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BlueNRGY Group Ltd – ‘20-F’ for 6/30/14

On:  Monday, 6/1/15, at 5:27pm ET   ·   For:  6/30/14   ·   Accession #:  1144204-15-34920   ·   File #:  1-36136

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 6/01/15  BlueNRGY Group Ltd                20-F        6/30/14    7:4.5M                                   Vintage/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 20-F        Annual Report of a Foreign Private Issuer           HTML   1.58M 
 2: EX-1.3      Underwriting Agreement                              HTML      5K 
 3: EX-11.1     Statement re: Computation of Earnings Per Share     HTML     30K 
 4: EX-12.1     Statement re: Computation of Ratios                 HTML     10K 
 5: EX-12.2     Statement re: Computation of Ratios                 HTML     10K 
 6: EX-13.1     Annual or Quarterly Report to Security Holders      HTML      7K 
 7: EX-13.2     Annual or Quarterly Report to Security Holders      HTML      7K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

or

For the fiscal year ended June 30, 2014

or

or

Date of event requiring this shell company report

From the transition period from                      to                     

Commission file number 001-36136

BlueNRGY Group Limited

(Exact Name of Registrant as specified in its charter)

Richard Pillinger

Chief Financial Officer

BlueNRGY Group Limited

Level 11

32 Martin Place

Sydney NSW 2000

Tel: +061-2-9037-1149

E-mail: rpillinger@cbdenergy.com.au

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

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

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

None

(Title of Class)

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

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of June 30, 2014, 4,718,133 ordinary shares, no par value, were issued and outstanding.

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

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  x

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  x

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  x

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

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

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

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Securities and Exchange Commission (the “SEC”), encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. Except for the historical information contained in this annual report on Form 20-F (this “Report”), the statements contained in this Report are “forward-looking statements” which reflect our current view with respect to future events and financial results.

Words such as “may,” “anticipate,” “estimate,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. Forward-looking statements represent management’s present judgment regarding future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks include, but are not limited to, risks and uncertainties regarding enactment of the approved share consolidation and the Company’s ability to regain and maintain compliance with the NASDAQ listing rules, as well as risks and uncertainties relating to litigation, government regulation, economic conditions, markets, products, competition, intellectual property, services and prices, key employees, future capital needs, dependence on third parties and other factors. Please also see the discussion of risks and uncertainties under “Risk Factors” contained in Item 3.D. of this Report.

In light of these assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this Report might not occur. Investors are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Report. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document.

PART I

ITEM 1.     IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.     KEY INFORMATION

3.A.             Selected Financial Data

The following summary consolidated financial data as of June 30, 2014, 2013 and 2012 and for the three years ended June 30, 2014, 2013 and 2012 are derived from the audited consolidated financial statements of BlueNRGY Group Limited included elsewhere in this Report.

Our historical results are not necessarily indicative of the results that may be expected for any other future period. Unless otherwise specified, all amounts are presented in Australian Dollars (A$).

You should read the selected consolidated financial data set forth below in conjunction with Item 5, “Operating and Financial Review and Prospects” and our audited consolidated financial statements and notes thereto included elsewhere in this Report.

Consolidated Statements of Operations Data:

1

Consolidated Balance Sheet Data:

Exchange Rates

The following tables set forth, for the periods and dates indicated, certain information regarding the rates of exchange of A$1.00 into US$ based on the 4pm market daily rate in Australia for cable transfers in Australian dollars as certified for customs purposes by the Reserve Bank of Australia. The exchange rate in effect on April 30, 2015, was AUD 1.00 = USD$0.8011.

(1)  Averages are calculated using the average of the daily rates during the relevant period

3.B.           Capitalization and Indebtedness

Not applicable.

3.C.           Reason for the Offer and Use of Proceeds

Not Applicable.

3.D. Risk Factors

Our business faces significant risks. You should carefully consider the risks described below, as well as the other information contained in this Report, including our financial statements and related notes. If any of the following risks, as well as other risks and uncertainties that are not yet identified or that we currently think are immaterial, actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our ordinary shares could decline, and you may lose part or all of your investment.

Risks Related to our Financial Condition

We experienced operating losses in fiscal years 2013, 2014 and, are continuing to experience operating losses that in the current fiscal year that cannot be sustained by our liquidity and there is uncertainty that we can continue as a going concern.

All of our business segments recorded a loss from operations and impairment of asset values for the fiscal years ended June 30, 2013 and June 30, 2014 totaling A$7.6 million and A$25.4, respectively. In November 2014 we filed for Voluntary Administration, or VA, in Australia. Pursuant to a deed of company arrangement, or DOCA, we shed various unprofitable businesses and compromised liabilities of approximately A$37.5 and exited VA on January 27, 2015, referred to as the Emergence Date. Notwithstanding the restructuring of our business through the VA process, several of our operating units, including the monitoring business of BlueNRGY LLC acquired on the Emergence Date (as further described under Item 4B), have experienced operating losses and continue to do so. Moreover, there is no assurance that the losses affecting some of our businesses can be avoided in the future or that cash flow from our profitable businesses will be sufficient to offset such losses. In conjunction with our corporate overhead and our debt service obligations, operating losses have depleted our liquidity to the extent that we cannot continue as a going concern unless we can achieve one or more of the following: higher levels of operating profitably now and in the future, raising additional debt or equity capital, deferring payment to creditors and selling assets. There is no assurance that we will have access to sufficient funds from such initiatives on terms acceptable to our Board of Directors (the “Board”), or on any terms, to meet our future needs.

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

Our business development and system development expenses for our monitoring business currently exceed our revenues and it is unknown when, if ever, growth in revenues from this line of business will generate cash flow in excess of costs. In addition we have re-launched our small-scale solar business in Australia under our own brand and are making plans to do so in the USA. Together with meeting costs of our corporate overhead, these initiatives are likely to consume substantial cash for the foreseeable future. To the extent that our liquidity permits us to do so, our Board has determined to continue to pursue development of the monitoring and small-scale solar businesses and cash will continue to be used for these purposes. Consequently, our liquidity may be depleted to the extent that we are unable to continue as a going concern.

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

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

In addition, our Australian residential and commercial solar business has historically experienced seasonal peaks and declines that has exacerbated our quarter-to-quarter revenue and net income volatility. As a consequence of these dynamics, it is very difficult to identify trends in overall business activity or profitability for the consolidated company or to anticipate future profitability based on recent results. Moreover, the very short project implementation cycle and short lead time associated with most of our projects make other metrics of business trajectory, such as backlog, difficult to apply. Our current and future expense levels, internal operating plans and revenue forecasts, and operating costs are, to a large extent, fixed. As a result, we may not be able to sufficiently reduce our costs in any period to adequately compensate for an unexpected short-term shortfall in revenues, and even a small shortfall could disproportionately and adversely affect financial results for that period. Consequently, we could confront unanticipated liquidity shortfalls that would jeopardize our ability to continue as a going concern.

All of our lines of business are cash intensive, and operations have been, and in the future are likely to be, affected adversely if we fail to maintain sufficient levels of liquidity and working capital.

Our small scale solar business requires investment in marketing and advertising activities to generate the leads to replenish or grow the sales pipeline. Consequently, our success depends heavily on the ability to fund marketing activity. The time taken for a lead generated from marketing and advertising activity to completion of the associated installation can vary from one month to over three months. The large-scale solar and Parmac project businesses require us to utilize our own working capital to fund operations between progress payments and, in the former case, through completion of projects that are being constructed under the BOT model. The monitoring business is a net consumer of cash due largely to the requirement to fund system development expenses necessary to provide a competitive product offering to our customers. Our Remote Area Power Systems, or RAPS, segment involves substantial upfront investment in generating assets with realization of cash flows and profit over time. Our now-discontinued wind business unit typically required us to make significant cash investments over multiple years before realizing revenue or cash flow. We currently lack the capital and liquidity to adequately fund all of these businesses. Additional cash will be needed to fund any growth. Consequently, we have not been able to operate our small-scale solar business above break-even levels for more than two years. Our project activities, particularly in the large-scale solar sector have been constrained, leading to losses that are ongoing and an inability to capitalize on opportunities to generate revenue. We must raise additional capital, further curtail operations in some of our lines of business or divest some of our business units to achieve profitability. Failure to do so increases the likelihood that we will not be able to continue as a going concern and the value of our ordinary shares will decline or become worthless.

Our growth strategy and the future success of our company is based, in part, on pursuing acquisitions of operating companies and renewable energy projects. If we are not successful in completing such acquisitions, or realizing the anticipated benefits from such transactions, then it could have a material adverse effect on our results of operations and financial condition.

One of our growth strategies is to pursue targeted acquisitions of operating companies and renewable energy projects at various stages of development. If we are not successful in implementing such strategy and acquiring targeted companies or projects, it could have a material adverse effect on our results of operations and financial condition. Further, we will have devoted significant time and resources in such pursuits, without receiving any benefit for our efforts. In addition, even if we are able to successfully complete such acquisitions, if we have misjudged the value to our company, or if we fail to successfully integrate any such assets or operations with ours, it could have a material adverse effect on our results of operations and financial condition, and you could lose some or all of your investment in our company.

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

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

Our indebtedness to lenders and other creditors in our operating subsidiaries that were not included in the VA is significant relative to our liquidity and we may encounter demands for payment that we cannot meet, which could have adverse consequences for our business and future prospects.

Although our convertible notes, installment notes and other liabilities payable by our corporate parent and many of our subsidiaries were extinguished pursuant to the DOCA, as of April 30, 2015, we had total outstanding debt (excluding current trade balances and accruals) at our operating subsidiaries of approximately A$1.1 million. At our corporate parent and operating subsidiaries where there is an excess of current liabilities over current assets the excess is approximately A$2.1 million, including that portion of deferred trade obligations and debt classified as current. While we have negotiated to satisfy this indebtedness in the future, (as further discussed below in Item 5.B.), our ability to meet our obligations when payment is due will also depend on our cash reserves, available additional financing and ongoing operating performance, and there can be no assurance that we will possess or be able to secure the resources to meet these obligations when they become due.

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

Although we are not currently involved in litigation with any creditors, there can be no assurance that creditors who have agreed to payment terms will continue to forbear if we cannot meet those terms. In such case we may receive demands for immediate payment that exceed our ability to pay. Our failure to satisfy or refinance these obligations when due would have a material adverse impact on the indebted operating subsidiaries and could jeopardize our ability or that of the affected operating subsidiaries to continue in business and could cause us to liquidate, resulting in the total loss of value to our shareholders.

We require additional capital to execute on current and anticipated future business opportunities and may not be able to raise the necessary capital on acceptable terms, if at all, with the result that we may have to curtail some business activities or forego growth.

We do not have sufficient capital to operate all of our businesses in accordance with our business plans or to ensure that we can continue as a going concern. Consequently, we are likely to have to raise additional capital in the future through public or private debt or equity financings by issuing additional ordinary shares or other preferred financing shares, debt or equity securities convertible into ordinary or preferred shares, or rights to acquire these securities. We may need to raise this additional capital in order to (among other things):

Our management expects us to issue additional debt securities to fund ongoing operations, including solar projects and related working capital. The associated debt agreements may contain restrictive covenants and we will be subject to additional costs related to originating such debt and for interest. Any scheduled principal amortization will place further burdens on our cash flow. Notwithstanding the expectations of our management, there is no assurance that debt can be raised on terms acceptable to our Board, if at all.

Our management also expects us to issue additional equity securities to fund operations of our existing businesses, the acquisition of additional businesses and pursuant to employee benefit plans, although our Board has not considered or approved any changes to our employee benefit plans that are not described in this Report. We may also issue additional equity securities for other purposes. These securities may have the same rights as our ordinary shares or, alternatively, may have dividend, liquidation, or other preferences to our ordinary shares. The issuance of additional equity securities will dilute the holdings of existing shareholders and may reduce the price of our ordinary shares. Because of our recent operating losses and capital deficiencies, it is likely that raising equity capital will be difficult and costly, with the result that dilution to existing shareholders could be high. There is no assurance that equity capital can be raised at a price acceptable to our Board or at all.

Notwithstanding write-offs of goodwill and intangibles in our 2012, 2013 and 2014 fiscal years and in conjunction with the effectiveness of the DOCA, we continue to have recorded substantial goodwill and intangibles asset value as the result of prior acquisitions and goodwill and intangibles are subject to periodic reviews of impairment that could result in future reported losses and that may limit our ability to raise capital.

We have previously acquired companies and assets that were retained through the VA process. The excess of the purchase price after allocation of fair values to tangible and identifiable intangible assets for those businesses is allocated to goodwill. We conduct periodic reviews of goodwill and intangible values for impairment. Any impairment would result in a non-cash charge against earnings in the period reviewed, which may or may not create a tax benefit, and would cause a corresponding decrease in shareholders’ equity. For the two fiscal years ended June 30, 2012, we recorded impairments of goodwill and intangibles of A$11.5 million.

Additional impairments of good will were recognized in conjunction with the effectiveness of the DOCA, with the result that our assets were comprised of A$15.9 million of goodwill and intangibles on our unaudited internal financial statements as of the Emergence Date. In keeping with our accounting policies, the value of goodwill and intangibles will again be reviewed as of June 30, 2015, the end of our 2015 fiscal year in light of the circumstances at the time and a further impairment of goodwill and intangibles may be recorded if warranted by the circumstances. In the event that there is a prolonged economic downturn in our served markets, competitive conditions become more challenging or we fail to achieve expected financial performance in our Solar PV business segment or our Monitoring business in particular, we may be required to record further impairments of goodwill in the future. Such impairment could be material and lead to a significant reduction in our stock price or make it more difficult for us to raise needed capital.

Taxing authorities could reallocate our taxable income among our subsidiaries, which could increase our consolidated tax liability.

We intend to conduct operations worldwide through subsidiaries in various tax jurisdictions. If two or more affiliated companies are located in different countries, the tax laws or regulations of each country generally will require that transfer prices and other inter-company charges be the same as those between unrelated companies dealing at arm’s length and that contemporaneous documentation is maintained to support such transfer prices and charges. On that basis, tax authorities could require us to adjust our transfer prices and intercompany charges and thereby reallocate our income to reflect such revised terms, which may result in a higher tax liability to us or limit our ability to utilize loss carry forwards and similar tax assets that are available to only some of our operating subsidiaries and not others, and, possibly, result in two countries taxing the same income, any of which outcomes could adversely affect our financial condition, results of operations and cash flows.

Risks Related to Our Industry and Business

Our large-scale solar and air conditioning installation businesses often receive payments upon the achievement of contractual milestones, and any delay or cancellation of one or more large projects could interrupt our cash flow and adversely affect our overall business.

We recognize revenue for Parmac and a significant fraction of our large-scale solar business on a “percentage of completion” basis and, as a result, our revenue from these installations is tied to the performance of contractual obligations, which are generally driven by timelines for the installation of solar power and air conditioning systems at customer sites.  This could result in unpredictability of revenue and, in the short term, revenue shortfalls or declines.  As with any project-related business, there is the potential for delays within any particular customer project. Variation of project timelines and estimates may impact the amount of revenue recognized in a particular period.  In addition, certain of our customer contracts may include payment milestones at specified points during a project.  Because we must invest substantial time and incur significant expense in advance of achieving milestones and the receipt of payment, failure to achieve milestones could adversely affect our business and cash flows.

Our residential solar business in Australia accepts assignment of small-scale technology certificates, or STCs, in lieu of some cash payments from customers and is exposed to risk of significant changes in market value of STCs between the date the value of STCs is agreed with our customers and the date STCs are assigned to us.

Based on current government policy and the average size of our residential installations, an average of approximately 25% of the revenue from small-scale solar projects we sell is in the form of small-scale technology certificates, or STCs. The secondary market in which we typically sell registered STCs is thin, with few purchasers or market makers. When we quote a customer for the price of a residential installation, we agree to a value for the STC portion of the revenue with the customer. On completion of an installation and completion of STC registration, our practice is generally to assign registered STCs to one of our solar PV equipment suppliers at a negotiated value in lieu of cash payment. The value attributed to the STCs by our suppliers is based on market price at the time of assignment to them. There can be a delay of up to three months between agreeing to a value for STCs with our customers and completion of registration and assignment of STCs to one of our suppliers; during this time we are exposed to changes in the market price of STCs. The magnitude of this financial risk is affected by the volatility of STC prices and can be significant. Our management has determined that it is not cost effective to hedge the financial exposure to STCs that we hold and therefore we do not do so.

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

We typically expect to complete projects initiated under the BOT model within one to three months. However, our limited experience in selling a 5MW portfolio of such projects in Europe in November 2012 demonstrates that closing a sale of commissioned projects can take six months or more. When we complete a project under the BOT model or the build, own, and operate model (the “BOO model”), we are fully exposed to changes in project value from the period between our commitment to undertake such a project and the time we reach an agreement to sell such project at a set price (for BOT projects) or the carrying value of the project is impaired (for BOO projects such as the Chatham Island Project).

Market conditions and value for completed large-scale solar projects are subject to significant fluctuations as a result of factors such as changes in relative currency values, market interest rates, institutional demand for projects generating fixed cash flows and idiosyncratic political and regulatory changes that affect investors’ perceptions of project risk. Moreover, based on our previous experience, the cost of capital for our BOT projects can significantly reduce our expected profitability if holding periods are protracted. The combination of exposures to changes in project values and the cost of financing BOT and BOO projects could cause us to incur significant losses on such projects in the future and the necessity to tie up capital in such projects between commitment and sale (or throughout the holding period for BOO projects) could strain our company’s limited liquidity.

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

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

There can be no assurance that we will be able to attract and retain sufficient numbers of highly skilled executives or technical employees in the future. The loss of such personnel, and executive management in particular, or our inability to hire or retain sufficient personnel at competitive rates of compensation could impair our ability to secure and complete customer engagements and could harm our business.

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

Our solar PV projects are generally not sold pursuant to long-term agreements with, but instead are sold on a one-time purchase-order basis.  We typically contract to perform large projects with no assurance of repeat business from the same customers in the future.  Our experience is that customers may cancel or reschedule purchase orders for solar PV projects on relatively short notice.  Cancellations or rescheduling of customer orders could result in the delay or loss of anticipated sales without allowing sufficient time to reduce, or delay the incurrence of, our corresponding inventory and operating expenditures.  In addition, changes in forecasts or the timing of orders from these or other customers expose us to the risks of supply shortages or excess purchase commitments for inventory.  This, in addition to the non-repetition of large-scale solar projects and the possibility that we may fail to obtain new large-scale projects could cause our revenues to decline, and, in turn, our operating results to suffer. Our monitoring, operations and maintenance services provided to the renewable energy and climate control markets are generally delivered under annual or multi-year contracts that have the potential to mitigate volatility from our project businesses. However, the scale of our service businesses is not yet sufficient to have a significant impact on our overall revenue or profitability and there is no assurance that we will be successful in expanding these activities or realizing meaningful economic benefits from recurring revenue.

Unlike some of our competitors, we do not have established and reliable sources of financing on which our customers can rely to finance their solar and climate control projects and as a result we are at a competitive disadvantage and our sales and profits may suffer.

We do not have contractual relationships with financing sources in any of the jurisdictions in which we undertake contracts for PV solar or climate control installations that can be relied on to provide debt or equity financing for our prospective customers who require such financing in order to commit to projects or engage our services. In the small-scale solar business in Australia financing is now generally available in the market and to our customers, but we may be at a disadvantage relative to energy distribution companies and other large competitors who can offer prospective financing to a broader range of customers or on better terms than us. The availability of financing for large-scale solar systems and climate control systems in the markets we serve is specific to the particulars of the installation and customer financial strength and varies widely. In any case, the availability of financing for large-scale system installations is generally less than for residential systems because the reliability of the cash flows from owners of large installations is generally perceived by financing sources to not be as high and the project development risk is greater. The consequence is that we are forced to compete for large-scale projects largely on price or from the limited universe of buyers who can self-finance or who have their own sources of financing for such projects. As a result, the growth of our large-scale solar and climate control business focused on the provision of engineering, procurement, and construction, or EPC, services has been slow and irregular in all of the markets we serve, and there is no assurance that this will change or that our large-scale EPC businesses will achieve consistent profitability.

Our large-scale solar, wind and major climate control projects are subject to lengthy sales cycles that adversely affect the predictability of results from sales and marketing efforts and make our financial forecasts unreliable and revenue recognition irregular.

Factors specific to our customers have an impact on our sales cycles.  Our equity fund, commercial, and government customers may have longer sales cycles due to the timing of periodic budgeting requirements typical for projects requiring significant capital expenditures.  Other customers may delay projects because of cyclical conditions in their industries or because of idiosyncratic liquidity or profitability issues. Lengthy and challenging sales cycles may mean that our sales and marketing efforts seldom result in rapid increases in revenue and delays may have adverse effects on our operating results, financial condition, cash flows, and stock price.

We sometimes act as general contractor for our customers in connection with the installation of solar power and HVAC systems and we are subject to risks associated with construction, bonding, cost overruns, delays, and other contingencies, which could have a material adverse effect on our business and results of operations.

When we act as a general contractor for our customers in connection with the installation of solar power and HVAC systems, costs are estimated at the time of entering into the sales contract for a particular project, and these costs are reflected in the overall price that charged to customers for the project.  These cost estimates may not accurately reflect all costs incurred by subcontractors, suppliers and other parties engaged by us on our projects.  In addition, qualified, licensed subcontractors are often required to install some of the systems.  Shortages of such skilled labor could significantly delay a project or otherwise increase our costs.  Should miscalculations in planning a project or defective or late execution occur, we may not achieve the expected margins necessary to cover our costs.  Also, many systems customers require performance bonds issued by a bonding agency.  Due to the general performance risk inherent in construction activities, it is sometimes difficult for us to secure suitable bonding agencies willing to provide performance bonding. In the event we are unable to obtain the requisite bonding, we will be unable to bid on, or enter into, sales contracts for the projects.  Delays in receiving solar or climate control system components, other construction delays, unexpected performance problems or other events could cause us to fail to meet these performance criteria, resulting in unanticipated and severe revenue and earnings losses and financial penalties.  Such delays are often caused by inclement weather, failure of suppliers to timely meet orders or transportation providers to make timely deliveries. We operate in multiple countries that have unique permitting requirements, which, if not met, may cause delays.  The occurrence of any of these events could have a material adverse effect on our business and results of operations.

A portion of our revenues is generated by construction contracts for new or renovated buildings, and, thus, a decrease in construction activity could reduce our construction contract-related sales and, in turn, adversely affect our revenues.

Some of our solar-related revenues and most of our HVAC project revenues are generated from the design and installation of systems in newly constructed and renovated buildings, plants and residences.  Our ability to generate revenues from such construction contracts depends on the number of new construction starts and renovations, which should correlate with the cyclical nature of the construction industry and be affected by general and local economic conditions, changes in interest rates, lending standards and other factors. 

In our installation and EPC businesses, we are highly dependent upon suppliers for the components used in the systems and products we design and install and any increases in the price of components, including as a result of the imposition of duties or tariffs, or any interruptions to, shortage or decline in the quality of the components we purchase could adversely affect our business.

Key components used in all of our solar, wind and energy efficiency/climate control systems are purchased from third party manufacturers, many of which are located in countries other the system installation area.  Market prices for these purchased components are subject to fluctuation. We cannot ensure that the prices charged by our suppliers will not increase because of changes in market conditions or other factors beyond our control. An increase in the price of components used in our systems could result in an increase in costs to our customers and could, as a result, have a material adverse effect on our revenues and demand for our products and services. Interruptions in our ability to procure needed components for our systems, whether due to discontinuance by suppliers, delays or failures in delivery, shortages caused by inadequate production capacity or unavailability, or for other reasons, would adversely affect or limit our sales and growth. There is no assurance that we will be effective in selecting qualified manufacturers on acceptable terms in the future and, if we are able to do so, there can be no assurance that product quality from those suppliers will continue to be acceptable, which could lead to a loss of sales and revenues. 

Problems with product quality and performance on projects we develop or install may damage our market reputation and cause our revenue and operating results to decline, particularly in the small-scale solar market.

Our PV solar and climate control businesses involve the sale of systems that have long lifetimes (up to 20 years or more in the case of key components in PV solar systems). In general, the manufacturers of components in the systems we sell are warranting those components and we offer limited warranties on system design and installation workmanship for such components; for example, up to 5 years on installation workmanship for small-scale solar systems we have sold in Australia. Under real-world operating conditions, which may vary by location and design, as well as installation, air particulate, soiling and weather conditions, a typical system installation may perform in a different way than under standard test conditions or design assumptions. If the systems we have sold perform below expectations or have unexpected reliability problems, we may suffer reputational damage, even if the problems are caused by operating conditions or defects of components produced by other manufacturers. The significance of this would be magnified if those suppliers fail to fully meet their warranty obligations. We could suffer additional reputational damage, even though we bear no direct responsibility for the component performance. In such a situation, if it were to occur, we might be unable to gain new customers and our plans to grow and maintain the small-scale solar business at a profitable scale could be thwarted.

One of our former subsidiaries, divested in our VA process previously sold inverters produced by, or under license from, Oelmaier, a German company that is no longer in business. Our subsidiary discontinued sales of the Oelmaier inverters in 2012 due to problems with product design and licensor support, but many customers made warranty claims prior to our VA and more are likely to continue to do so. Our estimated costs of warranty for all previously sold products, including the Oelmaier products, was A$0.2 million and A$0.4 million for the fiscal years ended June 30, 2014 and 2013, respectively. However, there can be no assurance about when or whether we will be able to overcome the negative market impact associated with the Oelmaier-licensed products and it may continue to dampen sales for the foreseeable future.

While our legal obligations to address future warranty claims was extinguished under the DOCAs that defined our Reorganization Plan (refer to Item 4.A. under the heading “Voluntary Administration and Deed of Company Arrangement”), market pressures may require us to expend resources to address warranty claims from our legacy residential solar customer base if we are going to grow the scale of that business in the Australia. Post VA, we do not have any reserves for addressing Oelmaier warranty claims and it is not possible to estimate the impact that acting or failing to act with respect to such claims may have on the growth or profitability of our Australian residential business. The possibility exists, however, that the adverse impact on our results of operations could be significant and contribute to reducing the value of an investment in our ordinary shares. .

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

Except for system design and installation workmanship deficiencies, the warranty obligations related to climate control and solar PV systems we sell are contractually borne directly by the system component suppliers.  Our contractual obligations to our customers in the event of a third-party component failure are generally limited to fielding service requests and organizing the repair or replacement of the faulty unit with the original component’s manufacturer for a period of time specified in the contract. In our experience, other than the costs of warranty claims related to Oelmaier inverters that Oelmaier did not meet, the costs of such service obligations have not been material and we expense them as incurred.  

Notwithstanding the limited contractual financial exposure that we have for system component failures, if the responsible component manufacturers fail to fully meet their warranty obligations, we may find it to be practical necessity to incur the expense to correct the problem in order to preserve our market reputation for reliability and service and to maintain system sales.  We have not reserved for such a possibility and may not have the financial or other resources to respond to such a problem if and when it occurs.  The result could be adverse and unexpected profit volatility for our climate control and PV solar businesses or a loss of market acceptance that could threaten the financial viability of this business segment altogether.

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

The further expansion of our business into new jurisdictions is one of our strategies for growing revenues from solar system installations and renewable system monitoring and operations and maintenance, or O&M, services sales. Such expansion is also expected to mitigate the impact of downturns in renewable energy demand in countries in which we are currently developing solar projects. Undertaking further international expansion of our solar system installation businesses is a complex task that requires, among other things the identification of locations that are environmentally favorable for solar project development and that have suitable regulatory and tax policies, utility cost, tariff and interconnection structures that allow renewable energy to be cost competitive (after taking into account local subsidies) and access to cost-effective financing for project owners, among other considerations. Different but equally complex considerations affect the expansion opportunities for our monitoring and O&M services businesses. Even if we successfully identify suitable countries for expansion, we may be unable to extend our business into these new locations if competitors enter the market first or are already well established. In addition, we may not have the necessary management, local knowledge or financial resources to undertake the successful and timely development or integration of projects in additional countries. Additionally, our ability to generate cash from existing operations may be slower than expected, or may not occur at all, resulting in the requirement for further funding to achieve our expansion plans that exceeds our ability to raise additional capital on acceptable terms. Our expansion plans could also be affected by cost overruns, failures or delays in obtaining government approvals of necessary permits and our inability to establish supply chains to serve new markets and other factors.

There is no assurance that we can effectively manage our planned expansion or achieve any expansion plans at all. If we are unable to do so, we will not be able to take advantage of growth opportunities, execute our business strategy or respond to competitive or market pressure, any of which could materially and adversely affect our business, results of operations, financial condition and share value.

Although we have historically derived most of our revenues from Australia and a few other countries, we currently do business in several international jurisdictions whose political and regulatory environments and compliance regimes differ from those of our home territory (or the United States) and our planned expansion into new markets will subject us to additional business, financial and competitive risks.

A portion of our revenue has been attributable to operations in countries other than Australia and the United States, including Italy, Thailand and the United Kingdom and this is expected to extend to other countries in Europe, Asia and Latin America with the acquisition of BlueNRGY LLC in January 2015 (refer to Item 4.A. under the heading “Recent Acquisitions”. Such activities accounted for approximately 2% and 22% of our consolidated revenue in fiscal years ended June 30, 2014 and June 30, 2013, respectively. Risks associated with our operations in foreign areas include, but are not limited to:

Part of our strategy is to prudently and opportunistically acquire businesses and assets that complement our existing products and services, and to expand our geographic footprint. If we make acquisitions of businesses or assets in other countries, we may increase our exposure to the risks discussed above. Governments in some foreign countries have become increasingly active in regulating and controlling the implementation of renewable energy projects, the sale of power generated from such projects in their countries and the processing of information from or about such generating assets. In some areas of the world, this governmental activity has adversely affected the amount of activity undertaken by renewable energy developers and may continue to do so. Some countries, such as China, restrict the storage or export outside their borders of data related to energy generation. Operations in developing countries can be subject to legal systems that are not as predictable as those in more developed countries, which can lead to greater risk and uncertainty in legal matters and proceedings. In some jurisdictions we are subject to foreign governmental regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These regulations may adversely affect our ability to compete. Additionally, our operations in some jurisdictions may be significantly affected by union activity and general labor unrest. There can be no assurance that we can avoid such factors having a material adverse effect on our results of operations or financial condition.

Our operations are subject to multiple tax regimes, and changes in legislation or regulations in any one of the countries in which we operate could negatively and adversely affect our operating results.

Our operations are carried out in several countries across the world, and our tax filings are therefore subject to the jurisdiction of a significant number of tax authorities and tax regimes, as well as cross-border tax treaties between governments. Furthermore, the nature of our operations means that we routinely have to deal with complex tax issues (such as transfer pricing, permanent establishment or similar issues) as well as competing and developing tax systems where tax treaties may not exist or where the legislative framework is unclear. In addition, our international operations are taxed on different bases that vary from country to country, including net profit, deemed net profit (generally based on turnover) and revenue-based withholding taxes based on turnover.

Our management determines our tax provision based on our interpretation of enacted local tax laws and existing practices and uses assumptions regarding the tax deductibility of items and recognition of revenue. Changes in these assumptions and practices could significantly impact the amount of income taxes that we provide for in any given year and could negatively and adversely affect the result of our operations.

We face common international trade and supply chain risks for our installation businesses, including delay or complete disruption of supply, logistics cost volatility, exchange rate fluctuations and changes in policies and tariffs, that could trigger an unexpected adverse impact on operational and financial performance.

Most of the components in our products are produced in places other than that where the products and systems are used or installed. For example, currently, all the solar modules for our solar PV systems are produced in China and must be shipped to installation sites in Australia, the United States, Europe and other jurisdictions where we operate. Key components for our energy efficiency businesses are manufactured in Europe, the United States or in Asia, even though we sell these systems primarily in Australia. Consequently, order lead times may be long and we and our customers are subject to substantial expense and delays that can accompany long-distance shipping, inventory management and design and specification of customized orders. Currency exchange rates can also shift between the time of ordering and delivery, sometimes resulting in us incurring higher costs. If mistakes in component order fulfillment occur, extended time can be required to remediate the problem and could lead to delays in completing projects, recognizing revenue or receiving cash flow.

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

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

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

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

Our international growth strategy involves complex transactions and presents financial, managerial and operational challenges, including diversion of management attention from existing businesses, difficulty with integrating personnel and financial and other systems, increased expenses, including compensation expenses resulting from newly hired employees, the assumption of unknown liabilities and potential disputes.  We could also experience financial or other setbacks if any growth strategies incur problems of which we are not presently aware.

We may incur significant costs and delays in our attempt to implement our international expansion strategy, particularly when we form joint ventures or make acquisitions.

We currently develop and install large-scale solar PV systems or offer performance monitoring and O&M services for such systems, targeting the markets in North America, the Eurozone, Thailand and various Pacific island nations. However, our company intends to undertake and provide life-cycle services to project developments in other international markets. New geographic markets may have different characteristics from the markets in which we currently sell products, and our success will depend on our management’s ability to properly address these differences. These differences may include:

In addition, we have and will continue to pursue acquisitions and joint ventures to facilitate our expansion into new products and services and into new geographic markets. For example, we acquired Green Earth Developers, LLC (“GED”), a Georgia limited liability company, in July 2014 and BlueNRGY LLC, a Florida limited liability company in January 2015 (refer to Item 4.A. under the heading “Recent Acquisitions”). Whether the mechanism we use for expanding our business is through internal development or acquisition, failure to develop and introduce new products successfully, to generate sufficient revenue from these products to offset associated marketing and installation costs, or to otherwise effectively anticipate and manage the risks and challenges associated with expansion into new product and geographic markets, could adversely affect our revenues and our ability to achieve or sustain profitability.

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

Subsequent to July 1, 2014 through the date of this Report, we have experienced the following turnover among members of our Board and among members of our top management:

Effective July 18, 2014 Todd Barlow resigned from the Board. Prior to his resignation Mr. Barlow served as a non-executive director.

Effective August 5, 2014, Ms. Luisa Ingargiola was appointed as a non-executive member of the Board and resigned on October 23, 2014 due to concerns that she could not give adequate time to both her role with another publicly-traded company and her role with the Board.

Effective October 4, 2014, Mr. Jeffrey A. Tischler was appointed the Company’s Chief Financial Officer and resigned on November 12, 2014.

As of November 14, 2014, Mr. Gerard McGowan was: suspended as the Company’s Managing Director pursuant to Article 18 of the Company’s Constitution. Following the commencement of our VA process, (refer to Item 4.A. under the heading “Voluntary Administration and Deed of Company Arrangement”) the Administrator terminated the Contractor Agreement pursuant to which we procured the services of Mr. McGowan as our Chief Executive Officer and Mr. McGowan resigned as a member of our Board on December 30, 2014.

In December, 2014 our CEO of International Operations, James Greer, and our Senior Vice President of Wind and Off Grid Solutions, Patrick Lennon, was terminated by the Administrator.

Effective January 27, 2015, the two then-existing members of the Board, William C. Morro and Carlo Botto, by unanimous resolution, appointed John H. Chapple, Yves-Regis Cotrel, and John F. Donohue as members of the Board, subject to receipt of their written consent to serve in such capacity. The appointment of Mr. Cotrel and Mr. Donohue became effective on January 27, 2015 and that of Mr. Chapple on February 2, 2015. With the exception of Mr. Botto, who has been employed by companies serving the power generation and energy trading sectors throughout his career, our directors have limited experience in the renewable energy sector.

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

If we fail to retain and attract executives and Board members with the capabilities to meet the significant challenges we face in all of our markets and lines of business, our stock price could decline or become completely illiquid and our shareholders could face a total loss of their investment.

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

In December 2014, a class action securities suit, referred to as the Texas Action, was filed in a federal court in the Eastern District of Texas against the Company and various current and past officers and directors, namely Mr. William Morro, Mr. Carlo Botto, Mr. Richard Pillinger, Mr. Todd Barlow, Mr. Gerard McGowan and Mr. James Greer. Mr. Morro, formerly a non-executive independent director currently serves as Chairman of the Company’s Board and its Managing Director (the Australian entity equivalent of a CEO); Mr. Botto continues as a non-executive member of the Board; and Mr. Pillinger is the Company’s CFO. The other parties to the lawsuit are no longer associated with the Company.

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

We believe that the claims against our Company related to the Texas and New York Actions are extinguished pursuant to the DOCA (refer to Item 4.A. under the heading “Voluntary Administration and Deed of Company Arrangement”), but litigation against our prior and current officers and directors may continue, causing the Company to incur expenses related to these matters. In addition, plaintiffs in the Texas and New York Actions, or other parties bringing a claim against us related to events arising prior to our VA, including, among others, the Administrator of Secured Energy Bonds Plc in the UK, may not recognize or accept the limitations on the Company’s liability imposed by the DOCA. Consequently, the Company may have to incur expenses to enforce the terms of the DOCA and such expenses could be significant. It is also possible that courts in jurisdictions where we do business or have assets, other than Australia, may not recognize or accept the limitations on our liability under the DOCA or may rule in favor of parties who assert claims against our subsidiaries domiciled or operating in such foreign jurisdictions. In such a case, we, or our foreign subsidiaries, could become burdened with liabilities for which we do not have a provision on our balance sheet and we may incur significant unforeseen defense costs.

In addition, the numerous operating hazards inherent in our business increase our exposure to litigation, which may involve, among other things, contract disputes, personal injury, environmental, employment, warranty and product liability claims, tax and securities litigation, patent infringement and other intellectual property claims and litigation that arises in the ordinary course of business.

Our management cannot predict with certainty the outcome or effect of any claim or other litigation matter. Litigation may have an adverse effect on us because of potential negative outcomes such as monetary damages or restrictions on future operations, the costs associated with defending the lawsuits, the diversion of management’s resources and other factors. Given our weak financial condition, a requirement to pay significant monetary damages or to restrict our business could jeopardize our viability as a going concern and could trigger illiquidity or a loss in value of our stock.

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

Our internal controls over financial reporting do not currently meet all of the standards contemplated by Section 404 of the Sarbanes-Oxley Act that we will eventually be required to meet. As soon as practicable, we intend to address our internal controls over financial reporting and to establish enhanced formal policies, processes and practices related to financial reporting and to the identification of key financial reporting risks and assessment of their potential impact and linkage of those risks to specific areas and activities within our organization that are applicable to our business. Additionally, we will need to further document our internal control procedures to satisfy the requirements of Section 404, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and, when available exemptions as an emerging growth company under the JOBS Act or other applicable exemption is no longer available, a report by our independent registered public accounting firm addressing these assessments. Although we have not yet tested our internal controls in accordance with Section 404, we have material weaknesses in our internal control over financial reporting. The material weaknesses include, but may not be limited to inadequate accounting oversight, policies, procedures, and controls specific to complex debt agreements, taxation computations and the application of accounting estimates for the recognition of impairment allowances for good will and intangibles and investments held by the company. We cannot conclude, in accordance with Section 404, that we do not have other material weaknesses in our internal controls or a combination of other significant weaknesses that could result in the conclusion that we have a material weakness in other aspects of our internal controls.

As a result of these material weaknesses and as a result of the concerns raised by the Company’s previous registered independent public accounting firm as described in the Company’s October 24, 2014 Report of Foreign Private Issuer on Form 6-K (the “October 6-K”), the Company’s financial statements for the fiscal years ended June 30, 2012 and June 30, 2013 have been restated. We have been implementing new accounting policies and procedures and review controls since Mr. Morro became our Managing Director following our emergence from VA. We acknowledge that additional resources, as well as the completion of a comprehensive review of the design and operating effectiveness of our controls relating to financial reporting, will be necessary in the future to fully remedy weaknesses in our financial reporting process. Further, if not fully remediated, these control deficiencies could continue to impact the reliability of our financial statements. As a public entity, we will be required to complete our initial assessment in a timely manner, subject to the exemption from auditor attestation requirements that is accorded to us as an emerging growth company under the JOBS Act. Until we cease to be an emerging growth company or our exemption from auditor attestation expires, we intend to avail ourselves of the exemption.

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

As a publicly-traded company in the United States, we incur significant costs, and our management is required to devote substantial management time and attention to our public reporting obligations.

As a publicly-traded company in the United States, we incur significant legal, accounting and other expenses. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations thereunder, as well as under the Sarbanes-Oxley Act, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) and the rules and regulations of the SEC, and The NASDAQ Stock Market, have resulted in a significant amount of time that our Board and management must devote to our compliance with these rules and regulations. We expect these rules and regulations to continue to divert management time and attention from our product development and other business activities and complying with them will require us to divert some of our limited management and financial resources from the execution of our business development strategy. This could slow our growth and delay our achievement of profitability and adversely impact our stock price.

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

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

We may remain an “emerging growth company” until as late as June 30, 2019 (the fiscal year-end following the fifth anniversary of the completion of our initial public offering), though we may cease to be an “emerging growth company” earlier under certain circumstances, including (i) if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of any June 30, in which case we would cease to be an “emerging growth company” or (ii) if our gross revenue exceeds $1 billion in any fiscal year.

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

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

Our company’s operations are affected by global political, economic and market conditions. The recent economic downturn generally reduced the availability of liquidity and credit to fund business operations worldwide. As regards the renewable energy sector in particular, this currently being acutely felt in Europe, where renewable developments are not growing at historical rates and the situation is likely to worsen if the downturn is prolonged. This dynamic has adversely affected our customers, suppliers and lenders and has caused us to largely withdraw from pursuing solar PV business in Europe, other than the United Kingdom where government policies are still favorable. Because of the large installed base of projects in Europe, however, we still consider this a promising, albeit mature and highly competitive, market for our monitoring and O&M services businesses.

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

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

The renewable energy sectors we serve depend on the availability of rebates, tax credits and other financial incentives and government policies, the reduction or elimination of which is occurring and is likely to reduce the demand for our services.

Many U.S. states, including California, Nevada, and New Jersey, and other countries such as the United Kingdom, Australia and Italy, offer substantial incentives to offset the cost of solar power or wind generation systems.  These incentives can take many forms, including direct rebates, state tax credits, system performance payments and feed-in tariffs, and Renewable Energy Credits, referred to as RECs.  However, there can be no assurance that these incentives will continue to be available in any or all of the jurisdictions in which we operate and, in many places, government policies have been implemented that will reduce or soon eliminate such incentives. For example, in Australia the number of RECs received per KW installed has been reduced continuously and the number of credits received for 5kW and smaller systems was reduced from a 5 multiplier in 2010 to a 1 multiplier beginning in January 2013. We expect it will ultimately be phased out altogether. In Italy and other European countries, minimum user prices for solar electricity production and feed-in tariffs are subject to reduction annually for new applications and are subject to unannounced change; subsequent, unpredictable decrees will redefine rates for solar power plants commissioned thereafter.  A reduction in or elimination of such incentives could substantially increase the cost or reduce the economic benefit to our customers, resulting in significant reductions in demand for our products and services, which may negatively impact our sales.

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

In general, the industries in which our businesses operate are highly competitive and fragmented, subject to rapid change and have low barriers to entry. Most of our businesses have the attributes of general contracting businesses where projects are open to competitive bidding and new customer acquisition is a constant challenge because a low percentage of customers are repeat purchasers of our products and services. Even our services businesses, i.e. system performance monitoring and O&M services are often subject to a competitive bid process initially and then on an annual basis or after a short multi-year period. In particular, contracts for large projects are traditionally awarded on a competitive bid basis, with pricing often being the primary factor in determining which qualified contractor is awarded a job, although each contractor’s technical capability, safety performance record and reputation for quality also can be key factors in the determination. Residential solar projects undertaken in the small-scale solar and energy efficiency segments and the O&M services we offer do not generally require us to utilize proprietary technology and the capital required to undertake individual projects is small and available to many competitors. Many other renewable energy system developers / installers, providers of climate control and energy efficiency solutions and monitoring and O&M services providers are larger than us and have resources that are significantly greater than ours. These competitors may be able to better withstand industry downturns, compete on the basis of price, and acquire new equipment and technologies, all of which could affect our revenues and profitability. These competitors compete with us both for customers and for acquisitions of other businesses.

In particular, with respect to the solar PV segment, we may, in the future, compete for potential customers with solar system installers and servicers, electricians, roofers, utilities and other providers of solar power equipment or electric power.  Also with respect to the performance monitoring business we are competing for potential customers with other data storage and software providers, manufacturers of components such as solar panels, inverters and wind turbines, large system integrators and providers of O&M services and utilities. Some of these competitors have significantly greater financial, technical and marketing resources and greater name recognition than we have.  We believe that our ability to compete depends in part on a number of factors outside of our control, including:

Competition in the provision of O&M services to the renewable power industry may increase in the future, partly due to the low barriers to entry, as well as from other alternative energy resources now in existence or developed in the future.  Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel.  There can be no assurance that we will be able to compete successfully against current and future competitors.  If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.

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

The first commercial version of our monitoring system software was released in February 2015 and has now been deployed to a few institutional customers on a trial basis. Initial trial and feedback has been positive, but it is too early to tell whether customer acceptance will lead to contracts that will generate material near-term revenues. The roll-out of the system to a broad spectrum of users will require that we hire additional personnel to integrate the data feeds from a larger universe of sources than is currently possible. Because of the uncertainties about our ability to win customers and earn revenue, and the expectations that development and marketing costs will accelerate, we are unable to determine when, or if, the monitoring business will become cash positive. This uncertainty is magnified by the competition to provide monitoring services. There are numerous competitors developing or marketing monitoring systems with at least some characteristics similar to ours. A few of these competitors currently offer robust systems with features and capabilities similar to those we expect to provide. Despite the proliferation of renewable power generating systems worldwide, asset ownership is beginning to concentrate and we believe that the market for monitoring services may be largely locked up by a small number of competitors within a few years. Primarily for this reason, we are investing aggressively, within the limitations of our liquidity, to accelerate system development and deployments. If we cannot capture meaningful market share quickly, we may be foreclosed from pursuing much of the available revenue from this sector and we may not realize a return on investment in the development of our monitoring system.

We do not carry business interruption insurance, and any unexpected business interruptions could adversely affect our business.

Our operations are vulnerable to interruption by earthquake, fire, power failure and power shortages, hardware and software failure, floods, computer viruses, and other events beyond our control.  In addition, we do not carry business interruption insurance to compensate us for losses that may occur as a result of these kinds of events, and any such losses or damages incurred by us could disrupt our solar integration projects and other operations without reimbursement. Because of our limited financial resources, such an event could threaten our viability to continue as a going concern and lead to dramatic losses in the value of our ordinary shares.

The renewable energy sectors we serve are notable for the pace of technological change and our operations could be adversely affected if we fail to keep pace with such changes; and changes in technology could make it difficult for us to be competitive with our available technology and prevent us from achieving sustained profitability.

We develop renewable energy projects and are offering services to participants in the renewable energy markets. In part because of the large amounts of capital deployed in the sector and the global growth, the renewable energy sector is becoming increasingly competitive. To meet our clients’ needs, we must continually source, qualify and offer updated technology for the projects and services we provide. We are at a competitive disadvantage in doing so because of our small scale, weak financial condition and unprotected know-how and proprietary technology. In addition, rapid and frequent technology and market demand changes can render the existing technologies known and used by us obsolete, requiring substantial new capital expenditure or negatively impacting our market share. Any failure by us to anticipate or to respond adequately to changing technology, market demands and client requirements could adversely affect our business and financial results.

Solar and wind energy are, in some jurisdictions, more expensive sources of energy than the wholesale cost of conventional alternatives and a drop or stability in the retail price of conventional energy sources and other factors affecting energy costs may negatively impact demand for renewables and reduce our revenues and profitability.

We believe that an end customer’s decision to purchase or install solar power capabilities is primarily driven by the cost and return on investment resulting from solar power systems. Fluctuations in economic and market conditions that affect the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil and other fossil fuels, could cause the demand for solar power systems to decline, which would have a negative impact on our profitability. Other factors that could have a negative effect on our rapidly evolving business include, but are not limited to:

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

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

Many large and well-known manufacturers of PV solar panels, wind turbines and related equipment necessary to implement functioning systems, such as inverters, have failed in recent years, including two of our significant past suppliers, Solon and Oelmaier. Others have been financially weakened, possibly including some of our current suppliers. The climate control sector is more mature and failures of equipment manufacturers are less common, but they do occur from time to time. Our PV solar, wind and climate-control installations are covered by warranties from these component suppliers, which they may not be able to meet. While, we do not generally have direct warranty obligations related to components produced by these suppliers we could suffer reputational damage if the component manufacturers default on their warranty obligations.

In all of our system installation businesses, if we fail to meet warranty obligations of our suppliers who fail to do so we may face precipitous declines in our sales. We believe this to be particularly the case in the residential solar segment in Australia and, if we re-launch a residential business in the USA where the importance of reputation as a provider of reliable systems is a critical factor in the sustainability the business. However, taking on warranty obligations for suppliers who default could place a financial burden on us that we are unable to meet. Either course of action could render our business non-viable.

Existing regulations, and changes to such regulations, may present technical, regulatory, and economic barriers to the purchase and use of wind and solar power products, which may significantly reduce demand for such systems and could harm our business.

Installations of solar power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering, and other rules and regulations.  In the jurisdictions in which we operate, we attempt to keep up-to-date with these requirements on a national, state, and local level, and must design, construct and connect systems to comply with varying standards.  Some jurisdictions have ordinances that prevent or increase the cost of installation of our solar power systems.  In addition, new government regulations or utility policies pertaining to solar and wind power systems are unpredictable and may result in significant additional expenses or delays and, as a result, could cause a significant reduction in demand for solar and wind generation systems and our post-installation services.  For example, there currently exist metering caps in certain jurisdictions such as Queensland that effectively limit the aggregate amount of power that may be sold by solar power generators into the power grid.  Certain jurisdictions have passed ordinances that limit noise or threats to wildlife to levels that would preclude installation of cost-effective wind generation capacity. Moreover, in certain markets, the process for obtaining the permits and rights necessary to construct and interconnect a power system to the grid requires significant lead time and may become prolonged, and the cost associated with acquiring such permits and project rights may be subject to fluctuation.

Our business benefits from the declining cost of solar panels, and our financial results would be harmed if this trend reversed or did not continue.

The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the pricing of our solar energy systems and customer adoption of this form of renewable energy. If solar panel and raw materials prices do not continue to decline or increase, our growth could slow and our financial results would suffer. In a the past we have purchased a significant portion of the solar panels used in our solar energy systems from manufacturers based in China, some of whom benefit from favorable foreign regulatory regimes and governmental support, including subsidies. If this support were to decrease or be eliminated, if internal Chinese demand for panels increases to a level that exports are reduced, or if tariffs and import restrictions above current levels were to be imposed by U.S. or European governments it could lead to higher prices for panels (or other components), reducing demand and margins. A similar adverse impact on our results would occur if our access to specialized technology from Chinese manufacturers is restricted or becomes more expensive.

If potential owners of solar PV systems are unable to secure financing on acceptable terms as a result of financial crisis, rising rates or other factors, we could experience a reduction in demand for installation of our solar PV systems and may be unable to sell projects developed under our BOT model or owned or operated under our BOO model.

Many owners of solar PV systems depend on financing to purchase their systems. Moreover, in the case of debt financed projects, even if lenders are willing to finance the purchase of these systems, an increase in interest rates or a change in tax incentives could make it difficult for owners to secure the financing necessary to purchase a solar PV system on favorable terms, or at all. In addition, we believe that a significant percentage of owners purchase solar PV systems as an investment, funding the initial capital expenditure through a combination of upfront cash and financing. Difficulties in obtaining financing for solar PV installations on favorable terms, or increases in interest rates or changes in tax incentives, could lower an investor’s return on investment in a solar PV installation, or make alternative solar PV systems or other investments more attractive relative to solar PV systems based on our product platform. Any of these events could result in reduced demand for our systems, which could have a material adverse effect on our financial condition and results of operations.

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

Over the last few years, public disfavor of solar and wind farms in certain European countries that have historically allowed such projects (e.g., Spain and Italy) has been manifested in changes in government policies. In the opinion of our management, the public opposition in Europe has been triggered by concerns that scarce farm land was being displaced by such solar and wind power installations and that the cost of the power supplied from ground-based systems was unjustified and not economically sustainable. Moreover, the significant displacement of farmland and the costs of power supplied from ground-mount projects appears to have been caused by excessively high feed-in tariff rates set by regulators. Key policy changes observed include reductions of subsidies applicable to ground-based solar installations relative to other types of projects and changes in permitting regulations that make ground-based installations difficult or practically impossible to start. Consequently, the number of economically feasible projects in these high-potential regions has declined and the near-term opportunities for us to pursue large-scale solar projects in these proven markets have diminished rapidly. If this occurs in other jurisdictions such as the USA and Australia where land is plentiful, it could significantly diminish project opportunities and our potential for growth.  

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

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

In our PV solar and climate control businesses we depend on a small number of suppliers for key components used in our products and systems with the result that we risk disruption in supply and may be constrained in negotiating competitive prices, lead times and other trade terms.

Our businesses focused on system design and installation provide the preponderance of our revenue. Nevertheless, our small scale and weak financial condition have compelled us to obtain key components required by these businesses from a small number of suppliers who would offer us credit terms. We believe that our commercial relationship with our suppliers in each of our business segments is good, but prior to and during the period when we were operating under VA, had difficulty making timely payments on a consistent basis to many of these suppliers. .Our historical inability to make timely payments has led to curtailment of shipments to us by suppliers, even after our emergence from VA and has reduced our recent revenues and increased our supply costs. Because of our continuing weak financial condition and limited liquidity, we may face the same issue in the future. We do not maintain, or expect to be able to maintain, sufficient inventories to allow us to buffer the consequences of supply interruptions. Although alternative suppliers exist for the components we sell in our solar installation and climate control businesses, new suppliers may not be willing to ship to us on customary trade terms, or at all, due to our financial condition. The sudden loss of any of our current primary component supply relationships could cause a delay in order fulfillment and be disruptive to our operations and lead to financial losses.

It is critical to the growth of our revenue that our products be high quality while offered at competitive pricing. Any constraints that we face in being able to negotiate with our suppliers may prevent us from being able to offer systems to customers on competitive terms or to do so profitably.

In addition, we are currently subject to fluctuations in market prices for the components that we purchase. We cannot ensure that the prices charged by our suppliers will not increase because of changes in market conditions or other factors beyond our control. An increase in the price of components used in our systems could result in an increase in costs to our customers and could have a material adverse effect on our revenues and demand for our products.

Interruptions in our ability to procure needed components for our systems, whether due to discontinuance by our suppliers, delays or failures in delivery, shortages caused by inadequate production capacity or unavailability, financial failure, manufacturing quality, or for other reasons, would adversely affect or limit our sales and growth. There is no assurance that we will continue to be able to find qualified sources for components on acceptable terms and, if we do, there can be no assurance that product quality will continue to be satisfactory, which could lead to a loss of sales and revenues.

The termination of our right to use of the Westinghouse® brand to market solar installations was triggered by our VA and necessitates that we rebrand and re-launch our small-scale solar offerings in Australia and the USA; we have elected to do so under our own BlueNRGY brand and this process, if unsuccessful or more costly than we anticipate, could severely and adversely affect the viability of our solar business and the ability of our Company to continue as a going concern.

We began marketing PV solar systems solely under the Westinghouse® brand in Australia and New Zealand in April 2013 and in the USA in July 2014 and continued to do so until we received notice of termination of the license agreement with Westinghouse Electric Corporation in December 2014. This action forced us to immediately cease marketing and sales efforts for small-scale solar altogether and, following our emergence from VA, to develop a new website, marketing materials and business plans to re-launch this business under an alternative brand at great expense and with much lost time. We have determined apply our own BlueNRGY brand to the small-scale solar business beginning in Australia. Unlike the Westinghouse brand, which has wide consumer recognition in both the USA and Australia, the BlueNRGY brand is substantially unknown. It is therefore unclear whether or not the BlueNRGY brand will gain enough market acceptance to drive sales as we expect at a cost that allows this line of business to be profitable. If not, our revenues and margins could be severely adversely affected to the potential detriment of our overall business. If the brand is accepted by consumers, our failure to effectively execute the roll-out of branded product or satisfy requirements of the initial orders may increase our costs or cause our re-launch to be scaled back or cancelled. Any of these adverse outcomes could create a window of opportunity for the continued growth of competitors utilizing similar technology and could foreclose us from reentering these markets with a small-scale solar offering altogether. Because the BlueNRGY brand is our own, any costs necessary to protect and defend our exclusive rights to the brand must be borne entirely by us and, if significant, could further impair our liquidity.

Risks Related to our Ordinary Shares

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

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

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

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

We may also issue additional equity securities for other purposes including for compensation of employees, directors consultants and for employment benefit plans. These securities may have the same rights as our ordinary shares or, alternatively, may have dividend, liquidation, or other preferences to our ordinary shares. The issuance of additional equity securities will dilute the holdings of existing shareholders and may reduce the price of our ordinary shares.

There are no assurances that equity financing will be available in amounts or on acceptable terms, if at all.  If financing is not available to us on acceptable terms, if and when needed, we will be unable to fund our operations or expand our business. In any such event, our business, financial condition and results of operations could be materially harmed, and we may be unable to continue as a going.

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

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

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

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

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

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

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

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

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

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

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

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

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

In addition, the split will reduce the number of shares available in the public float and this may impair the liquidity in the market for our ordinary shares on a sustained basis, which may in turn reduce the value of our ordinary shares. We may in the future undergo one or more additional reverse stock splits. If we issue additional shares in the future, it will likely result in the dilution of our existing shareholders.

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

As a “foreign private issuer” under the Exchange Act, we are exempt from certain rules under the Exchange Act, and will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, or to comply with Regulation FD, which restricts the selective disclosure of material nonpublic information. In addition, we are exempt from certain disclosure and procedural requirements applicable to proxy solicitations under Section 14 of the Exchange Act. Our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act. Accordingly, there may be less publicly available information concerning us than there is for a company domiciled in the United States, and such information may not be provided as promptly as it is currently provided by companies domiciled in the United States. Although not anticipated, if we lose our status as a foreign private issuer, we will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements with the SEC as if we were a company incorporated in the United States. The costs incurred in complying with these additional requirements could be substantial.

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

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

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

Our principal shareholders include affiliates of W.H. Soul Pattinson and certain affiliates, referred to as WHSP, Mr. Y-R Cotrel, Mr. Morro, and Mr. Chapple and they collectively control over 50% of our outstanding ordinary shares as of May 29, 2015.

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

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

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

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

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

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

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

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

Risks Related to Takeovers

Australian takeovers laws may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our ordinary shares, which could constrain our share price and reduce investor returns.

We are incorporated in Australia and are subject to the takeovers laws of Australia, including the Australian Corporations Act 2001, or the Corporations Act. Subject to a range of exceptions, the Corporations Act prohibits the acquisition of a direct or indirect interest in a company’s issued voting shares if the acquisition of that interest will lead to a person’s voting power in such company increasing from 20% or below to more than 20%, or increasing from a starting point that is above 20% and below 90%. Australian takeovers laws may discourage takeover offers being made for us or may discourage the acquisition of large numbers of our ordinary shares. This may have the ancillary effect of entrenching our Board and may deprive, limit our shareholders’ strategic opportunities to sell their ordinary shares and may restrict the ability of our shareholders to obtain a premium from such transactions.

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

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

ITEM 4.     INFORMATION ON THE COMPANY

4.A.           History and Development of the Company

We were originally formed on August 18, 1989 in Australia as London Securities Limited, a corporation subject to the laws of Australia, specifically, the Australian Corporations Act. Following our inception, we began acquiring energy generation assets and on December 19, 1996 changed our name to Asia Pacific Infrastructure Limited. On March 28, 2000 our company’s name was again changed to CBD Online Limited to better reflect a revised focus on the provision of internet connectivity and related services in Australia. Our name was again changed to CBD Energy Limited on December 6, 2002 to reflect a reemphasis of our prior strategic focus on energy-related businesses, planned new initiatives to acquire installation and service contractors delivering energy-efficient commercial-scale climate control systems, and discontinuance of our internet business. We entered Voluntary Administration in Australia, or VA, on November 14, 2014 and our corporate organization and liabilities were restructured pursuant to a deed of company arrangement, or DOCA. As further described below under the heading “Voluntary Administration and Deed of Company Arrangement”. We emerged from VA on January 27, 2015, but retained a strategic focus on delivering solutions for renewable energy generation and energy-efficient climate-control systems. On March 20, 2015 our Company name was changed to BlueNRGY Group Limited.

Our ordinary shares were listed on the Australian Stock Exchange, or ASX, from 1989 through January 31, 2014, when we voluntarily delisted them in connection with our U.S. listing. Our ordinary shares traded on the OTCBB from February 10, 2014 until June 13, 2014 under the ticker symbol CBDNF, and began trading on The NASDAQ Capital Market on June 13, 2014 but trading was suspended on November 14, 2014 following commencement of the VA process. Due to the delinquency of this Report and other concerns of The NASDAQ Capital Markets about whether we met and continue to meet the listing requirements, trading in our ordinary shares has not yet resumed. Although we are endeavoring to complete the steps necessary to allow our share to resume trading, there can be no assurance that our ordinary shares will continue to trade on The NASDAQ Capital Market when trading recommences, or if trading will resume.

Voluntary Administration and Deed of Company Arrangement

On November 14, 2014, by unanimous resolution of those members of its Board permitted to consider the matter and to vote, it was determined that the Company and three of its Australian subsidiaries were (i) insolvent or likely to become insolvent in the future (ii) should be placed into voluntary administration under the Australian Corporations Act 2001 (the “Act”), and (iii) appoint Said Jahani and Trevor Pogroske from Grant Thornton as joint and several administrators, referred to in the singular as “Administrator”, pursuant to section 436A of the Act. Three of our Australian subsidiaries also entered VA contemporaneously, CBD Solar Labs Pty, Westinghouse Solar Pty Ltd and KI Solar Pty Ltd, which, together with the Company are referred to as the VA Companies. The Company’s other subsidiaries continued to operate or were liquidated outside the VA process.

On December 24, 2014, DOCAs approved by requisite vote of creditors were signed for two of the VA Companies, specifically our Company and one of its subsidiaries, Westinghouse Solar Pty Ltd; the DOCAs were amended by deed of variation on January 27, 2015 following another vote of creditors and, as amended, are sometimes referred to as the Reorganization Plans. Among other things, the Reorganization Plans stipulate that: (i) creditor claims and contingent liabilities of the reorganized companies were extinguished; (ii) executory contracts of the reorganized companies were terminated; (iii) through the operation of deeds managed by the Administrator, referred to as Deed Funds, creditors of the reorganized companies would receive from the Company US$1.0 million in cash and newly-issued Company ordinary shares; (iv) a secured creditor of the reorganized Companies, Washington H. Soul Pattinson and Company Ltd, referred to as WHSP, would retain the rights to proceeds derived from certain company assets or receivables and would receive convertible preferred shares issued by two Company subsidiaries; (v) the terms of our Series B Preferred Shares would be amended; (vi) we would consummate the acquisition of BlueNRGY LLC, referred to as the BN Acquisition, through new issuance of additional ordinary shares to the BlueNRGY LLC shareholders (further described below under the heading “Recent Acquisitions”) and (viii) we would sell newly issued ordinary shares to investors at a minimum issue price per share equal to or greater than US$0.03637 and having an aggregate value at least sufficient to make the US$1.0 million payment to the Deed Funds, and (ix) the Administrator would retain ownership of all subsidiaries (not previously liquidated) other than specified subsidiaries.

The Reorganization Plans became effective on January 27, 2015, when the required conditions of the DOCAs were satisfied. At that time, our Company and its subsidiary, Westinghouse Solar Pty Ltd, emerged from VA, supervision by the Administrator ceased and management of the Company by its Board of Directors resumed in accordance with its Constitution.

The foregoing summary description of the Reorganization Plans is qualified in its entirety by the copies of the DOCAs, and deeds of variation, that were filed with our report on Form 6-K/A dated January 29, 2015.

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

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

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

Recent Acquisitions

In conjunction with our Reorganization Plan, we acquired 100% of the equity interests of BlueNRGY LLC, a U.S. company specializing in data acquisition, analysis and management related to the performance of geographically distributed energy generation systems and providing related operations and maintenance, or O&M, services. At the time of the BN Acquisition, BlueNRGY LLC it was serving customers in Europe and Asia. Subsequently it has expanded the scope of its operations to include customers with U.S. and Australian generating assets. Consideration paid to the BlueNRGY LLC shareholders and shares issued to key executives and Directors of the Group as part of the transaction comprised in aggregate 150,162,640 of our ordinary shares. Based on the issuance of our ordinary shares to investors in a contemporaneous private placement at US$0.03785 per share, the value of our shares issued to the BlueNRGY LLC shareholders was US$5.7 million. BlueNRGY LLC has its principal offices in Fort Lauderdale, FL

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

In December 2012 we acquired a 50% ownership interest in J Carpenter Electrical Services LTD (subsequently renamed Westinghouse Solar UK Limited) and in June 2013 we increased our ownership interest to 100%.

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

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

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

Recent Divestitures/Liquidations

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

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

During our 2013 fiscal year, our Board of Directors determined that development and exploitation of the Larkden Technology was not a core strategy and was not practical in the near term given our limited liquidity. On April 16, 2013, we sold our interests in Larkden Pty Ltd including the energy storage patents held by Larkden in a transaction that released approximately A$2.0 million of cash to us. The sale price of the patents was A$2.75 million of which A$0.25 million was received in cash at the time of sale. (Refer to Note 3(a) (vii) – Contingent Consideration included in Section F). The balance of the payments of A$2.5 million, referred to as the Remaining Larkden Installments, are scheduled to be received in three tranches on the anniversaries of the sale from 2015 to 2017. Rights to receive the Remaining Larkden Installments were assigned to WHSP pursuant to our Reorganization Plan.

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

4.B.           Our Business

Overview

We are an Australian corporation operating in the global renewable energy and energy-efficiency sectors. Our businesses are focused on the downstream implementation, collection and analysis of performance data (sometimes referred to as data management), operation and maintenance of renewable power generation systems and the delivery of differentiated products and services that are designed to allow electricity consumers to reduce power costs and increase efficiency of their climate control and other systems. In recent years we have expanded the scope of operations throughout Australia and to Asia, Europe and the United States. The scope of our activities was curtailed by the VA process described in Item 4.A.under the heading “Voluntary Administration and Deed of Company Arrangement”, but we continue to conduct business through multiple subsidiaries operating in the aforementioned regions. Our continuing activities are divided among the following lines of business:

Prior to the VA process, we were also actively developing wind projects, but our involvement with wind generation systems is now, and is expected to continue to be, limited to providing data management and maintenance services. We are no longer pursuing new project developments in this sub-sector of the renewable energy industry.

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

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

In conjunction with effecting our Reorganization Plan, we acquired BlueNRGY LLC, a company focused data management, operations and maintenance for renewable power systems. The BlueNRGY data analytics software is in the early stages of commercialization and testing with initial clients and prospective clients; the data management business has started to record revenues and we expect those to grow as it scales up and integrates new clients and sites. BlueNRGY’s O&M business is also small, but profitable, and we will endeavor to scale it rapidly in addition to having this team take over management of our legacy assets such as the Chatham Project, which is discussed further below.

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

Our wind project development business was historically confined to Australia and was active during our 2012 to 2014 fiscal years when we believed the regulatory framework, our experience and the local presence of our executive management gave us an opportunity to compete successfully. We developed and, until we entered the VA process, managed most of the construction of a 107MW, approximately A$290 million wind farm at Taralga in New South Wales. Completion and commissioning of the Taralga project is expected in the second calendar quarter of 2015. As developer, we negotiated a long-term energy off-take agreement with Energy Australia, Australia’s largest energy retailer, and then sold the project to an affiliate of Banco Santander. While we retained a 10% interest in project equity returns, the proceeds payable from that ongoing participation must now be turned over to WHSP pursuant to the terms of the DOCA. New development activities in the wind segment were curtailed upon emergence from VA, but we retained core competencies in the wind sector with some of the technical and other personnel who worked on our Taralga and other wind developments.

Our Industry

The renewable energy industry, which includes energy derived from wind, solar and renewable biological resources, has grown rapidly throughout the world in recent years. This has been a result of the convergence of several factors including government policies favoring the use of renewable resources over carbon-based alternatives, technological advances that have reduced the cost of energy derived from renewable resources and increases in the costs of many fossil fuels in most countries. Evidencing these trends is the level of investment by renewable energy sector, as shown in the table below:

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

Source: Bloomberg New Energy Finance, January 6, 2015

Although aggregate investment levels in renewable energy capacity have plateaued, installed generating capacity continues to grow rapidly because unit costs of installing renewable capacity are declining. According to the 2013 Clean Energy Race Report published by the Pew Charitable Trust, the Pew Report, installed global capacity of wind and solar generation systems in G-20 countries reached 307GW and 144GW respectively at the end of 2013 and had year-over-year growth rates compared with 2012 of 27GW and 40GW respectively. The Pew report also illustrated that almost half of the clean energy investment in 2013 was in Asia and Oceana and the remainder was split almost evenly between the Americas and Europe/Middle East and Africa. Our management believes, and our business planning assumes, that the current and near-term allocation of investment in the sector will remain consistent with that observed for 2013. Given the pattern of continuing investment in the renewable sector we expect the installed base of renewable assets to continue to cumulate rapidly

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

in wind and energy efficiency have been principally in the Australian region; however, our experience and technology establish a base for applications in other international markets.

The Solar PV Segment

As reflected in Figure 1 the solar sector has become the largest recipient of investment capital among the renewable energy sectors. According to the Pew Report, investments in solar generating assets attracted $97 billion of investment in the G-20 countries in 2013, 52% of the total invested in clean energy for that year. The solar sector encompasses a wide variety of commercial activity ranging from PV solar to solar thermal concentrators, including the monitoring and management of data pertaining regarding installed capacity. Progress in each of these areas of the Solar PV sector has contributed to making solar power more cost effective over time and this trend is continuing.

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

Figure 2, shown below, illustrates the Levelized Cost of Energy, or LCOE, for solar PV at year-end 2014 is at or below the cost of electricity in many major markets, including markets served by us.

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

Source: 2015 Solar Outlook - Deutsch Bank

Over the several years, a dramatic reduction in the cost of solar PV systems, most notably in the modules that generate electricity, has led to reductions in the installed cost per watt of system capacity. In May 2012, Bloomberg New Energy Finance published a white paper, “Reconsidering the Economics of Photovoltaic Power” that reviewed the economics of solar PV in the United States. In that paper the authors concluded that solar PV costs have been declining, and have declined dramatically in recent years – by 75%. The trajectory of the decline between 2001 and 2013 for the USA was charted by the Solar Energy Industry Association, or SEIA and is shown in Figure 3 below:

Figure 3: Prices and installation rates of solar PV systems in the United States (2000 – 2013)

Source: Solar Energy Industry Association, “Solar Market Insight Report 2013 Year in Review”

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

Figure 4: Reduction in solar PV modules Prices in Australia

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

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

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

Kingdom.

The convergence rate of solar energy cost with traditional energy costs has been accelerated by rising electric power rates in key markets we serve.

In Australia, the increase in retail electricity prices has been accelerating in recent years, more than doubling for both households and businesses since 2000, as illustrated in Figure 5.

Figure 5 Electricity price indices for households and businesses in Australia 

Source: Australia Bureau of Statistics

In the United States, recent retail price increases have not been as rapid as in Australia, but, according to the U.S. Energy Information Administration, prices are more than 50% higher than in 2001 and the price trend continues to be rising, as illustrated in Figure 6 below:.

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

Source: U.S. Energy Information Administration

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

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

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

Australia. Small-scale solar in Australia is incentivized primarily by the Small-scale Renewable Energy Scheme, or SRES, under which power generators and some industrial companies are obligated to purchase annually a number of small-scale technology certificates, or STCs, specified by the government agency responsible for administering the SRES program. Eligible installations, such as residential solar systems, are credited with a onetime allocation of STCs when completed and the regulator establishes the aggregate annual STC purchase obligation for power generators at a level approximately equal to the supply of STCs that it expects to be created from new installations, adjusted for over or under creation of STCs in prior years. STCs may be purchased by any person and freely traded. Consequently, an unregulated market for STCs has developed since the inception of the program. As the experience of the government agency responsible for balancing STC purchase obligations with supply has grown over time, market volatility, liquidity and predictability of pricing have decreased, but the market remains thin and the number of market makers is small. STC prices are effectively capped by the right of obligated purchasers to pay a fixed-rate penalty if they are unable to purchase sufficient STCs in the market to meet their obligations. As the costs of solar energy have declined and the market has matured, the number of STCs credited under the SRES program for each kW of solar capacity installed has been stepped down by the regulators and now represents less than 25% of the value of a system at market prices for STCs. The Australian government is currently considering legislation that would leave the SRES program unchanged through 2020. The legislation has bipartisan support and our management expects that it will be adopted, but there is no assurance that the proposal will be enacted or that government policy will not change.

Large-scale renewable energy installations, which include both commercial- and utility-scale solar systems and wind systems, receive annual credit for the energy produced and this is reflected in the issuance of RECs. Power generators are obligated to meet targets for renewable energy generation and may do so by receiving credit in the form of RECs for the renewable power they generate, or they may buy RECs from others who are generating power from renewable sources in excess of their mandated requirements. The regulation currently being considered by Australian lawmakers would fix the large-scale renewable generation targets through 2020 at 33,000GWh, almost double the 17,000GWh of energy that is expected to be produced by large-scale renewable generation in 2015. This target, if adopted, would create ample opportunity for large-scale installations over the next five years that, according to the Australian Clean Energy Council, would represent investment of more than A$10 billion over the period.

United States. The regulatory incentives in the United States include a federal income tax credit that represents approximately 30% of the value of a project. In addition, a patchwork of state- and local-level programs exist that vary widely in structure and economic effect and may include tax credits or other deductions, outright grants, REC programs and mandated net metering or feed-in tariff arrangements that have the effect of further subsidizing solar installations. The magnitude of federal tax credits are due to be reduced in 2016 to 10% and the incentive programs of states that were early promoters of solar are generally also declining in significance. Our management expects that the impending reduction in the federal tax credit will produce a high level of activity prior to year end 2016, followed by a downturn in the pace of solar PV installations. In general, state level incentives tend to be more favorable to residential or small-scale solar installations and we expect this to continue to be the case.

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

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

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

Figure 7: Historical and projected residential capacity increases – 2001 to 2014

Source: Australia PV Institute (APVI) Solar Map

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

United States. We expect demand for residential solar installations to grow rapidly in the United States and for more levels of commercial-scale installations to be sustained in line with the recent capacity installation trends reported by SEIA and shown in Figure 3 above. This market opportunity is creates substantial overall growth potential for participants in the U.S. market, including us.

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

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

The residential and small commercial solar PV market in Australia is fragmented, with no large dominant competitors. The three major energy retailers (Origin Energy, AGL and Energy Australia) have active installation businesses, and there are a number of significant competitors focused on residential installations. An Australian consultancy, Sunwiz, determined the top 20 solar installation businesses in August 2012 as shown in Table 8 and we believe that the same companies continue to hold leading market share.

Table 8: Sunwiz Top 20 Residential Solar PV Installers in August 2012

Source: Reneweconomy, August 2012 on-line article (http://reneweconomy.com.au/2012/solar-insights-australias-top-20-solar-companies-52223)

The U.S. residential market has some large competitors as illustrated in Figure 9 below:

Figure 9: Market share distribution of leading U.S. residential installers

Source: GTM Research

While still fragmented, GTM Research reported in its Q-1 2015 report that the residential installer market is consolidating, with SolarCity and Vivint market share exceeding 50% for the first time. Other large installers include Verengo, Sungevity and Real Goods Solar. Notwithstanding the significance of the larger competitors and their momentum in consolidating market share, the low penetration rates for small-scale installations in the United States are still supporting smaller competitors serving niche markets.

We believe First Solar and SunEdison to be the largest U.S. installers of utility-scale systems. We are not aware of any installers serving the large-scale commercial sub-sector that have accumulated meaningful market share. In the USA, as well as in Australia and the United Kingdom, we believe that this subsector is served by many regional companies in other industries such as roofing and general electrical contracting who have expanded their business scope to include solar installations.

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

Large-Scale Wind

Wind energy is currently the most economic source of large-scale renewable energy and is easily scalable if suitable sites can be developed in the regions where power is needed. As with other renewable energy sectors, installation of wind power generation capacity has grown rapidly over the past decade, although wind energy investments globally have recently plateaued, as shown in Figure 1 above. As with solar, the wind sector encompasses the design and installation of the generating system (turbines & towers) and ongoing maintenance and management.

In the Australian market, wind capacity has grown steadily, driven by a government-mandated renewable energy target. . This target requires electricity retailers to source an annually increasing amount of their customers’ electricity consumption from renewable sources, the largest component of which is necessarily wind. This trend in Australia is illustrated by the figure below:

Figure 10 - Cumulative Installed Wind Capacity in Australia

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

To satisfy the Australian renewable energy target under the pending legislation, the Australian Clean Energy Council estimates growth in wind capacity averaging between 500MW and 750MW per year will be required through 2020 is required in Australia’s installed wind generation capacity. As shown in Table 11 below, there were 13 wind projects in the advanced stage of development at year-end 2014. These represented 1,945 MW of wind generation capacity, with 14,676MW of wind projects in a less advanced stage.

Table 11. Major renewable electricity generation projects - November 2014

Source: Australian Bureau of Resources and Energy Economics –

Electricity Generation Major Projects Report - 2014

To our knowledge, there are approximately 20 companies developing and/or operating wind farms in Australia. These include the three major nongovernment utilities – AGL, Origin Energy and Energy Australia. Within the top ten, we estimated that two companies have development pipelines of greater than 1,000MW, with the remaining eight having pipelines in the range of 500 to 1,000 MW.

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

Renewable Power Systems Data Management, Operations & Maintenance

The addressable market for services targeting the data management, operations and maintenance of renewable generation projects of any type and in any region is defined largely by the installed generation capacity, with adjustments for differences that exist in project sizes and vertical integration among regional markets. On a worldwide basis, as of end of 2014, we estimate that more than 640GW of renewable power generation systems are in operation, including 226GW for Solar PV and 413GW for Wind.

Solar PV:

Distributed solar projects come in a wide variety of sizes, roughly characterized as residential, small-scale (or commercial) and utility- or megawatt-scale. supervisory control systems for these projects are provided by numerous specialist firms, equipment OEMs such as the inverter companies, and a handful of large, vertically integrated organizations and utilities or independent power producers who have developed proprietary systems. Given our current capabilities to provide data management, operations and maintenance, the markets that are immediately relevant for our data management services and O&M services are the small-scale commercial, where system fleets are involved and the megawatt-scale installations for both small and large fleet owners. Very large utility-scale projects with full-time operational personnel and fleets owned by vertically integrated solar companies are less likely to be customers for our current systems and services offerings than other types of projects.

United States: GTM Research has estimated that the total addressable market for distributed solar generation O&M in the U.S., excluding utility scale project, is forecasted to be over 11GW by the end of 2015 and is estimated to represent an $803 million niche market by 2020. This includes the more than 1,100 commercial installations analyzed by Solar Energy Industries Association Solar (SEIA) and that we believe to be representative of the concentration of U.S. installations. The ownership category and geographical concentration of these installations is illustrated in the chart below and provides perspective on the market for O&M services for less-than-utility-scale installations:

Figure 12: Representative Solar PV Installations

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

We believe that competition for O&M services in this less-than-megawatt market is highly fragmented and includes such regional firms as True South Renewables, Burke Electrical Solar, Petersen Dean, Verengo Solar and Trinity Solar. Notable competitors serving the U.S. market (both small-scale and utility-scale) with specialized data management systems for solar PV (both small-scale and mega-watt scale) include MeteoControl, Solarlog, Draker and Also Energy.

We believe the U.S. utility-scale market includes many very large single-site power plants and a high concentration of ownership by vertically integrated companies such as First Solar, Sun Power and Sun Edison. The solar installations run by these companies are not within our addressable market. There are, however, many smaller megawatt-scale installations and geographically distributed fleets in the United States and the number is growing. In addition, there has recently been significant formation and growth of special-purpose funds and operating entities (both public and private) to invest in contracted renewable energy assets or the cash flows derived from such assets (referred to as YieldCos). YieldCos are providing the renewable energy industry increased access to cost-effective capital, particularly in North America, that is driving market growth and consolidation of renewable assets into portfolios, or fleets. According to Kaye Scholer – Investment Financing Opportunities in Alternative Energy 2015 report, six publicly-listed North American YieldCos (NRG Yield, TransAlta Renewables, Pattern Energy, Abengoa Yield, NextEra Energy Partners and TerraForm Power) secured $3.8 billion in equity on the public markets in 2014, more than three times the $1.1 billion reported by Clean Energy Pipeline as having been raised in 2013. Clean Energy Pipeline also reported that the same YieldCos collectively acquired 3.8 GW of effective renewable energy capacity (defined as the capacity of the project multiplied by the stake acquired) in 2014, a 46 percent increase over the 2.6 GW of effective capacity acquired in 2013. The figures do not include acquisitions by other funds or independent power producers that we believe to be significant in number and are amassing portfolios of renewable energy projects. YieldCos and similar aggregators of renewable generation assets, whether public or private, have requirements for enhanced data analytics delivered through a single platform and we believe they will form an important new category of customer for our data analytics and O&M services in North America. Our management also believes that the aggregation of renewable asset ownership by specialized owners will grow globally and will create new customers for our services.

Numerous competitors for O&M services serve our addressable utility-scale market, including Suns Up Solar and Next Phase Solar and we are not aware that any of these companies has significant market share. We also believe that there is considerable overlap between O&M providers servicing megawatt-scale installations and small-scale systems.

Australia: We believe that the preponderance of solar PV installations in Australia have been residential or were constructed by the major vertically-integrated utilities. Neither of these categories of installation are currently addressable by us with our current capabilities to provide O&M services in Australia. As the market matures and financing becomes more readily available, we believe that fleets of commercial installations will grow and that a viable market for our O&M services for solar PV will emerge.

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

Wind. Because data management, asset management and maintenance contracts on wind projects typically extend for several years, we believe our best opportunities to win new business in the wind sector are in areas where new projects are likely to be commissioned over the next several years rather than endeavoring to displace established service providers at seasoned projects. Collectively, the pipeline projects in our targeted regions represent an attractive market opportunity for our maintenance and data management services, but there can be no assurance that we will be successful in garnering contracts with any of these prospective customers or projects. For Australia this is illustrated by the pipeline information in Figure 11 above. In the last several years there has been a considerable slowdown in the pace of new U.S. wind project construction, although, as illustrated in the chart below, many new projects were started in the fourth quarter of 2013 and are still under construction. The Pew Report indicates that investment levels for in wind projects in Europe are will continue

Figure 13 – Wind Capacity Under Construction

Source: American Wind Energy Association – U.S. Wind Industry 3^rd Quarter Market Report

Some of the projects still under construction may be candidates for our O&M services as they are completed and commissioned, but the pipeline of new starts is thin. In Europe, the UK represents a bright spot for wind installations due to the prevailing policy and current feed-in-tariff structure. The pace of new wind installations that could represent targets for our O&M services have fallen dramatically from historical levels.

To our knowledge, most local supervisory control systems deployed throughout the world are generally proprietary to the turbine manufacturers although a few specialist independent companies do offer data management systems for wind installations. These companies include: Baze, BaxEnergy, Osisoft and their primary served markets are North America and Europe.

Energy Efficiency

Our business segment targeting energy efficiency is currently focused only on Australian businesses whose products and services have the potential to contribute to reducing the amount of energy and related services consumed by end-users for a given activity. In Australia, powerful incentives exist for end-users to employ energy efficiency measures to reduce cost and/or comply with government regulations. Australia has also experienced sharp increases in electricity charges in the last five years and these are expected to continue. The country’s power cost increases have been primarily driven by investment in regulated infrastructure and the introduction of carbon pricing and other government policy mandates that are intended to promote the use of energy resources deemed to be more sustainable. The range of products and services associated with energy efficiency is potentially broad, but our activity in this sector is currently limited to an HVAC contracting and servicing business serving the Melbourne, Australia market. The following industry discussion is tailored accordingly. Major new installations in the HVAC markets we serve are awarded primarily by competitive tender where price is a key determinate of success. Market participants often submit tenders as part of a syndicate of contractors and opportunities are sourced through long-standing relationships with construction general contractors. Service sales are generated from relationships with prior installation customers and through competition on service levels. Revenue growth in the region is bounded by and highly correlated to construction activity levels in and around Melbourne. Because of the favorable weather patterns in the region, the construction cycle is not seasonal in nature.

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

Our Competitive Strengths

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

Development track record - As the renewable energy industry matures, execution track record and prior project success are increasingly important to securing bidding opportunities and winning contract awards. Notwithstanding our restructuring in VA, we have retained core competencies in, and a solid track record successfully developing, designing and implementing large and small-scale solar projects in both developed countries and remote and difficult geographies. We have also demonstrated that we can overcome the challenges of integrating renewable power into diverse local power grids. In Australia and through our foreign subsidiaries, we have successfully installed more than 70 MW of solar capacity worldwide through March 2015, including over 17,000 residential systems. Our wind project developments include completed systems in the Chatham Islands, off the coast of New Zealand, and the 107MW Taralga Wind Farm in Australia that is in the final stages of construction. In addition, we have handled numerous complex climate control system installations with total value of more than A$250 million.

Management skills, experience and local presence – Members of our Board and our managers in the USA and UK as well as Australia, have extensive knowledge of and experience in the utility and energy sectors that gives us the credibility to effectively negotiate power purchase agreements and complex EPC contracts for larger projects that we deem to be a critical factor for our success as a renewable energy project developer. We also have the relevant experience in operating and maintaining renewable systems to provide a foundation for development of this line of business from a small but growing revenue base. We intend to augment our executive ranks through direct hires and acquisitions to ensure we have the capabilities to fully capitalize on the market opportunities we in the growing sector we serve.

Clear strategic focus – We have a singular focus on downstream implementation, management and optimization of renewable energy and energy efficiency technologies over their full life cycle, specifically: project origination and negotiation of power purchase agreements, or PPAs, system design and technology integration, efficient procurement and installation, and post-commissioning performance measurement, operations and maintenance. This positioning allows our company to partner effectively with a wide base of equipment and component suppliers, project owners and financing sources. Our customers look to us to help them achieve competitive costs for systems, optimize energy delivered or used and to limit risks associated with relying on a single technology or supplier. We believe that our focus also positions us within the highest value-added segment of the renewable supply chain where we can distinguish ourselves through execution, branding and the development of proprietary technology in system data management and optimization.

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

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

Our Business Strategies

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

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

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

Deploy a flexible business development organization. We are striving to implement standardized project design methodologies, management processes and execution objectives across geographies and lines of business in which we operate. This allows cross utilization of our business development resources and facilitates using a small executive team to efficiently and rapidly respond to evolving demand for efficient generation and climate-control systems suitable for varying regulatory and business environments.

Capture high-margin opportunities not targeted by traditional installers and developers. We have developed expertise in solar, wind, energy storage and energy efficiency that gives us unique and complimentary capabilities to provide integrated sustainable and cost-effective generation and climate control solutions for the residential, commercial and utility markets. When possible, we try to sell our systems, or the output from generation systems, directly to electricity end users. In such cases, we have the opportunity to price our installations based on savings relative to retail prices, as opposed to wholesale prices, and thereby capture the highest available margins. Over time, where market conditions and regulations permit, we are positioning ourselves to be able to offer customers the opportunity to acquire energy from renewable sources at competitive pricing thorough so-called community or imbedded networks, without the necessity of customers having to be directly involved in system installation or ongoing management.

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

Selectively acquire or retain project ownership interests. Through our project development and proprietary data management activities we have visibility of expected project returns in many situations. Over time we expect to be able to invest opportunistically in commissioned generating projects that we believe will have high returns on our invested capital, generate O&M revenue or foster future business development. As capital cost and availability permit, we intend to invest in such projects.

Acquire complimentary businesses. We have grown and evolved our company through acquisitions and intend to continue to do so (see “—Acquisitions” below). We recently completed the acquisition of GED and BlueNRGY LLC and are actively exploring other acquisitions and strategic partnerships that we believe would accelerate our entry into targeted markets and enhance the depth of our management team

Our Challenges

In spite of our competitive strengths and strategies to capitalize on them, we face significant challenges in executing our business plan that subject investors in our ordinary shares to a high degree of risk, notably:

With respect to our business:

Weak financial condition – We emerged from the VA process with a streamlined cost structure and no corporate indebtedness. However, we remain thinly capitalized and are currently not profitable. Some of our operating subsidiaries that were not part of the VA process require cash infusions to meet working capital needs, including paying deferred trade creditors and funding for new projects. In addition, our data management business is still in the initial stages of commercialization and requires additional investment in the software to satisfy competitive requirements and to fund trials for prospective new customers. Consequently, we may encounter demands for payment that we cannot meet and have limited access to trade credit, either of which could have adverse consequences for our business and future prospects. Our auditors have raised substantial doubts as to our ability to continue as a going concern. Nevertheless, we have raised sufficient equity and, at our subsidiaries, working capital loans to fund our operations since emergence from VA. We believe we are positioned to grow profitably during our 2016 fiscal year if we have access to sufficient additional capital to fund business development opportunities in our pipeline.

Small scale and low market-share in highly competitive businesses – Competition is intense in all of our lines of business and we do not have significant market share in any of the businesses or regions where we operate. This places us at a disadvantage to larger competitors and limits our control over margins. We must work hard to originate new business leads and we expend significant resources doing so. With respect to obtaining financing for projects or our customers, we believe we are operating at a disadvantage to larger competitors who can more easily build alliances with project financing resources and negotiate better rates. We may also be at a disadvantage with respect to purchasing components at the lowest cost, although we believe that the component markets for the systems we install are currently so competitive and commoditized that this is not a significant concern. We are seeking to overcome these disadvantages by growing the scale of our business and trying to differentiate ourselves through use of the BlueNRGY brand the innovative technology we offer and the quality of our service.

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

With respect to our industry:

Instability of renewable energy policies and market conditions – Changes to global political and economic conditions have negatively impacted our business in the past and are likely to do so in the future. The renewable energy sectors we serve depend, to a degree, on the availability of rebates, tax credits and other financial incentives and government policies affecting the purchase and use of energy generated from solar and wind resources, changes in which could reduce the demand for our services and impair our margins. Some changes can be anticipated, such as the reduction in the U.S. federal tax credit for renewable energy projects that is scheduled to step down from 30% to 10% at the end of 2016. But other changes can occur with little advance warning and opportunities to mitigate the consequences in any single jurisdiction may be limited. Our strategy to diversify our operations across renewable energy technologies and geographies is intended to ameliorate this risk but cannot eliminate it.

Limited availability of cost-effective project financing – Renewable energy generation and energy efficiency installations are generally capital intensive and have long useful lives ranging up to 20 years or more. The availability of financing, and in the USA, tax equity financing, is usually a key factor in determining project viability. Because renewable energy generation technology, particularly solar, is not mature, the legal and regulatory frameworks governing these installations are evolving and demands for financing have been high relative to availability. Consequently, costs vary widely depending on project-specific factors and availability of financing is not reliably predictable. Gaining access to financing for projects on acceptable terms is an important factor to our success. While financing constraints affect all renewable system developers and providers, some larger competitors have advantages in accessing financing that we are seeking to overcome by rapidly increasing our own scale of operations in key markets. If interest rates rise or other factors cause financing costs to increase, this could dampen growth in all of the markets we serve.

Description Of Our Business Segments

Solar PV- Residential and Small Commercial Solar

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

Since we entered the business of installing PV solar systems, this component of our business was principally focused on residential installations, typically averaging about 3kW. However, we have also completed a substantial but much smaller number of commercial installations of less than 100kW. We dramatically increased the scale of our activity in the small-scale solar segment in Australia with the 2010 acquisition of eco-Kinetics, a Queensland based installation business.  Beginning around the start of our 2012 fiscal year, the residential installation market in Australia, which represented approximately 70% of our solar revenue in our fiscal year ended June 30, 2012, experienced a dramatic industry-wide downturn resulting from reductions in government incentives and subsidies at both the state and national level. This had an immediate adverse impact on the revenues and operating results of our Australian residential solar business and on our company as a whole.

In response to the revised policy environment in Australia, we dramatically scaled back our small-scale solar operations there and made adjustments in our business model to reduce fixed costs, lower inventory requirements, limit customer acquisition expense and shift some installation activities to qualified third parties. Beginning in 2013, we began the transition of our product and marketing focus to offer solar PV systems to Australian home owners under the Westinghouse® brand and early indications were that the brand and associated marketing program would gain sufficient consumer acceptance to sustain the strategy of selling branded systems. Based on the favorable consumer reactions to the Westinghouse® brand in Australia, we launched a small test of residential sales in the USA under the Westinghouse Solar name during the first half of our 2014 fiscal year. However, as a result of the VA process, we lost our rights to use the Westinghouse® brand and in December we ceased all sales and marketing initiatives referring to Westinghouse® and we are in the process of winding up the U.S. subsidiary in which the U.S. residential trials were conducted. In April 2015, following our emergence from VA, we re-launched commercial sales under the BlueNRGY brand and are currently undertaking residential sales in Australia on an opportunistic basis while we develop plans for re-entering this market and addressing system upgrade opportunities for the large installed base of solar system owners.

As costs of solar PV systems dropped, reliance in Australia on the SRES Program and other subsidies for the sale of PV systems has declined. With the cost of solar PV approaching or having reached grid parity in most areas of Australia we and other solar installers have been successful attracting new customers without the need for significant reliance on subsidies or feed-in-tariffs. Continued increases in energy prices in the future, if they occur as our management expects, will serve to increase the attractiveness of small-scale solar installations to both residential and commercial customers. Consequently, our management’s expectation is that if we have adequate working capital availability we can rebuild our Australian small-scale installation business to a sustainable and stable contributor to our overall financial performance. If we can grow our rate of small-scale system installations to a level of approximately 10MW/year, it would represent approximately 2.5% - 5% market share for such systems based on the lower range of the ORER consultants’ forecasts of the sustainable pace of solar installations in the Australian market. Attaining this market share is consistent with our rank in August 2012, as reflected in Table 8 above in “Our Industry”, under the single reference to eco-Kinetics, as the 15 ^th ranking Australian installer.

Going forward, we intend to market small-scale solar systems directly to Australian purchasers through commission sales representatives, tenders (for small commercial installations) and through our website. Our experience is that direct marketing initiatives provide us with immediate feedback on customer reactions to price and product changes and will allow us to adapt to changing market requirements. It is not known how consumers will react to the BlueNRGY brand when we introduce it and an unfavorable response could constrain our ability to rebuild meaningful residential market share.

Following our emergence from VA, components for our residential and commercial solar systems, including solar panels, inverters and certain other elements, are currently being purchased on a non-exclusive basis from third-party distributors, some of which have offered us limited trade credit terms. We are actively working to expand the supply chain to include additional supply sources and direct purchasing arrangements with specific component manufacturers. Obtaining such direct supply arrangements will necessitate growing our PV solar revenues substantially. With our emergence from VA, we have abandoned past efforts to produce solar panels for our own use and for sales to others. The lease of the facility in Queensland secured for that purpose was terminated and the equipment transferred to the Administrator for liquidation.

As discussed in the profile of our industry above, growth in small-scale installations in the United States is expected to be robust over the next few years, primarily in the residential /consumer segment. We consider it essential to participate in this market and we are currently developing plans to do so utilizing an approach similar to that employed in Australia and utilizing our BlueNRGY brand. We hope to be able to accelerate our entry into the U.S. residential market through acquisition of at least one company with strong customer origination capability and to exploit what our management believes will be a developing market for so-called community solar offerings. As of the date of this Report we are not currently selling small-scale solar systems in the USA.

Solar PV- Large Commercial and Utility Scale Solar

In 2011, we established a separate division to construct large-scale solar projects, which typically have a capacity of approximately 1MW or greater. The key factor that allowed us to venture into larger scale projects was the capability in EPC gained through the acquisition of eco-Kinetics in 2010. These capabilities were further augmented with the acquisition of GED, a U.S. EPC contractor in 2014. The projects we have developed include both ground mount and large commercial rooftop solar projects in various geographic markets.

Since inception, our large-scale solar business has employed three different delivery models, depending on customer requirements, working capital availability and cost at the time project opportunities became available:

Engineering, Procurement and Construction (EPC)

Under the EPC model, the customer pays the EPC contractor on a milestone or percentage of completion basis as project construction progresses and ownership of project work-in-progress is turned over to the customer. The EPC contractor typically takes responsibility for:

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

Build, Own and Transfer (BOT)

Under the BOT model, which we employed in beginning in our 2013 fiscal year, we acquire the site development rights, with permits and off-take agreements in place, from small or thinly capitalized developers and we complete the projects on a turnkey basis. The BOT model requires application of our EPC capabilities and that we provide the funding to acquire the site development rights, power generation equipment, complete construction and have the project connected to the grid. It also requires us to arrange the sale of completed projects, either individually or on a bundled basis, to third-party owners who are acquiring the long-term cash flow expected from projects following their commissioning. Such sale processes can be costly and protracted. Nevertheless, if construction financing is available, the BOT model can result in higher project margins than for EPC projects, although the benefits may be partially offset by the associated financing costs. We employed this model in Italy in FY 2013 at several sites aggregating to 5MW and referred to as the Italian Projects. These projects were sold during our 2014 fiscal year. Following our emergence from VA, we do not have sufficient capital available at a cost that allows us to employ the BOT model and there are no assurances that we will be able to do so in the foreseeable future. .

Build, Own and Operate (BOO)

The BOO model has been used successfully by us for only a few projects to date. It too requires application of our EPC capabilities and the provision of financing to fund construction. However, under the BOO model, we retain ownership of the project for an extended period of time, potentially through the useful life of the project assets and realize a revenue stream from the sale of power as long as we own the project. Our applications of this model included a construction of a solar array on King Island, Australia and, on New Zealand’s Chatham Islands, construction of a small wind farm. Our current policy is to undertake BOO projects only if the project has a long term PPA backed by a credit rated utility on terms we deem favorable and we can find and incorporate financing at an acceptable cost. While our management believes that the BOO model has the potential to yield the highest margins, utilizing it requires access to significant financial resources on terms that are not currently available to us following our emergence from VA.

Within Australia, our opportunities to bid on large-scale solar PV projects have been limited and the awards few. As the cost of solar PV approaches grid parity, our management expects the larger scale commercial and utility market within the Australia region to grow. With our capabilities in the Australia and, through GED in the USA, to undertake system design, engineering and installation, we believe we are positioned to participate actively in projects in Australia as well as internationally.

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

Although our large-scale solar experience is substantial, our projects generally represented less than 1% of the installations in our served markets at the time they were performed. Nevertheless, these experiences in building large-scale solar PV projects have focused us on the potential opportunity for this line of business in the United States and the United Kingdom and the highly fragmented markets facilitate our entry.

Whenever we construct a large-scale solar project we generally tender or negotiate for post-commissioning operations and maintenance, or O&M, contracts if we have a permanent presence in the country where the project is located. Such contracts, if awarded, are normally valid for multiple years and sometimes for the life of these projects, but there is no assurance that an O&M contract will be awarded to the project constructor. Our track record in winning O&M awards has been poor and we believe the acquisition of BlueNRGY LLC and the capabilities and processes they have in the O&M arena will assist us to win a higher percentage of O&M awards for projects we construct.

While our large-scale solar installations are not tied to any particular manufacturer or technology, we do work with preferred component suppliers to ensure quality products are installed and that strong warranty support from large established equipment manufacturers is available to our customers. This strategy allows us to optimize total project costs to give us an advantage in some bidding situations. Our large-scale solar projects are generally of sufficient scale to permit us buy components directly from a diverse group of manufacturers if the project owner is not negotiating component procurement arrangements directly. We believe that, as a result, our procurement costs are competitive with other large installers/developers and that we have a competitive advantage over some smaller installers who must purchase system components through distributors.

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

Renewable Power Systems Data Management, Operations & Maintenance

The integration of BlueNRGY LLC with our company in conjunction with our emergence from VA gives us enhanced capabilities that our management believes will allow us to access the large and growing market for data management and services related to operating and maintaining the large global pool of distributed renewable generating assets over their multi-decade life-cycles.

Data Management. - The proprietary BlueNRGY data management technology is a powerful tool designed to provide asset owners and managers with the capability to cost-effectively collect, store and analyze performance data on their systems over time with a high degree of granularity. It enables performance monitoring at the system component level and overall, and can be applied across the full spectrum of component suppliers. Component performance can be compared over time and across portfolios of projects, system performance can be compared across portfolios of assets and design expectations, and correlations with external factors can be evaluated. We believe that system data, once accumulated, will have alternative applications in validating billing and revenue collection, to support asset valuations and for financing providers, risk managers & insurers.

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

During the first half of our 2016 fiscal year, which begins July 1, 2015, we expect that our system development will have progressed to the point that we can begin actively marketing our data management solution to a broad range of new customers, although there is no assurance that we can maintain this rollout schedule. Our test customers comprise a utility and several owners of portfolios of renewable generating assets. These are the types of prospective clients that, in addition to our own customers for Solar PV systems, we intend to target through direct sales in the next phase of our system roll out in the USA, European and Australian markets. In China, we have engaged a reseller on a non-exclusive basis to reach prospective customers and this group has been successful in placing our system with a few customers already and supporting its successful launch. We intend to continue and broaden our use resellers in markets where we do not have operations.

Operations & Maintenance, or O&M. - In our climate control business, further discussed below (under the heading “Energy Efficiency — Parmac Air Conditioning & Mechanical Services Pty Ltd, or Parmac”) we have, for many years, successfully offered post-installation maintenance servicing of systems. This service is offered to prospective clients whenever we install a system and we frequently win contracts to service systems installed by others. In our experience, post-installation maintenance servicing provides a steady stream of recurring revenue, often pursuant to multi-year contracts, at attractive margins. We have endeavored to offer similar services to our clients for large-scale solar systems when the systems were constructed in regions where we have operations, but we have generally not been successful in doing so in the past.

However, the proprietary BlueNRGY data management system greatly enhances our ability to provide O&M services for renewable energy projects and an opportunity to differentiate our offerings from those of others. We have found that we can use the BlueNRGY system to pinpoint maintenance requirements and to efficiently schedule work. It also provides us with clear metrics to demonstrate to our O&M customers that they are getting results from our services. Since our emergence from VA, our O&M specialists based in the USA have won one multi-year contract with a large renewable asset manager and have developed a pipeline of prospects that we expect will lead to our growth in this line of business. We are also applying the BlueNRGY tools to enhance the O&M service offerings of our operations in Australia and the UK. There can be no assurance, however, that we will be successful expanding our O&M services business in the renewables sector.

Wind

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

Following our emergence from VA, we intend to confine our activities in the wind sector primarily to data management, operations and maintenance of commissioned facilities. We intend to emphasize regions where there are large concentrations of wind projects and we have established business operations and relationships, including Australia, the U.S. and Europe. However, we may opportunistically pursue smaller projects in remote locations on an opportunistic basis, particularly when they can be combined with PV solar and/or energy storage installations.

Our first wind project development was a 450kW installation on Chatham Island, completed in 2010 and referred to as the Chatham Project.  The Chatham Islands are a remote part of New Zealand in the South Pacific where previously power was generated solely by diesel generation. The Chatham Project comprises two turbines that were installed with the goal of delivering approximately one-third of the island’s total electricity power. 

Our only large utility-scale wind project was the Taralga Project, a development valued at about A$290 million with capacity of 107 MW and located in the state of New South Wales, Australia. Although we never owned the Taralga Project, we did assume the primary role in the project’s development process in October 2011 through agreements with the original developer. Pursuant to those agreements we directed critical development activities until the project’s sale to Banco Santander, an equity investor with sufficient financial resources to undertake the project’s construction. Upon arranging the acquisition of the Taralga Project by Banco Santander in November 2012 and their subsequent investment in the construction phase of the project, we received reimbursement for development expenses incurred, and an initial development fee. We invested a fraction of our development fee in the ongoing project in exchange for a residual equity interest in the Taralga Project that entitled us to a pro rata share of future profits earned either from the sale or continuing operation of the wind farm in the future after payment of debt service and a preferred return to Banco Santander. Our ongoing financial interest in the Taralga Project was conveyed to WHSP in January 2015 pursuant to our Reorganization Plan. .

Energy Efficiency

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

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

Other capabilities include:

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

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

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

Remote Area Power Systems (RAPS). Our RAPS business segment historically includes generating assets we own and the Larkden energy storage technology described below. Due to divestitures forced by our weak financial condition, the only remaining assets in our RAPS business segment after emergence from VA are related to the above-described Chatham (wind) Project we developed in 2010. The Chatham Project is not currently operating due to a dispute with the counterparty to the power purchase agreement, Chatham Islands Electricity Limited. Chatham Islands Electricity Limited is seeking to terminate its power purchase agreement with our subsidiary, Chatham Islands Wind Ltd (“CIWL”), and acquire the assets in accordance with contractual rights triggered by our VA. At this time it is not possible to predict how this matter will be resolved or what economic impact it will have on us.

Our interests in the solar installation on King Island and various solar installations owned by our subsidiary in the UK were eliminated with the divestiture of those assets and subsidiaries pursuant to the VA process and DOCA.

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

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

Our capability to manage such assets, should we able to acquire them, is enhanced by the demonstrated capabilities effectiveness in managing assets is In the future, we also intend to purchase already-commissioned assets from third parties if we can do so on terms we consider favorable and if capital is available to do so. To date, this has not proven feasible and there is no assurance that we will be able to make such project purchases in the future.

Capacitor Technologies Pty. Ltd., referred to as CapTech, was acquired by us in 2003 and divested in August 2013. During the period of our ownership, CapTech specialized in the engineering, design, manufacturing and installation of energy saving and electric power quality solutions including power factor correction equipment, harmonic filters, capacitors and similar products. CapTech’s revenues grew steadily during the later years of our ownership, but it lacked the proprietary technology and distribution channels to build scale outside of the local Australian market. Our management considered CapTech’s capabilities as being consistent with our goals of delivering energy efficiency solutions to customers and potentially complementary to our solar and wind power project businesses. However, financial circumstances following the end of our 2013 fiscal year compelled us to sell the business to generate cash. Notwithstanding our divestiture of CapTech, our management believes that we will have ongoing opportunities to utilize their products and technology in conjunction with our installations of renewable generation and energy-efficient climate control solutions and we have maintained amicable relations with CapTech’s management.

Seasonality

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

Intellectual Property

Our intellectual property is limited to trade names and trademarks that we own. Commencing September 1, 2013 we entered into a License Agreement and Trade Name Agreement with Westinghouse Electric, collectively, referred to as the Westinghouse License. The Westinghouse License was terminated in January 2015 as a result of our VA process.

Research and Development

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

OH&S and Environmental Regulations

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

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

Insurance

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

Currently, no material insurance claims are outstanding.

4.C.      Organization Structure

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

4.D.      Property, Plants and Equipment

Our facilities, as of May 29, 2015, consist of stand-alone administrative offices and multi-purpose facilities incorporating office, warehouse and manufacturing activities for some of our businesses. Our administrative office facilities, located in various countries, are utilized by our various business units as necessary to support changing operational requirements. We believe that our administrative offices are adequate to support our current needs and all foreseeable growth and we have no current plans for expansion or improvements. All are occupied pursuant to short-term operating leases and are listed below:

All of our multi-purpose facilities are located in Australia and are leased. Their sizes, locations and our business units that they primarily serve are listed below as of April 30, 2015:

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

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

Capital Expenditures

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

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

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

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

ITEM 4A.  UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.     OPERATING AND FINANCIAL REVIEW AND PROSPECTS

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

5.A.           Operating Results

We are an Australian corporation operating in the renewable energy and energy-efficiency sectors. Our businesses are focused on the downstream implementation, collection and analysis of performance data (sometimes referred to as data management), operation and maintenance of renewable power generation capacity and the delivery of differentiated products and services that are designed to allow electricity consumers to reduce power costs and increase efficiency of their electricity consumption. Our operations were unprofitable and we were unable to continue as a going concern without restructuring through VA in the period from November 14, 2014 through January 27, 2015 (refer to Item 4.A. under the heading “Voluntary Administration and Deed of Company Arrangement”), The scope of our activities was curtailed by the VA process,, but we continue to conduct business through multiple subsidiaries operating in the aforementioned regions. Following our emergence from VA, we have not been profitable, but we are taking active steps to grow revenue and attain profitability. Our activities are currently divided among the following lines of business:

Prior to the VA process through our fiscal years 2012 – 2014, we were also actively developing large-scale wind projects, but our involvement with wind generation systems is now, and is expected to continue to be, limited to providing data management and maintenance services.

In keeping with customary practice in Australia, our fiscal years end on June 30. During the fiscal years ended June 30, 2014 (fiscal year 2014); June 30, 2013 (fiscal year 2013) and June 30, 2012 (fiscal year 2012), we incurred a net comprehensive loss of A$25.4 million, A$8.4 million and A$54.7 million respectively, of which A$10.0 million, A$0.6 million and A$18.6 million for fiscal years 2014, 2013 and 2012 respectively were attributable to asset impairments and a non-recurring expenses, as further described below. However, as a result of the Reorganization Plans coupled with our initiatives to reduce costs and increase our capitalization, our management expects that we will return to profitability in the future, although there is no assurance that we will be able to do so. If we are unable to achieve our business growth strategies and objectives or to obtain sufficient financing on acceptable terms in order to meet our future operational needs, there is a substantial doubt as to whether we will be able to continue as a going concern.

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

Solar PV. Our business in the solar PV segment has been dramatically affected by reductions in the cost of components, most notably solar panels, during our 2012 – 2014 fiscal years and thereafter (Refer to Item 4.A under the headings “Our Industry –The Solar PV Segment” and “Description of our business segments — Solar PV Residential and Commercial Solar”) . The cost reductions were largely passed through to customers by PV solar developers and installers throughout the industry with the result that we needed to continually increase the amount of capacity installed to maintain stable revenues and contributions to profits. When development or installation unit volumes declined due to other factors, as they did in our small-scale solar business between fiscal years 2012 and 2014 the impact on revenue and profitability was amplified as further discussed below.

Small-scale. Our residential solar business is concentrated in Australia and is focused on retail or small-business customers who are typically installing solar PV generating capacity on their rooftops to offset the costs of their own electricity purchases. The market for small-scale systems is fragmented, highly competitive and commoditized. Consequently, installers, such as our company, are compelled to sell systems at market prices, which can be volatile as a result of short-term fluctuations in supply and demand. Individual transactions are relatively small, averaging less than A$8,000 during fiscal 2014 fiscal year and the market demands rapid fulfillment of orders, with installation times typically being between 20 and 30 days from order date. Most customer purchases are paid for at or prior to installation in the form of a combination of small-scale technology certificates, or STCs, issued under the Small-scale Renewable Energy Scheme, or SRES, and cash.

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

During fiscal years 2012 and 2013 and 2014 we experienced cash constraints that limited inventory availability to levels that were inadequate to satisfy order flow and limited our ability to sustain advertising at levels required to maintain historical installation bookings. This led to a significant decline in our unit volume of small-scale installations and, due to the prevailing trend of falling system prices, a disproportionate reduction in our revenues. The reduced gross margin contribution from lower revenues pushed our small-scale solar business into a loss position during fiscal year 2012 that necessitated changes to make costs more variable. These changes reduced break-even activity levels for this business consistent with our active small-scale solar orders during our 2013 fiscal year but still left us with a cost structure that was too great in light of the continued decline in our solar PV revenues in our 2014 fiscal year and thereafter. Consequently, we further reduced fixed costs in our solar PV units during the VA to a level that we believe will allow our Solar PV line of business to contribute to profits at an annual revenue level above $3 million. Future success in achieving profitability in the small-scale solar PV segment will depend heavily on sustaining transaction flow to exceed the break-even level Since emerging from VA we have focused our sales and marketing efforts in Australia and the UK on commercial installations sized above 10kW, a segment of the market that we believe to be less commoditized and less saturated than the residential segment and which is considered to be a growth area in the Australian PV market. With the limited trade credit available to us following our emergence from VA, The working capital required to grow this business from current levels cannot be internally funded by us. Supply agreements negotiated with wholesale distributors of PV components since our emergence from VA are now allowing us to operate without holding significant levels of inventory and the short operating cycle of our small-scale solar PV business is expected to require us to maintain a net working capital level for this business unit of only about one times monthly revenue in the near term. .

In April 2013, we began selling, under license, small-scale solar systems using the Westinghouse® brand. Our rights to use this brand were terminated in January 2015 and we are in the process of relaunching our small-scale solar PV marketing under the BlueNRGY brand.

Large-scale. Our large-scale solar business is a project-based business focused on installations of solar PV generating capacity that generally range in size from approximately 500KW to 8MW. We have constructed such large-scale, or megawatt-scale, solar projects in geographically diverse locations, usually outside of Australia, although management is exploring opportunities to increase the level of activity in Australia as component costs have declined and system costs are now at or approaching grid parity in most states. The intense nature of the competition in this business line has caused the number and installation rate of large-scale projects awarded to us to be irregular. Consequently, we evolved our cost structure for this segment to be scalable, both up and down. Other than a core team of about key staff members who handle project engineering and project sourcing, including, after June 30, 2014, the GED personnel based in the United States, we rely heavily on outsourcing and sub-contractors working in markets where projects are constructed.

Until the end of our 2012 fiscal year, we undertook such large-scale solar projects exclusively as an EPC contractor working for customer owners. In this role the company was and remains subject to competitive bidding processes, with the number of projects awarded being small and the timing uncertain. With a few exceptions, project fulfillment cycles have been short, typically less than 3 months, and we are paid on a progress-payment basis or at sale of a completed project. In general, the timing of payments to suppliers has been closely linked to progress payments, where applicable, thereby limiting the net working capital requirements the company needs to support these projects. In cases where we construct projects and on-sell the project at completion, construction financing is sourced to meet working capital requirements. Because of the short execution cycle, we have not historically tracked backlog for our large-scale solar business but it is our intention to begin to do so as new projects are awarded. Since the start of our 2014 fiscal year through the date of this filing, we have had no large scale solar PV installations under contract, although we are in the bid process on several installations in the United States through our GED unit. Because of uncertainties in the contract bidding process, there can be no assurance about when we will win a new contract. The ability of our subsidiaries involved with the installation of large-scale solar PV projects to bid effectively was impaired during the VA process and this may create ongoing challenges to winning bids in the near future.

In the latter half of fiscal year 2012, we initiated direct development of large-scale solar projects with the intent of reselling them to third-party owners. The first 5MW, referred to as the Italian Projects, was constructed in Italy and completed in June 2012. These projects were sold in December 2012 (during our 2103 fiscal year) for A$15.1 million, A$1.1 million above the site acquisition and construction costs (but excluding finance costs). During our 2012 and 2013 fiscal years we expended funds to establish and maintain a four-person organization in Europe intended to allow us to transact future projects Following our emergence from VA, this team, based in the UK, has been reduced to two people and they are also undertaking small-scale projects.

Renewable Power Systems Data Management, Operations & Maintenance. We entered the business of data management and the provision of O&M services for renewable generation assets in January 2015 with our acquisition of BlueNRGY LLC. For our fiscal years 2012 – 2014 we were not in this business. Our data management business in in the early stages of commercialization and requires development investment in excess of revenues. It is therefore not contributing to corporate profits and is not expected to do so for at least the remainder of this calendar year. There can be no assurances about when, if ever, the data management business will become profitable. Our O&M business does contribute to profits, but the revenues in this line of business are not yet material to our overall operations. There can be no assurance as to when or whether this line of business will be large enough to be material to our financial performance.

Energy Efficiency/Technology Solutions/RAPS. The business activities encompassed in our Energy Efficiency and Remote Area Power businesses, i.e. Parmac, RAPS and, until its divestiture in August 2013, CapTech, were collectively unprofitable in fiscal years 2012, 2013 and 2014 as described below in the year-to-year and period-to-period comparisons of operating results. As a result of management changes and focused attention to financial performance, our management expects that the ongoing businesses of Parmac will contribute to profits in the current fiscal year and beyond, although there is no assurance that this will be the case.

Parmac. Our Parmac business unit typically receives deposits or progress payments for its work on new projects and bills for service work monthly as incurred, so it has an average net working capital requirement of about 15% of revenues. We also have a low fixed cost structure typical of construction general contractors and have achieved average pre-tax operating margins in the range of 7% - 8% in some fiscal years prior to fiscal year 2012. We believe this level of profitability is sufficient to sustain available growth opportunities from operating cash flow. However, Parmac experienced adverse performance on several contracts entered into in the latter half of fiscal year 2013 that resulted in a loss in the 2013 and 2014 fiscal years as those contracts were completed. These losses are believed by our management to be contract-specific and are not necessarily indicative of the Parmac’s expected future performance. Since June 30, 2014 Parmac has been operating at level that provides a small but positive contribution to our overall profitability.

Parmac’s business depends heavily on the level of activity for commercial and industrial development in the region around Melbourne. The pace of general construction is cyclical in this market and is related to factors such as the general economic conditions in Australia, the strength of the commodities markets that underpin large segments of the Australian economy, demographic and other trends affecting growth in the state of Victoria and the bidding success of construction general contractors with which Parmac is aligned. The overall market is small enough that the flow of bidding opportunities can be irregular and work load from awarded projects can be volatile. Low utilization of project personnel and staff can lead to future losses, notwithstanding improved performance on individual contracts.

RAPS. During our 2012 – 2014 fiscal years, the RAPS division undertook projects and activities for the generation or storage of power to off-grid (typically remote) customers. Revenue from the King Island project averaged A$26,000 per annum since the beginning of fiscal year 2010 until it was divested in our VA. From fiscal year 2010 to date, we have either disposed of all other assets in the RAPS unit or have taken 100% valuation allowances for assets that we still legally own except the Chatham Island Project. The Chatham Island project, which was completed in 2010 and is 100% owned by us as a power generating asset. Chatham Islands revenue has averaged A$305,000 per annum since it was commissioned in July 2010, but there is currently a dispute regarding the status of the Chatham Island contract arising out of our VA, so no revenue has been received or recognized from this project since November 2014. At present we are unable to project the outcome of this dispute or whether we will realize any value from the Chatham Island Project Assets that are recorded in our financial statements without provision for impairment.

In fiscal year 2012, we recognized a A$0.5 million license fee related to the Larkden Technology, however, this was not paid because we and the licensee were in a legal dispute surrounding ownership of certain improvements made to the Larkden Technology. We have subsequently recorded a 100% valuation allowance for the revenue recorded during fiscal year 2012. We successfully defended the legal challenge and, despite being awarded certain costs, our company still incurred approximately A$700,000 of legal costs that were not recovered and were expensed in 2012. Having concluded that we lacked the financial resources to fully exploit the Larkden Technology, we sold the license together with our Larkden subsidiary in April 2013 and recognized a loss of A$0.6 million based on the total consideration of A$2.75 million. Most of the consideration for the sale the Larkden Technology is payable by the acquirer in future periods and, while A$1.0 million of this has been received since June 30, 2014 and our management believes that the specified amount will be paid in full, there can be no assurances that we will receive the full A$2.75 million. Our rights to the unpaid consideration were assigned to a third party under the Reorganization plans. See Notes 3(a)(vii), 6(b) and 16(b) in our audited financial statements included elsewhere in this Report for further details related to this matter.

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

Large-scale wind. During our 2012 – 2014 fiscal years we were active in the sourcing of opportunities for the development of large-scale wind projects in Australia and the associated costs were reflected in our expenses. Our active pursuit of new large-scale wind opportunities was curtailed in the VA process and we are no longer incurring expenses related to this line of business and we do not expect to realize additional revenues from this segment of our business related to our prior activities. When were active in the Large-scale wind development arena, typically incurred costs on early-stage development of projects with a view to sourcing the equity and/or debt funding required to take it through to construction and operation. Such expenses were undertaken with no assurance of being able to realize a recover of the development expense. The Taralga Project is an example of a project for which equity funding to complete construction was secured and we were able to recover our costs and profit from the activity.

We incurred early development expenditures in relation to the 107MW Taralga Project during fiscal year 2012. In October 2012, prior to commencement of project construction, we entered into an agreement with Banco Santander pursuant to which Banco Santander acquired a majority interest in the Taralga Project from the original owner and all of our development rights. As part of this transaction with Banco Santander, we were reimbursed for all early development costs we had incurred and also earned a development fee, specified in the contract that entitled us to a cash payment and allowed us to reinvest the balance for a continuing minority interest in the Taralga Project. The reimbursement and cash portion of the development fee we received was approximately A$7.2 million. The balance of the development fee, which had a recorded value of A$10.8 million, was earned in October 2012. We reinvested this fee as equity into the Taralga Project and as a result retained a residual equity ownership of the completed project. During the 2014 financial year, the timeline for the completion of the Taralga project was delayed as a result of design changes and the subsequent requirement to amend Development Approvals. The impact of these delays, coupled with cost overruns has negatively impacted the value of our residual equity interest in the project, and our holding has been fully impaired at June 30, 2014, resulting in an impairment charge being recognized in the Statement of Comprehensive income of A$10.8 million. We also entered into a separate project management agreement for the Taralga Project, but this was terminated in the VA process and we will not realize any management fee revenue in our 2106 fiscal year or beyond.

Other Factors Materially Affecting Our Businesses and Results of Operations

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

This situation is due to a confluence of factors:

Consequently, our management anticipates that the trend of increasing demand for renewable energy developments, both large and small-scale, will continue for several years, stimulating strong growth and profit opportunities for downstream industry participants such as our company.