent a proposed acquisition in
the above categories or impose conditions on such acquisition if
the Treasurer is satisfied that the acquisition would be contrary
to the national interest. If a foreign person acquires shares or an
interest in shares in an Australian company in contravention of the
Act, the Australian Federal Treasurer may order the divestiture of
such person’s shares or interest in shares in the company.
The Australian Federal Treasurer may order divestiture pursuant to
the Act if he determines that the acquisition has resulted in that
foreign person, either alone or together with other non-associated
or associated foreign persons, controlling the company and that
such control is contrary to the national interest.





Ownership Threshold





There
are no provisions in our Constitution that require a shareholder to
disclose ownership above a certain threshold. The Corporations Act,
however, requires a substantial shareholder to notify us and the
Australian Securities Exchange once a 5% interest in our shares is
obtained. Further, once a shareholder owns a 5% interest in us,
such shareholder must notify us and the Australian Securities
Exchange of any increase or decrease of 1% or more in its holding
of our shares. Such major shareholders are also required to file a
notice with the SEC on Schedule 13D or Schedule 13G.





Issues of shares and Change in Capital





Subject
to our Constitution, the Corporations Act, the ASX Listing Rules
and any other applicable law, we may at any time issue shares and
grant options or warrants on any terms, with preferred, deferred or
other special rights and restrictions and for the consideration and
other terms that the directors determine. Our power to issue shares
includes the power to issue bonus shares (for which no
consideration is payable to Mission NewEnergy), preference shares
and partly paid shares.





Subject
to the requirements of our Constitution, the Corporations Act, the
ASX Listing Rules and any other applicable law, including relevant
shareholder approvals, we may consolidate or divide our share
capital into a larger or smaller number by resolution, reduce our
share capital (provided that the reduction is fair and reasonable
to our shareholders as a whole, and does not materially prejudice
our ability to pay creditors) or buy-back our shares whether under
an equal access buy-back or on a selective basis.





Change of Control





Takeovers of listed
Australian public companies, such as Mission NewEnergy, are
regulated by, amongst other things, the Corporations Act which
prohibits the acquisition of a relevant interest in issued voting
shares in a listed company if the acquisition will lead to that
person’s or someone else’s voting power in the company
increasing from 20% or below to more than 20% or increasing from a
starting point that is above 20% and below 90%, subject to a range
of exceptions.





Generally, and
without limitation, a person will have a relevant interest in
securities if they:





●
are the
holder of the securities;





●
have
power to exercise, or control the exercise of, a right to vote
attached to the securities; or





●
have
the power to dispose of, or control the exercise of a power to
dispose of, the securities (including any indirect or direct power
or control).





If at a
particular time a person has a relevant interest in issued
securities and the person:





●
has
entered or enters into an agreement with another person with
respect to the securities;





●
has
given or gives another person an enforceable right, or has been or
is given an enforceable right by another person, in relation to the
securities; or





●
has
granted or grants an option to, or has been or is granted an option
by, another person with respect to the securities,and the other
person would have a relevant interest in the securities if the
agreement were performed, the right enforced or the option
exercised, the other person is taken to already have a relevant
interest in the securities.





There
are a number of exceptions to the above prohibition on acquiring a
relevant interest in issued voting shares above 20%. In general
terms, some of the more significant exceptions
include:





●
when
the acquisition results from the acceptance of an offer under a
formal takeover bid;





●
when
the acquisition is conducted on market by or on behalf of the
bidder under a takeover bid and the acquisition occurs during the
bid period;





●
when
shareholders of the company approve the takeover by resolution
passed at general meeting;





●
an
acquisition by a person if, throughout the 6 months before the
acquisition, that person, or any other person, has had voting power
in the company of at least 19% and as a result of the acquisition,
none of the relevant persons would have voting power in the company
more than 3 percentage points higher than they had 6 months before
the acquisition;





●
as a
result of a rights issue;





●
as a
result of dividend reinvestment schemes;





●
as a
result of underwriting arrangements;





●
through
operation of law;





●
an
acquisition which arises through the acquisition of a relevant
interest in another listed company;





●
arising
from an auction of forfeited shares; or





●
arising
through a compromise, arrangement, liquidation or
buy-back.





Breaches of the
takeovers provisions of the Corporations Act are criminal offences.
ASIC and the Australian Takeover Panel have a wide range of powers
relating to breaches of takeover provisions including the ability
to make orders canceling contracts, freezing transfers of, and
rights attached to, securities, and forcing a party to dispose of
securities. There are certain defenses to breaches of the takeovers
provisions provided in the Corporations Act.





Proportional Takeovers





Our
Constitution indicates that where offers to purchase our shares
have been made under a proportional takeover scheme, we are
prohibited from registering, other than where a transfer is
effected in accordance with the takeover provisions (if any) under
the ASTC Settlement Rules, a transfer which would give effect to
the contract resulting from the acceptance of such an offer unless
and until a resolution to approve the proportional takeover scheme
is approved at a meeting by the persons entitled to vote on such
resolution. The offeror or an associate of the offeror is not
entitled to vote on such resolution. A person, other than an
offeror or associate of the offeror, who, as at the end of the day
in which the first offer under the proportional takeover scheme was
made, held shares in that class of shares, is entitled to one vote
for each of the shares held in that class.





Access to and Inspection of Documents





Inspection of our
records is governed by the Corporations Act. Any member of the
public has the right to inspect or obtain copies of our registers
on the payment of a prescribed fee. Shareholders are not required
to pay a fee for inspection of our registers or minute books of the
meetings of shareholders. Other corporate records including minutes
of directors meetings, financial records and other documents are
not open for inspection by shareholders. Where a shareholder is
acting in good faith and an inspection is deemed to be made for a
proper purpose, a shareholder may apply to the court to make an
order for inspection of our books.











C.
 Material
Contracts.





We have
not entered into any material contracts other than in the ordinary
course of business and other than those described in “Item
4—Information on the Company” or elsewhere in this
annual report on Form 20-F.





D.
 Exchange
Controls.





Under
existing Australian legislation, the Reserve Bank of Australia does
not prohibit the import and export of funds, and generally no
governmental permission is required for us to move funds in and out
of Australia. However, for the movement of funds to and from
“tax havens,” as specified by current regulations, a
tax clearance certificate must be obtained. The United States is
not a declared tax haven. Accordingly, at the present time,
remittances of any dividends, interest or other payments by us to
non-resident holders of our securities in the United States are not
restricted by exchange controls.





E.
 Taxation.





The following is a summary of material U.S. federal and Australian
income tax considerations to U.S. holders, as defined below, of the
acquisition, ownership and disposition of ordinary shares. This
discussion is based on the laws in force as at the date of this
annual report, and is subject to changes in the relevant income tax
law, including changes that could have retroactive effect. The
following summary does not take into account or discuss the tax
laws of any country or other taxing jurisdiction other than the
United States and Australia. Holders are advised to consult their
tax advisors concerning the overall tax consequences of the
acquisition, ownership and disposition of ordinary shares in their
particular circumstances. This discussion is not intended, and
should not be construed, as legal or professional tax
advice.





This summary does not describe U.S. federal estate and gift tax
considerations, or any state and local tax considerations within
the United States, and is not a comprehensive description of all
U.S. federal or Australian income tax considerations that may be
relevant to a decision to acquire or dispose of ordinary shares.
Furthermore, this summary does not address U.S. federal or
Australian income tax considerations relevant to holders subject to
taxing jurisdictions other than or in addition to the United States
and Australia, and does not address all possible categories of
holders, some of which may be subject to special tax
rules.








U.S. Federal Income Tax Considerations





In this
section, we discuss material U.S. federal income tax considerations
applicable to an investment in ordinary shares by a U.S. holder, as
defined below, that will hold the ordinary shares as capital assets
within the meaning of Section 1221 of the Code. We do not discuss
the tax consequences to any particular holder nor any tax
considerations that may apply to holders subject to special tax
rules, such as banks, insurance companies, individual retirement
and other tax-deferred accounts, regulated investment companies,
individuals who are former U.S. citizens or former long-term U.S.
residents, dealers in securities or currencies, tax-exempt
entities, persons subject to the alternative minimum tax, persons
that hold ordinary shares as a position in a straddle or as part of
a hedging, constructive sale or conversion transaction for U.S.
federal income tax purposes, persons that have a functional
currency other than the U.S. dollar, persons that own (directly,
indirectly or constructively) 10% or more of our equity or persons
that are not U.S. holders.





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





●
an
individual who is a citizen or resident of the United States for
U.S. federal income tax purposes;





●
a
corporation, or other entity treated as a corporation for U.S.
federal income tax purposes, created or organized in or under the
laws of the United States or any state thereof or the District of
Columbia;





●
an
estate the income of which is subject to U.S. federal income
taxation regardless of its source; or





●
a trust
(i) the administration of which is subject to the primary
supervision of a court in the United States and for which one or
more U.S. persons have the authority to control all substantial
decisions or (ii) that has an election in effect under applicable
income tax regulations to be treated as a U.S. person.





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





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





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








Dividends





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





Subject
to the passive foreign investment company rules, certain dividends
received by an individual U.S. holder (as well as certain trusts
and estates) from a “qualified foreign corporation” are
eligible for a preferential U.S. federal income tax rate (20%),
subject to certain minimum holding period requirements and other
limitations. A foreign corporation may be a “qualified
foreign corporation” if (it is eligible for the benefits of a
comprehensive income tax treaty with the United States which the
U.S. Secretary of Treasury determines is satisfactory for this
purpose and which includes an exchange of information program. We
expect to be considered a qualified foreign corporation with
respect to our ordinary shares because we believe we are eligible
for the benefits under the Double Taxation Convention between
Australia and the United States. Accordingly, dividends we pay
generally should be eligible for the reduced income tax rate.
However, the determination of whether a dividend qualifies for the
preferential tax rates must be made at the time the dividend is
paid. U.S. holders should consult their own tax
advisers.





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





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





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





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





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











Sale or Exchange of Ordinary Shares





Subject
to the passive foreign investment company rules, discussed below, a
U.S. holder generally will, for U.S. federal income tax purposes,
recognize capital gain or loss on a sale, exchange or other
disposition of ordinary shares equal to the difference between the
amount realized on the disposition and the U.S. holder’s tax
basis in the ordinary shares. This gain or loss recognized on a
sale, exchange or other disposition of ordinary shares will
generally be long-term capital gain or loss if the U.S. holder has
held the ordinary shares for more than one year. Generally, for
U.S. holders who are individuals (as well as certain trusts and
estates), long-term capital gains are subject to U.S. federal
income tax at preferential rates. For foreign tax credit limitation
purposes, gain or loss recognized upon a disposition generally will
be treated as from sources within the United States. The
deductibility of capital losses is subject to limitations for U.S.
federal income tax purposes.





You
should consult your own tax advisor regarding the availability of a
foreign tax credit or deduction in respect of any Australian tax
imposed on a sale or other disposition of ordinary shares. See
“Australian Tax Considerations — Tax on Sales or other
Dispositions of Shares.”





Passive Foreign Investment Company Considerations





The
Code provides special, generally adverse, rules regarding certain
distributions received by U.S. holders with respect to, and sales,
exchanges and other dispositions, including pledges, of shares of
stock of, a passive foreign investment company, or PFIC. A foreign
corporation will be treated as a PFIC for any taxable year if at
least 75% of its gross income for the taxable year is passive
income or at least 50% of its gross assets during the taxable year,
based on a quarterly average and generally by value, produce or are
held for the production of passive income. Passive income for this
purpose generally includes, among other things, dividends,
interest, rents, royalties, gains from commodities and securities
transactions and gains from assets that produce passive income. In
determining whether a foreign corporation is a PFIC, a pro-rata
portion of the income and assets of each corporation in which it
owns, directly or indirectly, at least a 25% interest (by value) is
taken into account.





The
determination of whether or not we are a PFIC is a factual
determination that must be determined annually at the close of each
taxable year. Based on our business results for the last fiscal
year and composition of our assets, we believe that we may be a
PFIC for U.S. federal income tax purposes for the taxable year
ended June 30, 2015. Similarly, based on our business projections
and the anticipated composition of our assets for the current and
future years, we may be a PFIC for the taxable year ended June 30,
2016. It is also possible that we may become a PFIC in any future
taxable year.





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





●
the
excess distribution or gain will be allocated ratably over the U.S.
holder’s holding period for the ordinary shares;





●
the
amount allocated to the current taxable year, and any taxable year
prior to the first taxable year in which we were a PFIC, will be
treated as ordinary income; and





●
the
amount allocated to each other year will be subject to income tax
at the highest rate in effect for that year and the interest charge
generally applicable to underpayments of tax will be imposed on the
resulting tax attributable to each such year.





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





If we
are a PFIC for any taxable year during which any of our non-United
States subsidiaries is also a PFIC, a U.S. holder of ordinary
shares during such year would be treated as owning a proportionate
amount (by value) of the shares of the lower-tier PFIC for purposes
of the application of these rules to such subsidiary. You should
consult your tax advisors regarding the tax consequences if the
PFIC rules apply to any of our subsidiaries.





Unless
otherwise provided by the U.S. Treasury, each U.S. shareholder of a
PFIC is required to file a Form 8621 and such other form as the
U.S. Treasury may require. If we are or become a PFIC, you should
consult your tax advisors regarding any reporting requirements that
may apply to you as a result of our status as a PFIC.





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





Alternatively, a
U.S. holder owning marketable stock in a PFIC may make a
mark-to-market election to elect out of the tax treatment discussed
above. If a valid mark-to-market election for the ordinary shares
is made, the electing U.S. holder will include in income each year
an amount equal to the excess, if any, of the fair market value of
the ordinary shares as of the close of the holder’s taxable
year over the adjusted basis in such ordinary shares. The U.S.
holder is allowed a deduction for the excess, if any, of the
adjusted basis of the ordinary shares over their fair market value
as of the close of the holder’s taxable year. Deductions are
allowable, however, only to the extent of any net mark-to-market
gains on the ordinary shares included in the U.S. holder’s
income for prior taxable years. Amounts included in the U.S.
holder’s income under a mark-to-market election, as well as
gain on the actual sale or other disposition of the ordinary
shares, are treated as ordinary income. Ordinary loss treatment
also applies to the deductible portion of any mark-to-market loss
on the ordinary shares, as well as to any loss realized on the
actual sale or disposition of the ordinary shares, to the extent
the amount of such loss does not exceed the net mark-to-market
gains previously included for such ordinary shares. The tax basis
in the ordinary shares will be adjusted to reflect any such income
or loss amounts. A mark-to-market election will be effective for
the taxable year for which the election is made and all subsequent
taxable years unless the ordinary shares are no longer regularly
traded on an applicable exchange or the Internal Revenue Service
(“IRS”) consents to the revocation of the
election.





The
mark-to-market election is available only for stock which is
regularly traded on (i) a national securities exchange that is
registered with the U.S. Securities and Exchange Commission, (ii)
NASDAQ, or (iii) an exchange or market that the U.S. Secretary of
the Treasury determines has rules sufficient to ensure that the
market price represents a legitimate and sound fair market value.
Our ordinary shares are listed on the ASX and, consequently, we
expect that, assuming the ordinary shares are so listed and are
regularly traded, the mark-to-market election would be available to
you were we to be or become a PFIC.








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





Net Investment Income Tax





Certain
U.S. Holders who are individuals, estates, or trusts must pay a
3.8% tax on, among other things, dividends and capital gains from
the sale or other disposition of shares of common
stock.





Backup Withholding Tax and Information Reporting
Requirements





U.S.
holders that are “exempt recipients” (such as
corporations) generally will not be subject to U.S. backup
withholding tax and related information reporting requirements on
payments of dividends on, and the proceeds from the disposition of,
ordinary shares unless, when required, they fail to demonstrate
their exempt status. Other U.S. holders (including individuals)
generally will be subject to U.S. backup withholding tax at the
applicable statutory rate, currently 28%, in respect of any
payments of dividends on, and the proceeds from the disposition of,
ordinary shares if they fail to furnish their correct taxpayer
identification number or otherwise fail to comply with applicable
backup withholding requirements. Information reporting requirements
generally will apply to payments of dividends on, and the proceeds
from the disposition of, ordinary shares to a U.S. holder that is
not an exempt recipient. U.S. holders who are required to establish
their exempt status generally must provide IRS Form W-9 (Request
for Taxpayer Identification Number and Certification).





Backup
withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against a U.S. holder’s U.S.
federal income tax liability. A U.S. holder may obtain a refund of
any amounts withheld under the backup withholding rules by filing
the appropriate claim for refund with the Internal Revenue Service
in a timely manner and furnishing any required
information.





U.S.
holders are urged to contact their own tax advisors as to their
qualification for an exemption from backup withholding tax and the
procedure for obtaining this exemption.





Certain
U.S. Holders who are individuals may be required to report
information relating to an interest in our ordinary shares, subject
to certain exceptions. U.S. Holders are urged to consult their tax
advisers regarding their reporting obligation in connection with
their ownership and disposition of our ordinary
shares.





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











Australian Tax Considerations





In this
section, we discuss the material Australian income tax
considerations related to the acquisition, ownership and disposal
by the absolute beneficial owners of the ordinary shares. 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 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 transfer 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 the shares. This summary is based upon
the premise that the holder is not an Australian tax
resident.





Taxation of Dividends





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





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





Tax on Sales or other Dispositions of Shares — Capital gains
tax





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





Foreign
Shareholder who, together with associates, owns a 10% or more
interest would be subject to Australian capital gains tax if more
than 50% of our direct or indirect assets determined by reference
to market value, consists of Australian land, leasehold interests
or Australian mining, quarrying or prospecting rights. Double
Taxation Convention between the United States and Australia is
unlikely to limit the amount of this taxable gain. Australian
capital gains tax applies to net capital gains at a
taxpayer’s marginal tax rate but for certain shareholders a
discount of the capital gain may apply if the shares have been held
for 12 months or more. For individuals, this discount is 50%, which
may not be available for non-resident shareholders. Net capital
gains are calculated after reduction for capital losses, which may
only be offset against capital gains. Non-resident shareholders are
urged to obtain tax advise as required.





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





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





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





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





Transfer Duty





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





Australian Death Duty





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





Goods and Services Tax





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





F.
 Dividends
and Paying Agents.





Not
applicable.





G.
 Statement
by Experts.





Not
applicable.





H.
 Documents
on Display.





We are
subject to the periodic reporting and other informational
requirements of the Exchange Act as applicable to foreign private
issuers. Under the Exchange Act, we are required to file reports,
including annual reports on Form 20-F, and other information with
the SEC. All information filed with the SEC is available through
the SEC’s Electronic Data Gathering, Analysis and Retrieval
system (EDGAR), which may be accessed through the SEC’s
website at www.sec.gov. Information filed with the SEC may also be
inspected and copied at the public reference room maintained by the
SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request
copies of these documents upon payment of a duplicating fee, by
writing to the SEC. Please visit the SEC’s website at
www.sec.gov for further information on the SEC’s public
reference room.





As a
foreign private issuer, we are exempt under the Exchange Act from,
among other things, the rules prescribing the furnishing and
content of proxy statements, and our executive officers, directors
and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of
the Exchange Act.








I.
 Subsidiary
Information





Not
applicable.














Item 11. Quantitative and
Qualitative Disclosures About Market Risk





Our
business activities are exposed to a variety of market risks,
including credit risk, foreign currency risk, interest rate risk
and commodity risk.





Credit Risk





There
is no credit risk for receivables at June 30, 2017 in the refining
operations.





Foreign Exchange Risk





The
Group operates internationally through a number of subsidiaries and
is thus exposed to fluctuations in foreign currencies, arising from
the foreign currencies held in its bank accounts, the sale of goods
in currencies other than the Group’s measurement currency,
and the translation of results from investments in foreign
operations. The foreign exchange exposures are primarily to the
Malaysian Ringgit and the US dollar.





Foreign
exchange risks arising from the sale of products may be hedged
using forward exchange contracts.





Foreign
currency risks arising from commitments in foreign currencies are
managed by holding cash in that currency. Foreign currency
translation risk is not hedged, with translation differences being
reflected in the foreign currency translation reserve.





Group
sensitivity





At June
30, 2017, if foreign currencies had changed by -/+ 10%, with all
other variables held constant, the following financial impacts
would have been recorded by the Group:





Effect
on cash and cash equivalent – A$ 6,229 lower/ A$ 18,624
higher (2016:A$ 167,019 lower/ A$16,877 higher)





Profit
and Loss would have been – A$ 6,229 lower/ A$ 18,624 higher
(2016:A$ 167,019 lower/ A$16,877 higher)





Hedging
of Foreign Currency Risk





At
financial report date the Group had no forward exchange contracts
in place.





Interest Rate Risk





Interest rate risk
has historically been managed with a mixture of fixed and floating
rate deposits, fixed rate convertible note debt and floating rate
debt. For further details on interest rate risk refer to the table
below under liquidity risk. The group has no debt at June 30,
2017.





Group sensitivity





At 30
June 2017, if interest rates had changed by -/+ 25 basis points,
with all other variables held constant, the following financial
impacts would have been recorded by the Group;


●     Effect
on post tax profit – A$ Nil lower/higher (2016: A$ Nil
lower/higher)


●     Equity
would have been – A$ Nil lower/higher (2016: A$ Nil
lower/higher)





Commodity Risk





As
there was no inventory held as at June 30, 2017, the Group has no
exposure to market prices of input costs into the production of
biodiesel.

















Item 12. Description of Securities Other than Equity
Securities





A.
 Debt
Securities.





Not
applicable.





B.
 Warrants
and Rights.





Not
applicable.





C.
 Other
Securities.





Not
applicable.





D.
 American
Depositary Shares.





Not
applicable.





PART II





Item 13. Defaults, Dividend
Arrearages and Delinquencies





None.








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.





The
following “Use of Proceeds” information relates to our
initial U.S. public offering of 2,785,000 ordinary shares at a
public offering price of US$9.00 per share, thereby raising gross
proceeds of approximately US$25.1 million. The registration
statement on Form F-1 (File No. 333-170471) for our initial public
offering was declared effective by the SEC on April 19, 2011. On
April 26, 2011, we completed our public offering after 2,785,000
ordinary shares were sold. Chardan Capital Markets, LLC, Rodman
& Renshaw, LLC, Maxim Group LLC and Northland Capital Markets
were the underwriters for our initial public offering. We received
net proceeds (after deducting underwriting discounts and
commissions and other expenses related to the offering) of
approximately $US22,228,504. None of the above expenses included
direct or indirect payments to directors or officers of our company
or their associates, persons owning 10% or more of our equity
securities or our affiliates. The underwriters did not exercise
their overallotment option.





From
April 19, 2011, effective date of our registration statement on
Form F-1 for the offering, to June 30, 2011, we used approximately
US$0.8 million proceeds for the expansion of our feedstock
operations, including but not limited to Jatropha acreage
expansion, approximately US$2.1 million for general corporate and
convertible note coupon purposes, and as of June 30, 2011, we had
approximately $16.7 million left from the net proceeds of the
offering. Approximately US$8.8 million of the cash at June 30, 2011
was held in the refining segment to meet working capital needs. In
2012 the Group used A$4.9m for operations, A$4.0 million for
capital expenditure and advances to related entities and A$5.5
million for debt redemption. We had A$1.5 million in cash on hand
at June 30, 2012. In 2013 the Group used A$3.7m for operations,
released A$2.3 million from sale of capital items and raised a net
A$1.4 million from debt facilities. We had A$1.4 million in cash on
hand at June 30, 2013. During fiscal 2014 the Group utilized a US$5
million funding facility to meet operating costs until the two
refineries were sold, at which stage the working capital facility
was settled, convertible note debt paid down and the balance
retained for ongoing working capital and investment
uses.





None of
the net proceeds from our initial public offering were paid
directly or indirectly to directors or officers of our company or
their associates, persons owning 10% or more of our equity
securities or our affiliates.





Item 15. Controls and
Procedures





A.
 Disclosure
Controls and Procedures.





Under
the supervision and with the participation of our management,
including the Chief Executive Officer and Chief Financial Officer,
we conducted an evaluation of the effectiveness of our disclosure
controls and procedures (as such term is defined in Rules 13a-15(e)
under the Exchange Act), as of June 30, 2015. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were
effective as of such date. Our disclosure controls and procedures
are designed to ensure that information required to be disclosed by
us in the reports that we file under the Exchange Act is recorded,
processed, summarized and reported within the time periods
specified in the SEC’s rules and forms and that such
information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely discussions regarding required
disclosure.





B.
 Management’s
Annual Report on Internal Control over Financial Reporting and
Attestation Report of the Registered Public Accounting
Firm.





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


Because
of its inherent limitations, internal control over financial
reporting 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.


The
Company’s management has evaluated the effectiveness of the
Company’s internal control over financial reporting as of
June 30, 2017 based upon criteria established in Internal Control
Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on the assessment,
the Company’s management, including its Chief Executive
Officer and Chief Financial Officer, concluded that, as of June 30,
2017, the Company’s internal control over financial reporting
was effective.


Changes
in Internal Control over Financial Reporting.


There
was no change in internal control over financial reporting during
the year ended June 30, 2017 that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting.











Item 16. [Reserved]





Item 16A. Audit Committee
Financial Expert





The
Board determined that Mr. James Garton is qualified as an Audit
Committee Financial Expert and all members are independent as
determined by the NASDAQ listing rules.





Item 16B. Code of
Ethics





Our
board of directors adopted a Code of Conduct for Directors and Key
Officers that applies to our directors, officers and employees. We
have posted a copy of our code of business conduct and ethics on
our investor relations website at
http://missionnewenergy.com.





Item 16C. Principal Accountant
Fees and Services





Audit Fees. The aggregate fees billed for professional
services rendered by the Company’s principal accountant for
the audit of the Company’s annual financial statements for
the fiscal years ended June 30, 2017 and 2016 were A$46,748 and
A$66,748, respectively.





All other Fees. A$0 and for the fiscal year ending 2017 and
A$0 in fiscal year 2016.





Tax Fees. The Company incurred fees totaling A$0 during the
fiscal year ended June 30, 2017 and 2016.





Audit-Related Fees. A$0 and for the fiscal years ending 2017
and 2016.





All
fees incurred by the Company in relation to audit and permissible
non–audit services are approved by the Audit and Risk
Management Committee prior to the expenditure being
incurred.





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
Disclosures





Not
applicable.





PART III





Item 17. Financial
Statements





See
Item 18.





Item 18. Financial
Statements





The
consolidated financial statements for Mission NewEnergy Limited and
its subsidiaries are included at the end of this annual
report.











Item 19. Exhibits





EXHIBIT
NUMBER

Description
of Exhibit1.1

Constitution of
Mission NewEnergy (incorporated by reference to Exhibit 3.1 of our
registration statement on Form F-1 (File No. 333-170471), as
amended, initially filed with the SEC on November 8,
2010).4.1

Form of Access,
Indemnity and Insurance Deed for Directors and Ex-Directors
(incorporated by reference to Exhibit 10.6 of our registration
statement on Form F-1 (File No. 333-170471), as amended, initially
filed with the SEC on November 8, 2010).4.2

Employment
agreement (as renewed) with Dato’ Nathan Mahalingam
(incorporated by reference to Exhibit 10.7 of our registration
statement on Form F-1 (File No. 333-170471), as amended, initially
filed with the SEC on November 8, 2010).4.3

Employment
agreement with Guy Burnett (incorporated by reference to Exhibit
10.8 of our registration statement on Form F-1 (File No.
333-170471), as amended, initially filed with the SEC on November
8, 2010).4.4

Employment
agreement with James Garton (incorporated by reference to Exhibit
10.9 of our registration statement on Form F-1 (File No.
333-170471), as amended, initially filed with the SEC on November
8, 2010).8.1
*
List of
Subsidiaries.12.1
*
Certification of
Chief Executive Officer pursuant to Rule 13(a)-14(a) of the
Securities Exchange Act of 1934, as amended.12.2
*
Certification of
Chief Financial Officer pursuant to Rule 13(a)-14(a) of the
Securities Exchange Act of 1934, as amended.13.1
*
Certification of
Chief Executive Officer and Chief Financial Officer pursuant to
Rule 13(a)-14 (b) of the Securities Exchange Act of 1934, as
amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, as amended.








*Filed
herewith.











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.





Mission
NewEnergy Limited





Date: October 31,
2017
 By:
 /s/ Guy
Burnett


Name:
 Guy
Burnett


Title:
 Chief Financial
Officer and Company Secretary























Tel:
+8 6382 4600
Fax:
+8 6382 4601
www.bdo.com.au
38
Station Street
Subiaco,
WA 6008
PO
Box 700 West Perth WA 6872
Australia











31
October 2017


Board
of Directors and Stockholders


Mission
NewEnergy Limited


SUBIACO,
WESTERN AUSTRALIA





Dear
Directors and Stockholders,





Report of Independent Registered Public Accounting
Firm





We have
audited the accompanying consolidated financial position of Mission
NewEnergy Limited as of June 30 2017 and
2016 and the related consolidated statements of profit or loss,
comprehensive income, changes in
equity and cash flows for each of the three years in the period
ended June 30 2017. These financial
statements are the responsibility of the Company’s
management. Our responsibility is to express an
opinion on these financial statements based on our
audits.





We
conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit
to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well
as evaluating the overall financial statement presentation. We
believe that our audits provide a
reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the
financial position of Mission NewEnergy Limited at June 30, 2017
and 2016, and the results of its
operations and its cash flows for each of the three years in the
period ended June 30 2017, in conformity
with International Financial Reporting Standards as issued by the
International Accounting
Standards Board.





Emphasis of Matter
Regarding Going Concern


The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a
going concern. As described in Note 2 to the consolidated financial
statements, the Company has
suffered recurring losses from operations that raise substantial
doubt about its ability to continue as a going
concern. Management’s plans in regard to these matters are
also described in Note 2.





The
consolidated financial statements do not include any adjustments
that might result from the outcome of this
uncertainty. Our opinion is not modified with respect to this
matter.





BDO
Audit (WA) Pty Ltd













Wayne Basford


Director





BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national
association of independent entities which are all members of BDO
Australia Ltd ABN 77 050 110 275, an Australian company limited by
guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members
of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member
firms. Liability limited by a scheme approved under Professional
Standards Legislation other than for the acts or omissions of
financial services licencees.











Audit
report - TO BE UPDATED





























FINANCIAL
STATEMENTS TABLE OF CONTENTS





PageCONSOLIDATED STATEMENT
OF PROFIT OR LOSS
38CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
40CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
41CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
42CONSOLIDATED STATEMENT
OF CASH FLOWS
43NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS
44HOW NUMBERS ARE
CALCULATED
441. Nature of
operations and general information
442. Basis of
preparation
443. New, revised or
amending Accounting Standards and Interpretations
adopted
444. New Accounting
Standards and Interpretations not yet mandatory or early
adopted
445. Segment
reporting
456.
Expenses
467. Income
Tax
468. Earnings per
share
479. Cash and cash
equivalents
4710. Trade and Other
Receivables
4711. Trade and Other
Payables
4712.
Provisions
4713. Issued
Capital
4714. Cash Flow
Information
48GROUP
STRUCTURE
4915. Investments in
subsidiaries, unconsolidated entities and
associates
49RISK
5016. Critical Accounting
Estimates and Judgments
5017. Financial Instruments
and Financial Risk Management
5118. Capital
Management
51UNRECOGNISED
ITEMS
5119. Capital and Leasing
Commitments
5120.
Contingent Liabilities
and Contingent Assets
5121.
Events occurring after
the reporting period
51OTHER
INFORMATION
5222. Remuneration of
Auditors
5223. Related
Parties
5224. Parent
entity information
5225. Company
Details
5226. Authorisation of
financial statements
52




















CONSOLIDATED STATEMENT OF PROFIT OR
LOSS


FOR
THE YEAR ENDED 30 JUNE 2017


Note
2017
2016
2015$
$
$Other
income

7,777
41,960
7,270,759Total
revenue

7,777
41,960
7,270,759Director and
Employee benefits expense
6a
(467,220)
(1,090,634)
(1,574,264)Net foreign
exchange (losses)/gains

(10,874)
(339,576)
3,240,119Consultants’
expenses

(13,017)
(9,301)
(16,333)Impairment of
receivable



(671,660)Regulatory
expenses

(40,228)
(28,645)
(67,589)Travel
expenses

(66,488)
(188,092)
(175,320)Rental
expenses

(11,986)
(17,039)
(10,136)Other
expenses
6b
(298,617)
(586,192)
(1,985,187)Depreciation and
amortisation expenses

(487)
(175)
(2,874)Finance Cost
– amortisation

-
-
(944,123)Finance
Costs

-
-
(870,703)Impairment of
investment in associate
16
(3,608,038)
-
-(Loss)/Profit
before income tax

(4,509,178)
(2,217,694)
4,192,689Income tax
expense
7
(3,252)
(844)
(5,497)(Loss)/Net
Profit before non-controlling interest

(4,512,430)
(2,218,538)
4,187,192Share of net
(loss)/profit of associate accounted for using the equity
method
15
(38,174)
(110,007)
37,510Gain for the year
from discontinued and deconsolidated operations

-
-
24,132,542(Loss)/Profit
for the year after tax

(4,550,604)
(2,328,545)
28,357,244Profit/(Loss)
attributable to:Owners of Mission
NewEnergy Ltd

(4,550,604)
(2,328,545)
28,357,244Non-controlling
interests

-
-
-(4,550,604)
(2,328,545)
28,357,244














CONSOLIDATED
STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2017
Contd.Earnings per share
from continuing operations
attributable to the
ordinary equity holders of the parent:Basic
(loss)/earnings per share (dollars)
8
(0.11)
(0.06)
0.13Diluted
(loss)/earnings per share (dollars)
8
(0.11)
(0.06)
0.13Earnings per share
from profits attributable to the
ordinary equity
holders of the parent:Basic
earnings/(loss) per share (dollars)
8
(0.11)
(0.06)
0.91Diluted
earnings/(loss) per share (dollars)
8
(0.11)
(0.06)
0.91





The above
Consolidated Statement of Profit or Loss should be read in
conjunction with the accompanying notes.








CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME


FOR
THE YEAR ENDED 30 JUNE 2017


2017
2016
2015$
$
$Profit/(Loss)
for the year
(4,550,604)
(2,328,545)
28,357,244Other
comprehensive incomeItems that may be
realised through profit or loss:Exchange
differences on translating foreign operations
(20,146)
324,255
(2,485,775)Other
comprehensive (loss)/income for the period net of tax
(20,146)
324,255
(2,485,775)Total
comprehensive loss for the year
(4,570,750)
(2,004,290)
25,871,469Attributable to
non-controlling equity interests
-
-
-Attributable
to owners of the parent
(4,570,750)
(2,004,290)
25,871,469Comprehensive
(loss)/income from Continuing Operations
(4,570,750)
(2,004,290)
1,738,927Comprehensive
income from Discontinued Operation
-
-
24,132,542





The above
Consolidated Statement of Comprehensive Income should be read in
conjunction with the accompanying notes.








CONSOLIDATED STATEMENT OF FINANCIAL
POSITION


AS
AT 30 JUNE 2017


Note
2017
2016$
$Current
AssetsCash and cash
equivalents
9
387,840
1,400,538Trade and other
receivables
10
6,134
1,117,594Other
assets

3,751
4,166Total current
assets

397,725
2,522,298Non-Current
AssetsProperty, plant and
equipment

1,748
2,455Investments
accounted for using the equity method
15
-
3,646,211Non-Current assets
held for sale
16
-
-Total non-current
assets

1,748
3,648,666Total
Assets

399,473
6,170,964Current
LiabilitiesTrade and other
payables
11
21,072
104,157Short-term
provisions
12
183,885
1,301,541Total
current liabilities

204,957
1,405,698Net
Assets

194,516
4,765,266











CONSOLIDATED
STATEMENT OF FINANCIAL POSITION Contd.Note
2017
2016$
$EquityIssued
capital
13
523,197
523,197Reserves

1,184,653
1,204,799Retained losses) /
earnings

(1,513,334)
3,037,270Total
Equity

194,516
4,765,266


The above
Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.











CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR
THE YEAR ENDED 30 JUNE 2017Ordinary
Share Capital
Retained
Earnings/ (losses)
Share
Based Payments Reserve
Foreign
Currency Translation Reserve
Total$
$
$
$
$Balance
as at 30 June 2015
523,197
5,365,815
150,000
730,544
6,769,556Loss after income
tax expense for the year
-
(2,328,545)
-
-
(2,328,545)Other Comprehensive
income for the period
-
-
-
324,255
324,255Total
Comprehensive Income
-
(2,328,545)
-
324,255
(2,004,290)Balance
as at 30 June 2016
523,197
3,037,270
150,000
1,054,799
4,765,266Transactions with
owners in their capacity as ownerLoss after income
tax expense for the year
-
(4,550,604)
-
-
(4,550,604)Other Comprehensive
income for the period
-
-
-
(20,146)
(20,146)Total
Comprehensive Income

(4,550,604)

(20,146)
(4,570,750)Balance
as at 30 June 2017
523,197
(1,513,334)
150,000
1,034,653
194,516








CONSOLIDATED STATEMENT OF CASH
FLOWS


FOR
THE YEAR ENDED 30 JUNE 2017


Note
2017
$
2016
$
2015
$Cash
Flows From Operating ActivitiesReceipts from
customers

-
-
3,840,439Payments to
suppliers and employees

(983,190)
(2,118,136)
(3,461,059)Interest
received

7,718
41,347
17,529Income tax
paid

(3,252)
(844
(5,445)Net cash generated
/ (used in) operating activities
14
(978,724)
(2,077,633)
391,464Cash
Flows From Investing ActivitiesPurchase of
property, plant and equipment

-
(2,618)
-Proceeds and
deposit from sale of assets

-
-
28,894,946Release of
performance bond and deposits

-
-
20,843Retention
released

1,056,870
-
-Payable associated
with retention released

(1,056,870)
-
-Settlement payment
of legal dispute

-
(4,040,886)
-Amounts
released/(placed) on deposit for legal dispute

-
4,040,886
(5,105,051)Asset sale
retention deposit

-
332,333
(354,610)Payments for
investment in Associate

-
-
(3,731,689)Cash balance from
deconsolidated operations

-
-
(32,648)Net cash provided
from investing activities

-
329,715
19,691,791Cash
Flows From Financing ActivitiesRepayments of
borrowings

-
-
(17,730,983)Net cash (used) by
financing activities

-
-
(17,730,983)Net
(Decrease) In Cash And Cash Equivalents

(978,724)
(1,747,918)
2,352,272Cash and cash
equivalents at beginning of the financial year

1,400,538
3,150,776
451,953Effects of exchange
rate fluctuations of cash held in foreign currencies

(33,974)
(2,320)
346,551Cash
And Cash Equivalents At End Of Financial Year
9
387,840
1,400,538
3,150,776


The above
Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.





NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


HOW NUMBERS ARE
CALCULATED


This section
provides additional information about those individual line items
in the financial statements that the Directors consider most
relevant in the context of the operations of the entity,
including:


(a) information and
accounting policies that are relevant for an understanding of the
items recognised in the financial statements. Accounting policies
specific to an item of disclosure are included with that disclosure
in these Financial Statements,


(b) analysis and
sub-totals, including segment information,


(c) information
about estimates and judgements made in relation to particular
items.


1.
 Nature of operations and general
information


Mission NewEnergy
Limited is a company domiciled in Australia (ACN: 117 065 719)
and:


●
 listed on the ASX
(MBT) with its operations in Malaysia. Currently the shares on the
ASX are in voluntary suspension pending the completion of a
proposed Reverse Take Over;


●
 that has a 20%
interest in an Associate owning a 250,000 tpa (approx. 75 million
gallon p.a.) biodiesel refinery, located in Malaysia, which is
expected to be retrofitted to produce biodiesel from lower cost
feedstock. This investment was equity accounted at 30 June 2016 and
classified as an associate within these financial statements with a
carrying value of $3.6 million (note 15). At 30 June 2017,
following a change in classification of this asset to held for
sale, the carrying value was written down to NIL (see note
16).





2.
 Basis of preparation


Statement
of compliance


The financial
report is a general purpose financial report which has been
prepared in accordance with Australian Accounting Standards
(AASB’s) (including Australian interpretations) issued by the
Australian Accounting Standards Board (AASB) and the Corporations
Act 2001. The consolidated financial report of the Group complies
with International Financial Reporting Standards (IFRSs) and
Interpretations issued by the International Accounting Standards
Board (IASB). Mission NewEnergy Limited is a for-profit entity for
the purpose of preparing the financial statements.


These accounting
policies have been consistently applied by each entity in the Group
and are consistent with those of the previous year.


Basis
of measurement


The financial
report has been prepared on an accruals basis and is based on
historical costs. All amounts shown are in Australian dollars ($A)
unless otherwise stated.


Significant matters


Going
concern


The Group realised a net operating loss for the
year ended 30 June 2017 of $4,550,604 (2016 : $2,328,545) and
incurred net cash outflows from operating activities of $978,724
(2016 : $2,077,633). At 30 June 2017 the Group had net working
capital of $192,768 (2016 : 1,116,600). At the date of 27 September 2017 the Group has a
cash balance of around $328,000 and net assets of around
$121,000.


The
ability of the Group to continue as a going concern is dependent on
securing additional funding through the issue of further equity
(either via an equity raise or via the proposed reverse takeover
transaction as discussed in the Directors report) or debt,
generating positive cash flows from new operations, and/or
realising cash through the sale of its 20% share in the
associate.


These conditions
indicate a material uncertainty that may cast a significant doubt
about the Group’s ability to continue as a going concern and,
therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of
business.


Management believe
there are sufficient funds to meet the Group’s working
capital requirements as at the date of this report, and that there
are reasonable grounds to believe that the Group will continue as a
going concern as a result of a combination of the following
reasons:


●
 raise additional
funding through debt and/or equity;


●
 reduction of
expenditure where Directors have agreed to not draw a fee or accrue
a salary;


●
 generate positive
cash flows from new operations; and


●
 realise cash
through the sale of its 20% share in
the associate.


Should the Group
not be able to continue as a going concern, it may be required to
realise its assets and discharge its liabilities other than in the
ordinary course of business, and at amounts that differ from those
stated in the financial statements. The financial report does
not include any adjustment relating to the recoverability and
classification of recorded assets or liabilities that might be
necessary should the entity note continue as a going
concern.


Carrying
value of investment in associate


The Group owns 100%
of M2 Capital Sdn Bhd, a Malaysian subsidiary, which owns a 20%
stake in FGV Green Energy Sdn Bhd (FGVGE), a refinery joint venture
company (see note 15).


FGVGE is continuing
with the process of assessing whether it will complete the retrofit
of the 250,000 tpa refinery and this assessment
includes:


●
 Assessing the
expected costs of the refurbishment to install the new technology
to the refinery to enable it to produce Biodiesel using lower
quality, and hence generally cheaper cost feedstock;


●
 Assessment of the
forecast profitability of the refinery given current oil prices,
feedstock prices and government incentives;


●
 Assessment of
financing options for the refurbishment of the refinery which is
currently made up of equity injected by each shareholder and
interim funding from FGV Capital; and


●
 Finalising a sales
off-take agreement.


FGVGE is currently
pursuing options to refinance the existing loan from FGV Capital
with third party debt financiers. The Board of FGVGE continues to
review the status of the project.


The Group’s
investment in associate is recorded at NIL (2016: $3,646,211),
please refer to note 15 and 16 for further
information.


Goods and Services Tax (GST)


Revenues, expenses
and assets are recognised net of the amount of GST, except where
the amount of GST incurred is not recoverable from the Australian
Tax Office. In these circumstances the GST is recognised as part of
the cost of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the statement of financial
position are shown inclusive of GST


Functional
and Presentation currency


The consolidated
financial statements are presented in Australian Dollars. The
functional currencies of the operating units are as
follows:


●
 Malaysian
investments (20% investment in Associate) - Malaysian
Ringgit


●
 Other –
Australian Dollar.


The Board of
Directors approved this financial report on 27 September
2017.





3.
 New, revised or amending Accounting
Standards and Interpretations adopted


The Group has
adopted all of the new, revised or amending Accounting Standards
and Interpretations issued by the AASB that are mandatory for the
current reporting period. The adoption of these Accounting
Standards and Interpretations did not have a material impact on the
financial performance or position of the consolidated
entity.


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





4.
 New Accounting Standards and
Interpretations not yet mandatory or early adopted


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 period ended 30 June 2017.
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 9 Financial Instruments


These
amendments must be applied for financial years commencing on or
after 1 January 2018. Therefore application date for the Company
will be 30 June 2019.


AASB 9 addresses
the classification, measurement and de-recognition of financial
assets and financial liabilities, it also sets out new rules for
hedge accounting. There will be no impact on the Company’s
classification or measurement for financial assets and financial
liabilities. Currently the Group holds no financial instruments
that would it would have paid the amortised cost for. The new
hedging rules align hedge accounting more closely with the
Company’s risk management practices. As a general rule it
will be easier to apply hedge accounting going forward. The new
standard also introduces expanded disclosure requirements and
changes in presentation. Currently the Group does not enter into
derivative contracts.


AASB 15 Revenue from Contracts with Customers


These amendments must be applied for annual
reporting periods beginning on or after 1 January 2018. Therefore
application date for the Company will be 30 June 2019.


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 those goods or services. This means that our Associate
once in production, will only recognize revenue when control of
goods or services is transferred, rather than on transfer of risks
and rewards as is currently the case under IAS 18
Revenue.


AASB 16 Leases


AASB
16 eliminates the operating and finance lease classifications for
lessees currently accounted for under AASB 117 Leases. It instead
requires an entity to bring most leases onto its statement of
financial position in a similar way to how existing finance leases
are treated under AASB 117. An entity will be required to recognise
a lease liability and a right of use asset in its statement of
financial position for most leases.


There
are some optional exemptions for leases with a period of 12 months
or less and for low value leases. The application date of this
standard is for annual reporting periods beginning on or after 1
January 2019. Due to the recent release of this standard, the group
has not yet made a detailed assessment of the impact of this
standard.


It
is not expected that there will be any impact on the financial
statements when these amendments are adopted.














5.
 Segment reporting


Segment
Report – 2017
Biodiesel
Refining
Corporate
Total2017
$
2017
$
2017
$RevenueRevenue from
external customers
-
-
-Interest
received
2,744
5,028
7,772Other
income
-
5
5Total
segment revenue
2,744
5,033
7,777Employee benefits
expense
(70,590)
(34,679)
(105,269)Executive Directors
benefits expense
(15,991)
(293,600)
(309,591)Non-Executive
Directors benefits expenses
-
(52,360)
(52,360)Depreciation and
amortisation
(487)
-
(487)Finance
costs
-
-
-Impairment of
investment in associate
(3,608,038)
-
(3,608,038)Other
expenses
(169,139)
(272,071)
(441,210)Share of net loss
of associate accounted for using the equity method
(38,174)
-
(38,174)Segment result
before tax
(3,899,675)
(647,677)
(4,547,352)Income tax
expense
(3,252)
-
(3,252)Net
(loss) for the year


(4,550,604)Non-current Segment
assets
1,748
-
1,748Total Segment
assets
40,499
358,974
399,473Segment
liabilities
(3,864)
(201,093)
(204,957)











Segment
Report – 2016
Biodiesel
Refining
Corporate
Total2016
$
2016
$
2016
$RevenueRevenue from
external customers
-
-
-Interest
received
12,881
28,336
41,217Other
income
731
12
743Total
segment revenue
13,612
28,348
41,960Employee benefits
expense
(96,008)
(79,065)
(175,073)Executive Directors
benefits expense
(39,995)
(749,900)
(789,895)Non-Executive
Directors benefits expenses
-
(125,666)
(125,666)Depreciation and
amortisation
(175)
-
(175)Finance
costs
-
-
-Other
expenses
(867,092)
(301,753)
(1,168,845)Share of net loss
of associate accounted for using the equity method
(110,007)
-
(110,007)Segment result
before tax
(1,099,665)
(1,228,036)
(2,327,701)Income tax
expense


(844)Net
(loss) for the year


(2,328,545)Non-current Segment
assets
3,648,666
-
3,648,666Total Segment
assets
5,069,833
1,101,131
6,170,964Segment
liabilities
(1,114,920)
(290,778)
(1,405,698)Acquisitions of
property, plant and equipment
2,455
-
2,455











Accounting Policies: Segment reporting
The Group Chief
Executive Officer is the Chief operating decision maker. The
reportable segments presented are in line with the segmental
information reported during the financial year to the Group Chief
Executive Officer.
Segment revenues
and expenses are those directly attributable to the segments and
include any joint revenue and expenses where a reasonable basis of
allocation exists. Segment assets include all assets used by a
segment and consist principally of cash, receivables, inventories,
intangibles and property, plant and equipment, net of allowances
and accumulated depreciation and amortisation. Segment liabilities
consist principally of payables, employee benefits, accrued
expenses and borrowings. Segment assets and liabilities do not
include deferred income taxes. Segments exclude discontinued
operations.
Intersegment Transfers: There are no
intersegment transfers.
Business and Geographical Segments: The
Group had one key business segment, being biodiesel, which is
located in Malaysia.

















6.
 Expenses


2017
$
2016
$
2015
$6a) Director and
Employee benefits expenseWages and
Salaries
450,318
1,041,974
1,369,926Contribution to
defined contribution plans
16,902
48,660
54,338Share based
payment
-
-
150,000467,220
1,090,634
1,574,2646b) Other
expenses:Audit
fees
46,748
66,748
53,096Computer
maintenance & consumables
592
6,114
5,670Communication
expenses
14,725
28,773
40,209Insurance
costs
78,004
91,138
149,578Legal
fees
52,508
152,961
1,372,921Plant sale and
operating costs
-
188,185
293,384Due diligence
costs
73,145
-
-Other
administrative costs
32,895
52,273
70,329Total
298,617
586,192
1,985,187














7.
 Income Tax


2017
$
2016
$
2015
$a. The components
of tax expense compriseCurrent
tax
(3,252)
(844)
(5,497)Deferred
tax
-
-
-(3,252)
(844)
(5,497)b. The prima facie
tax on the profit (loss) from ordinary activities before income tax
is reconciled to the income tax as follows:Accounting (loss)
before tax
(4,509,178)
(2,217,694)
4,192,689Gain / (Loss) for
the year from discontinued operations
-
-
24,132,542Total Gain / (Loss)
for the year
(4,509,178)
(2,217,694)
28,325,231Prima facie tax
(benefit)/expense on profit/ (loss) from ordinary activities before
income tax at 30%
(1,352,753)
(665,308)
8,497,569Adjusted
for:Tax effect
of:●losses not brought
to account
1,349,501
664,464
(480,747)●Impairment of
non-assessable items
-
-
(8,022,319)(3,252)
(844)
(5,497)Add:Over provision for
income tax in prior year
-
-Income tax
attributable to entity
(3,252)
(844)
(5,497)The applicable
weighted average effective current tax rate is as
follows:
0%
0%
0%


Deferred tax assets
on temporary differences and losses are not recognised because it
is not probable that future taxable profit will be available
against which the unused tax losses can be used and may be subject
to continuity of ownership and business test.


At both period ends
the Group has not recognised any current or deferred tax
liabilities or assets.


Deferred tax assets
on losses to a value of $2.8 million (2016: $2.9 million) to date
are not brought to account due to not being probable of being
recovered. In addition, deferred tax assets for deductible
temporary differences of A$3.1 million (2016: A$1.2
million).





Accounting Policy: Income Tax
The charge for
current income tax expense is based on the profit/(loss) for the
year adjusted for any non-assessable or disallowed items. It is
calculated using the tax rates that have been enacted or are
substantially enacted by the reporting date.
Deferred tax is
accounted for using the balance sheet liability method in respect
of temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business
combination, where there is no effect on accounting or taxable
profit or loss.
Deferred tax is
calculated at the tax rates that are expected to apply to the
period when the asset is realised or liability is settled. Deferred
tax is credited in the Statement of profit or loss, except where it
relates to items that may be credited directly to equity, in which
case the deferred tax is adjusted directly against
equity.
Deferred income tax
assets are recognised to the extent that it is probable that future
tax profits will be available against which deductible temporary
differences can be utilised.
The amount of
benefits brought to account or which may be realised in the future
is based on the assumption that no adverse change will occur in
income taxation legislation and the anticipation that the Group
will derive sufficient future assessable income to enable the
benefit to be realised and comply with the conditions of
deductibility imposed by the law.




















8.
 Earnings per share


a. Reconciliation
of earnings to profit or lossEarnings used in
calculation of both ordinary and dilutive EPS
(4,550,604)
(2,328,545)
28,357,244b. Earnings
used in calculation of both ordinary and dilutive EPS for ongoing
operations
(4,550,604)
(2,328,545)
4,187,192c. Weighted average
number of ordinary shares outstanding during the year used in
calculating basic EPS
40,870,275
40,870,275
31,253,837Effect
of:Weighted average
number of ordinary shares outstanding during the year used in
calculating dilutive EPS
40,870,275
40,870,275
31,253,837





Accounting policy: Earnings per share
Basic earnings per
share are calculated by dividing the profit attributable to owners
of the company, excluding costs of servicing equity other than
ordinary shares, by the weighted average number of ordinary shares
outstanding during the financial year.
Diluted earnings
per share adjusts the figures used in the determination of basic
earnings per share to take into account the after tax effect of
interest and other financing costs associated with the dilutive
potential ordinary shares, and the weighted average number of
additional ordinary shares that would have been outstanding
assuming the conversion of all dilutive potential ordinary
shares.








9.
 Cash and cash equivalents


2017
$
2016
$
2015
$Cash at bank and in
hand
147,673
271,158
1,033,903Short-term bank
deposits
240,167
1,129,380
2,116,873387,840
1,400,538
3,150,776





See note 17,
Financial Instruments, for information on risk exposures for cash
and cash equivalents.





Accounting policy: Cash and Cash Equivalents
Cash and cash
equivalents include cash on hand, deposits held at call with banks,
other short-term highly liquid investments with original maturities
of 3 months or less.





10.
 Trade and Other
Receivables


2017
$
2016
$CURRENTReceivable –
sales proceeds withheld
-
1,114,830Other
receivables
6,134
2,764TOTAL
6,134
1,117,594





The Receivable
– Sales proceeds withheld, relates to a portion of the
proceeds from the sale of the 250,000 tp refinery withheld to be
settled as deferred consideration on settlement of convertible
notes previously owed (see note 12). This amount was received with
the corresponding payment in the current financial
year.





At each reporting
date, the Board assesses the likely timing of recoverability of
receivables and bases this assessment on a number of assumptions
and estimates. Please refer to note 17 for a discussion around
credit risk, provisioning and age analysis of financial
assets.








11.
 Trade and Other Payables


CURRENT
2017
$
2016
$Unsecured
liabilities:Trade
payables
82
55,069Sundry payables and
accrued expenses
20,990
49,08821,072
104,157











12.
 Provisions


CURRENTProvision for
leave
183,885
186,711Provision for legal
settlements
-
1,114,830183,885
1,301,541





The Provision for
legal settlement, relates to a portion of the proceeds from the
sale of the 250,000 tpa refinery and has been settled in the
current financial period (see note 10).








13.
 Issued Capital


Fully
paid ordinary shares (Issued and authorised)2017
Number
2017
$
2016
Number
2016
$At the beginning of
reporting period
40,870,275
523,197
40,870,275
523,197Ordinary shares
issued
-
-
-
-At
reporting date
40,870,275
523,197
40,870,275
523,197


Ordinary shares
participate in dividends and the proceeds on winding up of the
parent entity in proportion to the number of shares held. At
shareholder meetings each ordinary share is entitled to one vote
when a poll is called, otherwise each shareholder has one vote on a
show of hands.


There were no
warrants, performance rights or options in existence at reporting
date.





Accounting policy: Contributed equity
Ordinary shares are
classified as equity. Incremental costs directly attributable to
the issue of new shares are shown in equity as a deduction, net of
tax, from the proceeds.











14.
 Cash Flow Information


Reconciliation
of Cash Flow from Operations with Profit (Loss) after Income
Tax
2017
$
2016
$
2015
$(Loss) after income
tax
(4,550,604)
(2,328,545)
28,357,244Non
cash flows in profit / (loss)Depreciation of
plant and equipment – continued operations
487
175
2,874Gain from
discontinued and deconsolidated operations
-
-
(24,132,542)Share of net
loss/(profit) of associate
38,174
110,007
(37,510)Interest
accrued
-
-
870,703Gain on the
settlement/restructure of Convertible Note
-
-
(7,245,011)Amortisation of
Equity portion of Convertible Note
-
-
944,123Provision for
employee benefits
(2,826)
9,094
27,883Other non cash
adjustments
4,436
-
-Share based
payment
-
-
150,000Impairment of
receivables and loans
-
-
672,510Impairment of
associate
3,608,038
-
-Net
cash (used in) operating activities before change in assets and
liabilities
(902,295)
(2,209,269)
(389,726)Change in assets
and liabilitiesDecrease in
receivables
1,091
75,730
3,123,545(Increase) /
decrease in other assets
(4,691)
36,022
(17,268)Decrease in
deferred tax and current tax
-
-
52(Increase)/decrease
in creditors and accruals
(87,870)
(325,926)
316,172Foreign Currency
Adjustments
15,041
345,810
(3,581,046)(76,429)
131,636
(158,545)Cash generated by
discontinued operations


939,735Cash
(used in)/provided by operations
(978,724)
(2,077,633)
391,464


There were no
non-cash investing activities during the reported
periods.


Cash flows are
presented in the statement of cash flows on a gross basis, except
for the GST component of investing and financing activities, which
are disclosed as operating cash flows.











GROUP STRUCTURE


This section
provides information which will help users understand how the group
structure affects the financial position and performance of the
group as a whole. In particular, there is information
about:


● changes to
the structure that occurred during the year as a result of business
combinations and the disposal of a discontinued
operation


●
transactions with non-controlling interests and interests in joint
ventures.


A list of
subsidiaries is provided in note 15. This note also discloses
details about the group’s equity accounted
investments.





15.
 Investments in subsidiaries,
unconsolidated entities and associates


(a)
Subsidiaries


The Group’s
subsidiaries at 30 June 2017 are set out below. Unless otherwise
stated, they have share capital consisting solely of ordinary
shares that are held directly by the Group, and the proportion of
ownership interests held equals the voting rights held by the
Group. The country of incorporation or registration is also their
principal place of business.





Percentage
Owned (%)
Ownership
interest held by non-controlling interestsCountry
of Incorporation
2017
2016
2017
2016
Principal
activitiesA.
Controlled Entities ConsolidatedParent
Entity:Mission NewEnergy
Limited
AustraliaSubsidiaries
of Mission NewEnergy Limited:Mission Biofuels
Sdn Bhd
Malaysia
100
100
-
-
Administrative
entityM2 Capital Sdn
Bhd
Malaysia
100
100
-
-
Holds 20% of FGV
Green Energy SBB.
AssociatesFelda Green Energy
Sdn Bhd
Malaysia
20
20
80
80
Biodiesel
refining





Set out below is
the associate of the group as at 30 June 2017. The entity listed
below has share capital consisting solely of ordinary shares, which
are held directly by the group. The country of incorporation or
registration is also their principal place of business, and the
proportion of ownership interest is the same as the proportion of
voting rights held.





Percentage
Owned (%)


Carrying
amount ($)Name
of entity
Country
of Incorporation
2017
2016
Nature
of relationship
Measurement
method
2017
2016FGV Green Energy
Sdn Bhd
Malaysia
20
20
Associate
Equity
method
-
3,646,211








FGV
Green Energy Sdn BhdSummarised
statement of comprehensive income
2017
2016Interest
income
-
-(Loss)/Profit from
operations
(354,842)
(550,035)Dividends
received
-
-The Groups share of
(Loss)/profit from operations
(38,174)
(110,007)








FGV
Green Energy Sdn BhdSummarised
statement of financial position
2017
2016Cash and cash
equivalents
74,158
310,610Other current
assets
230,602
22,969,284Non-current
assets
33,125,295
35,559,859Current
liabilities
(18,775,207)
(42,184,168)Non-current
financial liabilities
-
(101,291)Net
Assets
14,654,848
16,554,294








Accounting policy: Principles of Consolidation
The consolidated
financial statements comprise the financial statements of Mission
NewEnergy Limited and its subsidiaries, as defined in Accounting
Standard AASB 127 ‘Consolidated and Separate Financial
Statements’. These include Mission Biofuels Sdn Bhd and M2
Capital Sdn Bhd. A list of controlled and associate entities with
details of acquisitions and disposals is contained in this note.
All controlled entities have a 30 June financial year-end. The
Associate company has a 31 December year end.
All inter-company
balances and transactions between entities in the Consolidated
Group, including any unrealised profits or losses, have been
eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies applied by the parent entity.
Where controlled
entities have entered or left the Consolidated Group during the
year, their operating results have been included/excluded from the
date control was obtained or until the date control
ceased.
Non-controlling
interests in the equity and results of the entities that are
controlled are shown as a separate item in the consolidated
financial report.
Foreign Currency Transactions and Balances
Functional and
presentation currency
The functional
currency of each of the Group’s entities is measured using
the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are
presented in Australian dollars which is the parent entity’s
functional and presentation currency.
Transaction and
balances
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, 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.
Group
companies
The financial
results and position of foreign operations whose functional
currency is different from the Group’s presentation currency
are translated as follows:
●assets and
liabilities are translated at year-end exchange rates prevailing at
that reporting date;
●income and expenses
are translated at average exchange rates for the period where this
is not materially different from the rate at the date of the
transaction; and
●retained earnings
are translated at the exchange rates prevailing at the date of the
transaction.
Exchange
differences arising on translation of foreign operations are
transferred directly to the Group’s foreign currency
translation reserve in the statement of financial position. These
differences are recognised in the Statement of Profit or Loss in
the period in which the operation is disposed.











RISK


This section of the
notes discusses the groups exposure to various risks and shows how
these could affect the Groups financial position and
performance.





16.
 Critical Accounting Estimates and
Judgments





The preparation of
annual financial reports requires the Board to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expenses. The Board evaluates estimates and judgments
incorporated into the financial report based on historical
knowledge and best available current information. Estimates assume
a reasonable expectation of future events and are based on current
trends and economic data, obtained both externally and within the
Group. Actual results may differ from these estimates.


Except as described
below, in preparing this consolidated financial report, the
significant judgements made by management in applying the
Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that were applied to the
consolidated financial report as at end for the year ended 30 June
2017. During the twelve months ended 30 June 2017 management
reassessed its estimates in respect of:


Impairment
of assets


The Group assesses
impairment of assets at each reporting date by evaluating
conditions specific to the Group that may lead to impairment. Where
an impairment trigger exists, the recoverable amount of the asset
is determined.


Investments
in subsidiaries


Investments held by
the parent entity, Mission NewEnergy Limited, are reviewed for
impairment if there is any indication that the carrying amount may
not be recoverable. The recoverable amount is assessed by reference
to the higher of ‘value in use’ (being the net present
value of expected future cash flows of the relevant cash generating
unit) and ‘fair value less costs to sell’.


In line with the
impairment of the carrying value of assets in the subsidiaries, the
parent entity has impaired the value of all subsidiaries to zero.
This accounting adjustment has no impact on the cash flows or the
Consolidated Financial Statements of the Group. Refer to note 24:
Parent Information for further details.


Investments
in associates/Non-Current Assets held for sale


The Group owns 100%
of M2 Capital Sdn Bhd, a Malaysian subsidiary, which owns a 20%
stake in FGV Green Energy Sdn Bhd (FGVGE), a refinery joint venture
company. Investments in associates held by the parent entity,
Mission NewEnergy Limited, are reviewed for impairment if there is
any indication that the carrying amount may not be recoverable. The
recoverable amount at 30 June 2016 was assessed by reference to the
higher of ‘value in use’ (being the net present value
of expected future cash flows of the relevant cash generating unit)
and ‘fair value less costs to sell’. At 30 June 2016
the 20% shareholding of Felda Green Energy Sdn Bhd (FGVGE) in
Malaysia was carried at cost less the groups share of losses for
the reporting period (Refer to note 15).


During the current
financial year the Group announced an intention to undertake a
Reverse Take Over (refer to the Director’ Report for further
details). Under the RTO arrangement the Group is required to
dispose of the shares held in the Associate Joint Venture Company.
The accounting standards require assets held for sale to be
separately disclosed on statement of financial position with the
value of the investment into the joint venture company to be
accounted for at the lower of carrying value or fair value less
costs to sell.


In
assessing the carrying value of the investment, the following
factors were considered by the Directors:


o
 Mission
does not hold a refining asset, however it holds a 20% share in the
refining JV,


o
 This
refining JV is not a listed publically traded entity with a readily
determinable share price, nor is there a ready market to sell the
20% holding,


o
 Mission
does not have the voting or management rights to force any actions
on the JV company, (be that to commence refurbishment, sell the
asset as a going concern or for sell for scrap value),


o
 Should
the JV company require further equity funding to undertake the
refurbishment the group has insufficient current cash proceeds to
protect its equity position and hence our shareholding position
would likely be diluted.





Given
that the Group has entered into this agreement in December 2016
which requires the sale of its 100% stake in M2 Capital, which owns
the 20% stake in the JV company and the delays being experienced
with the project, management has been unsuccessful to date in
disposing of the investment, however continues to actively seek
buyers. Accordingly the Directors have deemed it prudent to impair
the carrying value of the investment to NIL during the current
financial year. Should the Group sell the refinery an impairment
reversal is expected to be recognised in the financial records of
the Group.








2017
2016$
$Impairment of
investment in associate
3,608,038
-3,608,038
-














17.
 Financial Instruments and Financial
Risk Management


Financial Risk
Management


The Group has a
financial risk management policy in place and the financial risks
are overseen by the Board. The Group’s financial instruments
consist mainly of deposits with banks, other financial assets and
accounts payable.


The principal risks
the Group is exposed to through its financial instruments are
interest rate risk, foreign currency risk, liquidity risk and
credit risk.


The Group does not
have any financial assets carried at fair value therefore no
further disclosure in relation to the fair value hierarchy is
presented. In addition the group does not have any financial
instruments that are subject to recurring or non-recurring fair
value measurements.


As at 30 June 2017
and 30 June 2016 the group held the following financial
instruments:


2017
$
2016
$Financial
assetsCash and cash
equivalents
387,840
1,400,538Receivables
(Current)
6,134
1,117,594Financial
liabilitiesTrade and other
payables
21,072
104,157


The fair value of
cash and cash equivalents, other financial assets, receivables,
trade and other payables and current loans are short-term
instruments in nature whose carrying value is equivalent to fair
value.


Interest rate risk


Interest rate risk
is managed with floating rate deposits.


Group sensitivity


At 30 June 2017, if
interest rates had changed by -/+ 25 basis points, with all other
variables held constant, the following financial impacts would have
been recorded by the Group;


●
 Effect on post tax
profit – A$NIL lower/higher (2016: A$ Nil
lower/higher)


●
 Equity would have
been – A$NIL lower/higher (2016: A$ Nil
lower/higher)








Foreign
currency risk


The Group operates
internationally through a number of subsidiaries and is thus
exposed to fluctuations in foreign currencies, arising from the
foreign currencies held in its bank accounts, the sale of goods in
currencies other than the Group’s measurement currency, and
the translation of results from investments in foreign operations.
The foreign exchange exposures are primarily to the Malaysian
Ringgit and the US dollar.


Foreign currency
risks arising from commitments in foreign currencies are managed by
holding cash in that currency. Foreign currency translation risk is
not hedged, with translation differences being reflected in the
foreign currency translation reserve.


Group sensitivity


At 30 June 2017, if
foreign currencies had changed by -/+ 10%, with all other variables
held constant, the following financial impacts would have been
recorded by the Group;


Effect on cash and
cash equivalent – A$6,229 lower / A$18,624 higher (2016:
A$167,019 lower / A$16,877 higher


Profit and Loss
would have been – A$6,229 lower / A$18,624 higher (2016:
A$167,019 lower / A$16,877 higher)


Hedging of Foreign Currency Risk


At financial report
date the Group had no forward exchange contracts in
place.








Credit
risk


The following table
sets out the credit quality of financial assets:


2017
$
2016
$Cash and Cash
EquivalentsCounterparties with external credit rating (Standard and
Poors)A-1+
(Australian)
358,974
1,100,041P-2
(Malaysia)
28,866
300,497387,840
1,400,538ReceivablesCounterparties without external credit ratingGroup
1
6,134
1,117,594


Group 1 receivables
in 2016 primarily relate to receivables related to the sale of the
refinery in the prior financial year whereby proceeds of the sale
were withheld pending certain legal proceedings.


Commodity
Risk


As there was no inventory held as at 30 June 2017,
the Group has no direct exposure to market prices of input
costs into the production of biodiesel.


Liquidity
risk


Weighted
Average Interest Rate2017
2016
2017
2016$

$%
%Financial Assets:Cash
and cash equivalents
387,840
1,400,538
1.28
1.93Loans
and Receivables
6,134
1,117,594
-
-393,974
2,518,132Current
liabilities
204,957
1,405,698


The Group manages
liquidity risk by monitoring forecast cash flows and ensuring that
adequate cash is maintained to meet known liabilities.











Accounting policy: Financial Instruments
Recognition
Financial
instruments are initially measured at fair value on trade date,
which includes transaction costs (except where the instrument is
classified as ‘fair value through profit or loss’ in
which case transaction costs are expensed to profit or loss
immediately), when the related contractual rights or obligations
exist. Subsequent to initial recognition these instruments are
measured as set out below.
Loans and
receivables
Loans and
receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and
are stated at amortised cost using the effective interest rate
method.
Financial
liabilities
Non-derivative
financial liabilities are recognised at amortised
cost.
Impairment of
financial assets
At each reporting
date, the Group assesses whether there is objective evidence that a
financial instrument has been impaired. Impairment losses are
recognised in the Statement of profit or loss.








18.
 Capital Management


Management controls
the capital of the Group in order to maintain an appropriate debt
to equity ratio, provide the shareholders with adequate returns and
ensure that the Group can fund its operations and continue as a
going concern. Due to the stage that the business is in,
managements preferred approach is to fund the business with equity,
however where equity funding is not available debt funding is
considered. Management reviews historic and forecast cash flows on
a regular basis in order to determine funding needs.


The Group has no
debt and capital includes ordinary share capital, supported by
financial assets.








UNRECOGNISED ITEMS


This section of the
notes provides information about items that are not recognised in
the financial statements as they do not (yet) satisfy the
recognition criteria.





19.
 Capital and Leasing
Commitments


The group has no
operating lease or capital expenditure commitments.





20.
 Contingent Liabilities and Contingent
Assets


The Group is not
aware of any contingent liabilities or contingent assets as at 30
June 2017.





21.
 Events occurring after the reporting
period


There have been no
significant subsequent events up until the date of signing this
Financial Report.











OTHER INFORMATION





This section of the
notes includes other information that must be disclosed to comply
with the accounting standards and other pronouncements, but that is
not immediately related to individual line items in the financial
statements.





22.
 Remuneration of Auditors


2017
$
2016
$Audit
servicesRemuneration of the
auditor of the parent entity for:●auditing or
reviewing the financial reports – BDO Audit (WA) Pty
Ltd
36,837
60,909











23.
 Related Parties





During the period a
subsidiary in the Group leased a portion of office space from a
company owned by the Chief Executive Officer at a cost of around
A$650 per month. The lease is on a month to month
basis.


There were no other
transactions with related parties during the period other than with
subsidiaries which were 100% wholly owned.








24.
 Parent entity information


2017
2016Information
relating to Mission NewEnergy Limited:
$
$Current
assets
358,974
1,101,131Non-current
assets
-
3,720,509Total
assets
358,974
4,821,640Current
liabilities
(201,093)
(295,573)Total
liabilities
(201,093)
(295,573)Net asset surplus /
(deficit)
157,881
4,526,067Issued
capital
418,635
418,635Opening Retained
Profit / (Loss)
3,957,431
5,900,761Share based
payments reserve
150,000
150,000Total
shareholders’ equity/deficit
(4,526,066)
(6,469,396)(Loss) of the
parent entity during the year
(4,368,185
(1,943,331)Total
shareholders equity deficit
(157,881)
(4,526,065)








2017
$
2016
$Details of any
contingent liabilities of the parent entity
-
-Details of any
contractual commitments by the parent entity for the acquisition of
property, plant or equipment.
-
-


The parent entity
is not aware of any other contingent liabilities or contingent
assets as at 30 June 2017.





25.
 Company Details


The registered
office of the company is: Mission NewEnergy Limited, Unit B9, 431
Roberts Road, Subiaco, WA 6008, Australia.


The
principal places of business are:





Australia
Mission NewEnergy LimitedHead Office
Unit B9, 431 Roberts Rd, Subiaco, Western Australia, 6008,
Australia.Malaysia
Mission
Biofuels Sdn Bhd
M2
Capital Sdn Bhd
No 5E Nadayu 28
Dagang
Jalan PJS
11/7
Bandar
Sunway
47500 Subang
Jaya
Selangor,
Malaysia











26.
 Authorisation of financial
statements


The consolidated
financial statements for the year ended 30 June 2017 (including
comparatives) were approved by the Board of Directors on 27
September 2017.





Dato’
Nathan Mahalingam


Director