CBDEF BlueNRGY Group Ltd (CE)

RISK FACTORS

Any investment in our securities involves a high degree of risk. Investors should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our ordinary shares. Our business, financial condition or results of operations could be materially adversely affected by these risks if any of them actually occur. As a result, the trading price of our ordinary shares could decline and the holders could lose part or all of their investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this prospectus.

Risks Related to our Financial Condition

In fiscal year 2012 we experienced a major a downturn in revenue and a substantial operating loss that depleted our liquidity to the point that 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 year ended June 30, 2012 totaling A$40.1 million. Cash used in operations was A$19.0 million for that fiscal year. We subsequently incurred losses in our 2013 fiscal year and thereafter, and there is no assurance that losses affecting some or all of our businesses can be avoided in the future. Moreover, the cash losses incurred during fiscal year 2012 depleted our liquidity to the point that the business cannot continue as a going concern unless we can achieve one or more of the following: operating profitably now and in the future, raising additional debt or equity capital, deferring payment to creditors and selling assets. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for further information. There is no assurance that we will have access to sufficient funds from such initiatives on terms acceptable to our Board of Directors, or our Board, to meet our future needs.

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 large-scale solar and wind businesses (described under the headings “Our Business—Business Segments—Solar PV - Large Commercial and Utility Scale Solar” and “Our Business—Business Segments—Wind,” respectively) are project driven and, although individual large-scale solar projects are smaller than those undertaken in the Wind-segment, 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. For example, our wind segment experienced no revenue or positive cash flow during fiscal year 2012 but realized revenue of A$17.0 million from the sale of a single project in October 2012 (during our 2013 fiscal year). This volatile revenue pattern in our large-scale solar business will be exacerbated by the increasing focus on projects that we build, own (typically at least through the project commissioning phase) and transfer (to a third-party), referred to as BOT projects. In addition, Parmac’s business (see “Our Business—Business Segments—Energy Efficiency/RAPS,” which accounted for 23% of our fiscal year 2013 revenue) is also primarily a project-based business and is subject to volatility typical of the construction sector.

In addition, our Australian residential solar business (see “Our Business— Business Segments—Solar PV - Residential and Small Commercial Solar”) has historically experienced seasonal peaks and declines that has exacerbated our quarter-to-quarter revenue and net income volatility. For example, in our fiscal year 2013, the peak monthly installation volume for this business was 415% above the level of the lowest activity month for the fiscal year. 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 wind business unit typically requires us to make significant cash investments over multiple years before realizing revenue or cash flow, and our RAPS segment involves substantial upfront investment in generating assets with realization of cash flows and profit over time. 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 18 months and 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, 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 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, including without limitation a solar EPC contractor and residential solar origination company in the United States, and a wind development in Australia (see “Our Business—Our Strategies—Acquire complementary businesses”). 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.

IFRS 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. Notwithstanding our recent success in raising debt in the United Kingdom through the Clean Energy Bonds and more recently in Australia through the extension of a new secured credit line (see “Management’s Discussion and Analysis of Results of Operations—Liquidity and Capital Resources—Indebtedness”) 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 is significant and we may encounter demands for payment that we cannot meet, which could have adverse consequences for our business and future prospects.

As of June 30, 2013, we had total outstanding debt of approximately A$17.6 million and an excess of other current liabilities over current assets of approximately A$14.9 million. This indebtedness, net of cash, represented approximately 93% of our total capitalization. While we have renegotiated some of the terms or satisfied some of this indebtedness (as further discussed below in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness”), our ability to pay these liabilities and meet our obligations 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.

We amended the terms of our convertible debt agreements, referred to as Convertible Notes, in November 2013 and December 2013, pursuant to which our Convertible Noteholders waived events of defaults arising under or as a result of breaches of the Convertible Notes. However, these agreements contain negative covenants and cross-default provisions that require ongoing compliance by us. Although we have received no notices of default or non-compliance from any Convertible Noteholders subsequent to the execution of the most recent Convertible Note amendments, and our management does not believe that any such notices will be issued by our Convertible Noteholders based on events or circumstances that have occurred or are anticipated as of the date of this prospectus, due to the passage of time, there can be no assurance that we are meeting these requirements currently, will be able to dispositively meet them in the near future or will be capable of curing them if we are found to be non-compliant. Such breaches could trigger acceleration of some or all of the convertible notes and a demand for immediate payment.

Our convertible notes mature in May 2015 and, at the discretion of the Noteholders, will either be converted into ordinary shares of our company or be redeemed for cash. This will result in either a dilutive issuance of shares or a demand for repayment which we may not be capable of meeting or which can only be met through the sale of assets. 

Despite overall progress in negotiating payment extensions and compromises of trade payables incurred in the ordinary course of business, certain of our subsidiaries still have past-due accounts payable that are not subject to documented payment agreements, which our management estimates to be no more than A$4.5 million in the aggregate, and that exceed our cash on hand in those entities. Consequently, during the pendency of negotiations regarding payment terms, we are dependent on the continuing forbearance of those creditors. Although our management believes that payment deferrals can be arranged as necessary, we have not been and are not currently involved in litigation with any creditors and there are no collection actions pending against us, there can be no assurance that creditors who have not yet entered into extended payment agreements will continue to forbear and 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 effect on our ability to continue in business and could cause us to liquidate, resulting in the total loss of value to our shareholders.

Our convertible note terms impose restrictions that may limit the discretion of management in operating our business and that, in turn, could impair our ability to meet our obligations to others.

We have outstanding various convertible debt agreements with a principal and accrued interest value totaling A$19.7 million as of February 28, 2014. The limitations imposed on us by existing or future debt agreements could have significant consequences for our future prospects, including the following:

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our earnings and cash flow may vary significantly from year to year due to the intermittent cash flows from projects and other factors affecting the renewable energy sector. As a result, our future cash flows may be insufficient to meet all of our debt obligations and other commitments, and any insufficiency could negatively impact our business. To the extent we are unable to repay our indebtedness or meet other current liabilities as they become due or at maturity with cash on hand, we will need to refinance our debt, sell assets or repay the debt with the proceeds from equity offerings. Additional indebtedness or equity financing may not be available to us in the future for the refinancing or repayment of existing indebtedness or to meet current liabilities, and we may not be able to complete asset sales in a timely manner sufficient to make such repayments.

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 and wind developments, and working capital. The associated debt agreements may contain covenants similar to or more restrictive than those of our current convertible notes 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 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 prospectus. 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.

We 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 continue to result in reported losses and that may limit our ability to raise capital.

We have previously acquired companies and assets. The excess of the purchase price after allocation of fair values to tangible and identifiable intangible assets is allocated to goodwill. We conduct periodic reviews of goodwill and intangible values for impairment or the reversal of a prior 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 and 2013, we recorded impairments of goodwill and intangibles of A$0.7 million and A$3.0 million, respectively. See Note 16 of our audited financial statements included elsewhere in this prospectus for additional information about the calculations and assumptions used to determine the recoverable value of goodwill and the goodwill impairment charges taken in those fiscal years.

As of June 30, 2013, A$15.9 million of our assets were comprised of goodwill and intangibles, which amount was reduced by approximately A$0.3 million upon the sale of CapTech in August 2013. Approximately A$14.4 million of the remaining balance attributed to goodwill and intangibles is related to our Solar PV business and approximately A$1.2 million is allocated to Parmac. 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 in particular, we may be required to record further impairments of goodwill. 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.

In the event that market conditions deteriorate or there is a prolonged downturn, we may be required to record further impairments of goodwill, and 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 a value for the STC portion of the revenue with the customer. On completion of an installation and completion of STC registration, our current 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 is usually a delay of between one and three months between agreeing a value of 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. For example, during the year ended June 30, 2013, the maximum difference between the peak and low price of STCs during any single month was as much as A$14.34 or 63% of the low price of A$22.73 for such month based on market prices offered to us. Future fluctuations in price could be higher or lower than the example provided. 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 BOO model (see “Our Business—Our Business Segments—Solar PV - Large Commercial and Utility Scale”), 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). 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. For example, the rate of interest for the Clean Energy Bonds with which we are financing projects in the United Kingdom ranges between 6.5% and 7.5% per annum. 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 tied 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 ceased production of solar panels at our Queensland Facility in Queensland and are exploring options for the future of the facility and equipment. We may be required to dispose of the equipment at a loss or record an impairment.

In May 2013 we commenced limited production at the Queensland Facility, our then newly-commissioned manufacturing facility in Queensland, Australia established to produce solar panels for the Australian market. Following a period of limited production we ceased operations at the facility and we do not intend to restart. We are currently considering our options for the future of the facility and equipment, including the sale of the equipment or identifying a joint venture partner to operate the equipment on our behalf. If we are unable to successfully implement one of these options, then we may be required to dispose of the equipment at a loss. The current book value of the equipment is A$400,000, which is our loss or impairment exposure.

We are highly dependent on our senior management and key sales and technical personnel and if we are unable to retain key personnel and attract and train highly qualified personnel, particularly in regions 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. The contract of service for Gerard McGowan, our Managing Director and most senior executive officer, expired on August 31, 2013 and, while discussions have commenced between Mr. McGowan and the Board on the renewal of his contract of service and we anticipate that it will be renewed, there is no assurance that an agreement on terms satisfactory to our Board and Mr. McGowan can be reached or that we will be able to retain his services if an agreement cannot be reached. If Mr. McGowan departed, we would have to undertake a search for a replacement and 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 for the requirements of our business, expansion into new jurisdictions is likely to necessitate employing additional highly skilled technical personnel in or proximate to those locations. We expect competition for such personnel to increase as the market for solar power systems 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 Mr. McGowan 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 contracts to perform large projects with no assurance of repeat business from the same customers in the future.  Although cancellations on purchase orders to date have been infrequent, 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 inventory shortages or excess 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.

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 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 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 in the markets we serve is specific to the particulars of the installation and customer financial strength and varies widely. Nevertheless, except in the United Kingdom where we can directly finance projects that qualify for use of funds from our Clean Energy Bonds, we are at a disadvantage relative to some larger competitors who may be able to facilitate financing for customers or project when we cannot or on better terms than we could arrange. In any case, the availability of financing for large-scale systems is generally less than for residential systems because the reliability of the cash flows from owners of large installations is generally not 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 business focused on the provision of EPC services has been slow and irregular, particularly in Australia, and there is no assurance that this will change or that our large-scale solar EPC business will achieve consistent profitability.

Our large-scale solar, wind and major air conditioning 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 air conditioning 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 international markets 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.  For example, low demand and tight credit markets has resulted in reduced commercial construction in Europe, which have limited our ability to sell solar products to commercial developers in the region. A similar cyclical downturn affecting the Melbourne Australia region resulted in a dip in sales of HVAC systems by Parmac during fiscal year 2012.

In all of our lines of business, 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 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.

All of our businesses involve the sale of products that have long lifetimes (up to 20 years in the case of key components in PV solar systems). In general, the manufacturers of components we sell are warranted by the manufacturers and we offer limited service warranties for such components; for example, up to 5 years for small-scale solar systems we have sold in Australia. We previously sold inverters produced by, or under license from, Oelmaier, which we discontinued in 2012 due to problems with product design and licensor support. As a result, we have borne and will continue to bear the risk of warranty claims for at least the 5-year limited warranty period. Our estimated costs of warranty for all previously sold products, including the Oelmaier products, was A$0.4 million and A$0.3 million for the fiscal years ended June 30, 2013 and 2012, respectively, and may increase in the current and future fiscal years. We maintain a warranty reserve for the Oelmaier-licensed components that we sold and the estimated liability recorded on our balance sheet for this was A$0.4 million as of June 30, 2013. Because of the limited operating history of the systems, our company has been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims and the ongoing durability and reliability of these products. These assumptions could prove to be materially different from the actual performance of the products, causing us to incur substantial expense to repair or replace defective products in the future. An increase in the estimates of future warranty obligations due to product failure rates, shipment volumes, field service obligations and rework costs incurred in correcting product failures, could cause us to increase the amount of warranty reserves and would have a corresponding negative impact on our results of operations.

As a result of the past problems with the Oelmaier-licensed components the expectations of our customers for system performance have not been consistently met and this has resulted in some lost business and reputational damage to our company, despite our best efforts to correct defects. We are making efforts to address the reputational damage by promoting our current and ongoing use of more appropriate inverters to prospective new customers, promptly meeting service requests on the installed base of components and marketing of our solar system sales under the Westinghouse® brand. 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.

In addition, under real-world operating conditions, which may vary by location and design, as well as installation, soiling and weather conditions, a typical solar PV installation may perform in a different way than under standard test conditions. If the systems we have sold perform below expectations or have unexpected reliability problems, we may suffer additional reputational damage, even if the problems are caused by 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.

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 the Oelmaier-produced and licensed products that we sold and for which we maintain a warranty reserve on our balance sheet for potential warranty or service claims that could occur in the future, the warranty obligations related to solar PV systems are ultimately borne directly by the system component suppliers.  Our contractual obligations in the event of a third-party component failure are limited to fielding service requests and organizing  the repair or replacement of the faulty unit with the original equipment’s manufacturer if the equipment is deemed faulty  for a period of only 60 months for electronic components and 120 months for solar panels from the date of purchase.  To date 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 small-scale solar business 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 and mitigating the impact of downturns in renewable energy demand in countries in which we are currently developing solar projects. Undertaking further international expansion is a complex task that requires the identification of locations that are environmentally favorable for solar project development and that have suitable regulatory and tax policies, utility cost, tariff and interconnection structures that allow renewable energy to be cost competitive (after taking into account local subsidies) and access to cost-effective financing for project owners, among other considerations. Even if we successfully identify suitable countries for expansion, we may be unable to extend our business into these new locations if potential competitors enter the market first. In addition, we may not have the necessary management, local knowledge or financial resources to undertake the successful and timely development 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 and financial condition.

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. Such activities accounted for approximately 22% of our consolidated revenue in fiscal year ended June 30, 2013. 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 and the sale of power generated from such projects in their countries. 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. 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 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. All the critical components of our solar PV systems are currently 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. Because of our substantial dependence on Chinese suppliers, we maintain a presence in Beijing to coordinate with and monitor suppliers and as a means of mitigating potential supply-chain risks. However, this presence cannot ensure that we will not experience supply-chain problems that could have a significant adverse impact on the results of operations.

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, including those relating to the renewable energy industry in general, and 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. On the effective date hereof, our operations will become subject to compliance with the U.S. 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. 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 growth strategy involves complex transactions and present 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, targeting the commercial markets in North America, the Eurozone, Thailand and various Pacific island nations. However, our company intends to undertake 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 eco-Kinetics in January 2010 to facilitate our expansion into the PV solar sector. However, not all of our acquisitions initiatives have been successful or produced the expected results and the cost of the effort has sometimes been high. We also acquired the Larkden Technology in 2009 for approximately A$6.3 million but were unable to successfully realize the expected commercial potential and we recognized impairments of carrying value in 2011. The Larkden Technology was sold in April 2013 and we recorded an incremental loss on the sale. As reflected in our audited financial statements included herein, certain other acquisitions and joint ventures that we attempted over the last three fiscal years have failed to realize material benefit or resulted in losses, including without limitation the eco-Kinetics joint ventures in the United Kingdom and Germany and the property development projects in Emerald and Bowen (both in Queensland, Australia). Whether or not future acquisitions or joint ventures are commercially successful, any efforts we make to pursue joint ventures and acquisitions will likely result in significant transaction-related expenses, as was the case with the unsuccessful attempt to acquire Neighborhood Energy in fiscal year 2011, and such expenses may further strain our liquidity or require us to raise additional debt or equity capital. In addition, until the merger agreement was terminated in July 2013, we were pursuing the acquisition of Westinghouse Solar, Inc., or Westinghouse Solar, a U.S. solar products manufacturer based in California and recently renamed Andalay Solar, Inc. The termination of the Merger with Andalay Solar delayed our expansion into North America and we will have to implement alternative strategies and expend additional funds to scale up our business in the region.

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 experience in these key positions to ensure success of the business.

Subsequent to July 1, 2011 through the date of this prospectus, two of our four directors resigned and two replacements have been appointed. Two of the four current directors are members of our management team and another is an employee of an affiliate of Washington H. Soul Pattinson & Co. Limited, referred to as WHSP, one of our largest shareholders. 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 and with small-scale solar installations in particular. The experience these other directors have in these lines of business, which are significant for us, has largely been gained during their tenure with our company. In addition, only one of our directors, Mr. Morro, has experience in governance of a company that is subject to U.S. securities regulations, although the others have experience in governance of public companies in Australia. We anticipate that additional directors with relevant experience and qualifications will be appointed in the future, however, our weak financial condition may make it more difficult or impossible for us to attract suitable or independent directors. Consequently, there can be no assurance that we will be successful in making appointments to our Board that can ensure our success or effectively oversee our compliance with U.S. securities laws.

Since July 1, 2011, we have experienced the departure of several senior executives, notably James Anderson, who served both as our Chief Financial Officer and as a member of our Board, and Edwin Cywinski, the former owner of eco-Kinetics who continued to lead our solar businesses following the acquisition of eco-Kinetics until his resignation in February 2013. We have replaced Mr. Anderson as CFO in October 2011 with Richard Pillinger, who has qualifications deemed appropriate by our Board and our CEO. Mr. McGowan, has personally assumed the key managerial responsibilities of Mr. Cywinski and is leading the operational restructuring of or solar businesses. Although Messrs. Pillinger and McGowan have not had extensive prior career experience in the PV solar sector, they are both seasoned and highly qualified executives and we believe that they, together with other members of our executive team who have been with us since we entered the solar PV segment have the experience and capabilities necessary to manage our businesses effectively. Mr. McGowan’s service contract expired on August 31, 2013 and, although we expect it to be renewed, there is no assurance that this will be the case. If Mr. McGowan’s term of service is not extended, it would further exacerbate the pressures on our remaining management team and directors and could jeopardize our operating performance and viability. However, we face significant challenges in all of the markets we serve and we are financially weak, so there can be no assurance that our executive team can succeed in making our company viable. If they fail in this regard, 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.

We are, from time to time, involved in litigation. 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.

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 after the effective date hereof, 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 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 related to insufficient personnel with appropriate financial reporting knowledge within our accounting function and inadequate accounting oversight, policies, procedures, and controls specific to complex debt agreements, taxation computation and the application of accounting estimates for the recognition of impairment allowances for 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, our financial statements have been restated in respect of the balances for June 30, 2010, 2011 and 2012 following the identification of certain accounting errors by our independent registered public accounting firm that we determined to be material. The errors noted in these years occurred when our current finance team was not in place and we have attempted to remedy certain control deficiencies that were noted, which included the hiring of the current Chief Financial Officer in October 2011 and implementing new accounting policies and procedures and review controls related to accounting for complex debt agreements, taxation computation and accounting estimates. We acknowledge that additional resources, as well as the completion of a comprehensive review of the design and operating effectiveness of our controls relating to financial reporting, will be necessary in the future to fully remedy weaknesses in our financial reporting process. Further, if not fully remediated, these control deficiencies could continue to impact the reliability of our financial statements. As a public entity, we will be required to complete our initial assessment in a timely manner, subject to the exemption from auditor attestation requirements that is accorded to us as an emerging growth company under the JOBS Act. Until we cease to be an emerging growth company or our exemption from auditor attestation expires, we intend to avail ourselves of the exemption.

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

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 has generally reduced the availability of liquidity and credit to fund business operations worldwide, and in Europe in particular, and has adversely affected our customers, suppliers and lenders. Our limited capital resources have negatively impacted our activity levels and, in turn, our financial condition and results of operations. A sustained or deeper recession in Europe or in other regions in which we operate could limit overall demand for our renewable energy solutions and could further constrain our ability to generate revenues and margins in those markets and to grow overall.

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.  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 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. 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 and subsequent 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.

Most 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. 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. The projects undertaken in the small-scale solar and energy efficiency segments of our business 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 developers and providers of energy efficiency solutions 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.  Some of these competitors may 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 solar power services 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.

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 in increasingly competitive markets. To meet our clients’ needs, we must continually source, qualify and offer updated technology for the projects and services we provide. In addition, rapid and frequent technology and market demand changes can render existing technologies obsolete, requiring substantial new capital expenditures, and could have a negative impact on 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 solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, 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. 

If PV technology is not suitable for widespread adoption at economically attractive rates of return, or if sufficient additional demand for solar modules does not develop or takes longer to develop than we anticipate, our net sales and profit may flatten or decline and we may be unable to sustain profitability.

The solar energy market is at a relatively early stage of development, in comparison to fossil fuel-based electricity generation. If PV technology proves unsuitable for widespread adoption at economically attractive rates of return or if additional demand for solar modules and systems fails to develop sufficiently or takes longer to develop than we anticipate, we may be unable to grow our business or generate sufficient net sales to sustain profitability. In addition, demand for solar modules and systems in our targeted markets, including North America, Europe, Australia, southeast Asia and other foreign jurisdictions, may develop to a lesser extent than we anticipate. Many factors may affect the viability of widespread adoption of PV technology and demand for solar modules and systems, including the following:

Overcapacity and financial distress among manufacturers of wind and solar power generation equipment is commonplace and if any OEM or component suppliers 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 and related equipment such as inverters have failed in recent years, including Solon and Oelmaier two of our significant suppliers. Others have been financially weakened, possibly including some of our current suppliers. Our PV installations are covered by warranties from these component suppliers, which they may not be able to meet. While, we do not have direct warranty obligations related to components produced by these suppliers, , except for the Oelmaier inverters discussed above, we could suffer reputational damage if the component manufacturers default on their warranty obligations. In the small-scale solar segment in Australia, the importance of our reputation as a provider of reliable systems is a critical factor in the viability of our business. Consequently, we may be compelled to meet warranty obligations of our suppliers who fail to do so in order to ensure future system sales or we may face precipitous declines in our sales of small-scale systems if we do not ensure defaulted warranty obligations are met. Either result could place a financial burden on us that we are unable to meet and our small-scale solar business could be rendered 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.  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 services.  For example, there currently exist metering caps in certain jurisdictions 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.

Deteriorating economic conditions or changes in the political and economic policies of governments where we operate or are seeking to expand could have an adverse effect on renewable energy development in those countries and could materially and adversely affect prospects for growth and profitability.

The tightening of credit markets and turmoil in the global financial markets has been widely reported and a weak global economy, especially in Europe, has contributed to slowdowns in the solar and wind industries there and this situation may continue and worsen if current economic conditions are prolonged or deteriorate further. The market for installation of solar power systems in particular depends largely on commercial and consumer capital spending. Economic uncertainty exacerbates negative trends in these areas of spending, and may cause our customers to defer or cancel, or refrain from placing orders, which may reduce net sales. Difficulties in obtaining capital and deteriorating market conditions may also lead to the inability of some customers to obtain affordable financing, including traditional project financing and tax-incentive based financing and home equity-based financing, resulting in lower sales to potential customers with liquidity issues, and may lead to an increase of incidents where our customers are unwilling or unable to pay for systems they would otherwise purchase. 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. Such circumstances have caused us to largely withdraw from pursuing solar PV business in Europe, other than the United Kingdom where government policies are still favorable. 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.

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 increase or do not continue to decline, our growth could slow and our financial results would suffer. In addition, in 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, or if tariffs imposed by the U.S. or European governments were to increase the prices of these solar panels, our ability to purchase these products on competitive terms or to access specialized technologies from those countries could be restricted. Any of those events could harm our financial results by requiring us to pay higher prices or to purchase solar panels or other system components from alternative, higher-priced sources. In addition, the U.S. and various European governments have imposed tariffs on solar cells manufactured in China. These tariffs will increase the price of solar panels containing Chinese-manufactured cells, which may harm our financial results in the event we purchase such panels.

If potential owners of solar PV systems are unable to secure financing on acceptable terms as a result of financial crisis 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 and operated under our BOO model.

Many owners of solar PV systems depend on financing to purchase their systems. Some of our systems utilize micro-inverters and the limited use of micro-inverters to date, coupled with our limited operating history, could result in lenders refusing to provide the financing necessary to purchase solar PV systems based on our product platform on favorable terms, or at all. 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 products, 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 Europe and 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 two 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. In other jurisdictions where land is plentiful and feed-in tariff structures are closer to the costs of conventional power generation, we do not expect to see similar public opposition to solar and wind development or adverse policy changes.

Recent public opposition in Australia related to wind projects raises the specter of constraints on project development activities in our home country. In the opinion of our management, the negative public sentiment in Australia has been caused primarily by the adverse environmental impact of large-scale wind farms to nearby residents, such as noise and adverse aesthetics. This dynamic may force us to explore new markets for such projects, with the attendant risks and cost of extending our geographic footprint, or to reduce our expectations for growth in the wind segment of our business. Our business prospects in Australia may be diminished as a result.

Regulations applicable to the U.S. market are limiting demand for solar installations and are likely to 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 are reducing demand in the United States for solar energy systems and our services relative to expectations. Our management expects these dynamics to increase competitive pressures among system developers that could lead to reduce pricing and profits. Our solar development initiatives in the United States may not succeed or be profitable as a result.

In our small-scale solar business in particular, 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.

In most of our lines of business, primarily due to our small scale, we have historically obtained key components from a small number of suppliers, but we generally have had access to a wide range of suppler options. We believe that our commercial relationship with our suppliers in each of our business segments is good, but we have recently had difficulty making timely payments on a consistent basis to suppliers of components for small-scale solar systems. Our inability to make timely payments has led to curtailment of shipments to us by suppliers that have prevented us from fulfilling some residential customer orders and have reduced our revenues. Because of our weak financial condition and limited liquidity, we may face the same issue in the future and 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 small-scale solar business, 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 competitive products in the future or to do so profitably.

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

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

We recently announced the introduction of the Westinghouse ® brand to Australia, but this initiative may not prove to be commercially successful and, if not, would severely and adversely affect the viability of our Australian small-scale solar business.

Effective April 2013, we began marketing PV solar systems under the Westinghouse® brand in Australia and New Zealand in order to differentiate our systems from those offered by competitors. Although early consumer response to the brand has been encouraging, the Westinghouse® brand may not gain enough market acceptance to drive sales as we expect. Such an outcome would adversely impact our revenue or margin. 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 the initial order to be scaled back or cancelled. Any of these adverse outcomes could create a window of opportunity for the entry or growth of competitors utilizing similar technology and competing brands would have a negative impact on our results of operations.

The growth of our Australian small-scale solar business depends, in part, on recognition and customer acceptance of the Westinghouse® brand and trademarks and, if unsuccessful, exposes us to losses if we cannot continue to utilize the Westinghouse® brand, which we do not own.

We have licensed the right to use the Westinghouse® name in marketing our solar products and services worldwide (see “Our Business—Our Business Segments —Solar PV- Residential and Small Commercial Solar”) and have launched our use of the brand in Australia and New Zealand. We do not own the Westinghouse® brand or trademarks and may not be able to continue to use them on financially acceptable terms or any terms. Currently we have the rights to use the Westinghouse®brand and trademarks under a long-term license agreement with Westinghouse Electric, the owner of the brand, subject to our continued compliance with the terms of the agreement. We believe that marketing renewable energy systems and products under a trade name incorporating Westinghouse® has significant value in the North American, Australian and certain European markets. If we lose our rights to use the Westinghouse® brand, we will have expended significant resources in building an association with the brand for which we will realize little future benefit and our business and competitive position would be harmed. Whether or not we are able to extend our use of a brand or trade name incorporating Westinghouse®, any litigation relating to protecting the trademarks and patents against infringement, as required in the licensing agreement, could be time consuming and costly.

We recently began sourcing financing in the United Kingdom by issuing Clean Energy Bonds to raise funds to develop global renewable energy projects. The bonds have a fixed repayment term and interest rates, which, if we are unsuccessful in developing assets with adequate returns, we may not be able to repay.

In July 2013, we closed the offering of our first Clean Energy Bond (Energy Bond 1), the proceeds from which will be used to develop renewable energy projects. On October 5, 2013, we launched another bond offering in the United Kingdom (Energy Bonds 2) to develop larger-scale renewable energy projects. The offering closed on December 10, 2013 having raised gross proceeds of £7.5 million (approximately A$13.5 million). We anticipate making additional Clean Energy Bond offerings in the future. The projects funded through proceeds from Energy Bonds can either be on-sold to third parties or held on our balance sheet and generate future cash flows for the group under the Build, Own, Operate model. The assets that are developed using these funds may not generate sufficient cash flows to service the debt and interest payments. We incur costs during the lead up to the launch of each tranche of Clean Energy Bonds, and there is no guarantee that the funds raised will be sufficient to cover these costs.

Our utility-scale wind farm business involves unique risks that may prevent us from operating this segment profitably or predictably.

Development of wind farms in Australia involves unique business challenges such as:

Failure to meet these challenges and requirements may result in extended and unexpected project delays, an inability to finance projects or attract unfavorable financing terms, and the achievement of low net development fees or even the realization of losses. They may also create contractual or regulatory exposure following the sale of projects that is difficult to accurately assess. Consequently, our participation in the wind power segment may make it difficult for us to operate profitably or predictably and the magnitude of the financial exposure on any single wind project could jeopardize our overall financial viability, particularly given our weak financial condition

Risks Related to our Ordinary Shares and this Offering

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 may be unable to fund our operations or expand our business. In any such event, our business, financial condition and results of operations could be materially harmed, and we may be unable to continue as a going concern.

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

We may require additional financing in the future in connection with execution of our growth strategy, to fund future capital expenditures and for 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.

If we list on NASDAQ, we will be unable to access equity capital without shareholder approval if such equity capital sales would result in dilution above regulatory thresholds, and consequently we may be unable to obtain financing sufficient to sustain our business if we are unsuccessful in soliciting requisite shareholder approvals.

If our application to list our ordinary shares on the NASDAQ is approved, we will be subject to rules requiring shareholder approval for certain capital raising transactions. The operation of these rules could limit our ability to raise capital through issuance of shares or convertible securities without jeopardizing our listing status. If we were to violate such rules, assuming we obtain initial listing approval, our company would be subject to delisting from NASDAQ and share prices and trading volumes would likely suffer.

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

Although we have applied to list our ordinary shares on the NASDAQ Capital Market, there is no assurance that our NASDAQ listing application will be approved or that an active public market for our ordinary shares will develop or be sustained. Our ordinary shares have only began trading on the OTCBB on February 10, 2014 and it is not clear if an active market for our shares will develop. Since trading began on the OTCBB, our ordinary shares have not traded on many days and the highest trading volume recorded in a single day was 2,100 shares. This lack of an active market means that the number of persons interested in purchasing ordinary shares at or near bid prices at any given time may be relatively small or nonexistent. This situation is attributable to a number of factors, including the fact that many of our shareholders are located in Australia and lack the capability or knowledge to trade in the U.S. markets, our company’s history of losses and the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the U.S. investment community that generate or influence sales volume. Even if we came to the attention of such persons, they tend to be risk-adverse and may be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as our business has demonstrated viability and we become larger and more seasoned. As a consequence, there may continue to be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on our stock price. There are no assurances that a broader or more active public trading market for our ordinary shares will develop or be sustained, or even that current trading levels experienced on the OTCBB will be sustained.

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

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

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

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

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

Our ordinary shares are currently only traded on the OTCBB as we voluntarily delisted from the ASX on January 31, 2014. Although we have applied for listing of our ordinary shares for trading on NASDAQ Capital Markets and believe that listing on NASDAQ will result in a more active public market and liquidity for our ordinary shares than was achieved as an ASX-listed company, there can be no assurance that this is will be the case. There may be significant consequences associated with our ordinary shares initially trading on the OTCBB rather than a national exchange. The effects of not being able to list our ordinary shares on a national exchange include:

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

As a foreign private issuer, if and after our ordinary shares are listed on the NASDAQ Capital Market, we will be permitted and intend to 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, if and after our ordinary shares are listed on the NASDAQ Capital Market, we will be permitted to follow certain home-country corporate governance practices in lieu of certain NASDAQ requirements. We intend to avail ourselves of all such exemptions available to us, including without limitation, the following:

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. See “Management—Corporate Governance Requirements Arising from Our U.S. Listing” for a description of each NASDAQ requirement with which we do not intend to comply, if and after our ordinary shares are listed on the NASDAQ Capital Market, together with a description of our applicable home-country practice.

  We recently effected a 1-for-300 reverse stock split 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 implemented on February 6, 2014, 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, we reduced 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 will be 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 treaty providing for the reciprocal recognition and enforcement of judgments in civil and commercial matters. 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 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 Gerard McGowan, who is our Chairman of the Board and Chief Executive Officer, and W.H. Soul Pattinson and certain affiliates, referred to as WHSP. Mr. Todd Barlow, a member of our Board is an employee of an affiliate of WHSP. Mr. McGowan and WHSP, respectively, own approximately 13.74% and 10.25% of our outstanding ordinary shares as of February 28, 2014. 

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 our Board to with the authority to issue a new series of 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 applicable listing regulations. 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.

A significant portion of our total outstanding shares are eligible to be sold into the market in the near future, which could cause the market price of our ordinary shares to drop significantly, even if our business is doing well.

Sales of a substantial number of our ordinary shares in the public market, or the perception in the market that the holders of a large number of shareholders intend to sell shares, e.g. the preponderance of our shareholders who are located in Australia or holders of large blocks of unrestricted shares, could reduce the market price of our ordinary shares. After this offering, we will have      outstanding ordinary shares based on the number of shares outstanding as of February 28, 2014. This number includes the            shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. While a significant portion of our outstanding shares are currently restricted as a result of securities laws or lock-up agreements, they will become eligible to be sold at various times after the offering. In addition, holders of our outstanding convertible notes and warrants stock have certain registration rights with respect to the ordinary shares issuable upon conversion or exercise thereof. Sales of such shares could cause the market price of our ordinary shares to drop significantly.

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 (see “Taxation—United States Federal Income Tax Consequences”) 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. For more information see “Taxation—United States Federal Income Tax Consequences—Passive Foreign Investment Company Considerations.”

Our management will have broad discretion over the use of the net proceeds from this offering and we may use the net proceeds in ways with which you disagree or which do not produce beneficial results.

We currently intend to use the net proceeds from this offering for working capital, to fund potential acquisitions, to develop further renewable energy projects and general corporate purposes. We have not allocated specific amounts of the net proceeds from this offering for any of the foregoing purposes. Accordingly, our management will have significant discretion and flexibility in applying the net proceeds of this offering. You will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. It is possible that the net proceeds will be invested in a way that does not yield a favorable, or any, return for us or our stockholders. The failure of our management to use such funds effectively could have a material adverse effect on our business, financial condition, and results of operation.

You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future as we do further financings and transactions.

You will incur immediate and substantial dilution as a result of this offering. After giving effect to the sale by us of up to        ordinary shares offered in this offering at a public offering price of US$     per share, and after deducting the underwriter’s discount and estimated offering expenses payable by us, investors in this offering can expect an immediate dilution of US$     per share. In addition, in the past, we have issued options, warrants and convertible notes to acquire our ordinary shares and may do so in the future. To the extent these options, warrants or convertible notes are ultimately exercised or converted, you will sustain further future dilution.

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. See “Description of Share Capital—The Foreign Acquisitions and Takeovers Act 1975 and Corporations Act 2001.”

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. Prior to investing in our ordinary shares investors should carefully review the summary of these matters set forth under “Description of Share Capital—Constitution,” as well as the copy of our complete Constitution, which is included as an exhibit to the registration statement of which this prospectus forms a part.