BLUE SPHERE CORP. - FORM S-1 - December 14, 2011

Attached files

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EX-5.1 - EXHIBIT 5.1 - BLUE SPHERE CORP.	v238258_ex5-1.htm
EX-23.1 - EXHIBIT 23..1 - BLUE SPHERE CORP.	v238258_ex23-1.htm
EX-10.15 - EXHIBIT 10..15 - BLUE SPHERE CORP.	v238258_ex10-15.htm
EXCEL - IDEA: XBRL DOCUMENT - BLUE SPHERE CORP.	Financial_Report.xls

Registration No. __________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

BLUE SPHERE CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

(State or Other Jurisdiction of Incorporation or Organization)

7370

(Primary Standard Industrial Classification Code Number)

98-0550257

(I.R.S. Employer Identification Number)

35 Asuta Street

Even Yehuda, Israel 40500

972-9-8917438

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Copy to:

JSBarkats, PLLC

Attn: Sunny J. Barkats, Esq.,

18 East 41st Street, 19th Fl.

NY, NY 10017

www.JSBarkats.com

Telephone No.: (646) 502-7001

Facsimile No.: (646) 607-5544

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Approximate Date of Proposed Sale to the Public: From time to time after the date this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x

CALCULATION OF REGISTRATION FEE


Title of class of securities to be registered	Amount to be registered (1)		Proposed maximum offering price per share (2)		Proposed maximum aggregate offering price (2)		Amount of registration fee
Common Stock, $.001 par value per share		12,812,500	$	0.06	$	768,750	$	88.10

(1) In accordance with Rule 416(a), the registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions.

(2) Estimated in accordance with Rule 457 of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee and is based on the closing price of our stock reported by the Over-the-Counter Bulletin Board (the “OTCBB”) on December 12, 2011, which was $0.06.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

THE INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS DECLARED EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION, DATED DECEMBER 14, 2011

PRELIMINARY PROSPECTUS

BLUE SPHERE CORPORATION

12,812,500 Shares of Common Stock

This prospectus relates to the offer and resale of up to 12,812,500 shares of our common stock, par value $0.001 per share, by Centurion Private Equity, LLC (“Centurion”), the selling stockholder. Of such shares, (i) 10,267,445 represent shares issuable to Centurion pursuant to the terms of the investment agreement we entered into with Centurion on August 17, 2011 (the “Investment Agreement”) and (ii) 2,545,055 shares represent shares that were issued to Centurion as commitment shares and to cover Centurion’s transaction fees incurred in the preparation of the documents for the investment transaction. Subject to the terms and conditions of the Investment Agreement, we have the right to “put” or sell up to $20,000,000 in shares of our common stock (the “Put Shares”) to Centurion (each such sale, a “Put”) subject to volume and other limitations in the Investment Agreement. The Investment Agreement provides that prior to exercising any Put we must have a registration statement declared effective. This arrangement is referred to herein as the “Equity Funding Facility.”

For more information on the selling stockholder, please see the section of this prospectus entitled “Selling Stockholders” beginning on page 47.

We will not receive any proceeds from the resale of these shares of common stock by Centurion. We will, however, receive proceeds from the sale of the Put Shares directly to Centurion pursuant to the Equity Funding Facility. This registration statement covers the maximum number of shares of common stock that may be issuable to Centurion pursuant to the Investment Agreement based on the current market price of our common stock. In the event the price per share of our common stock declines, we may amend this registration statement to cover the resale of additional shares of common stock issuable to Centurion pursuant to the Investment Agreement. We will bear all costs associated with this registration statement.

When we put an amount of shares to Centurion, the per share purchase price that Centurion will pay to us in respect of such Put will be determined in accordance with a formula set forth in the Investment Agreement. There will be no underwriter’s discounts or commissions, so we will receive all of the proceeds of our sale to Centurion. Generally, the price per share for each Put will be a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of our common stock, or (ii) the Market Price of our common stock minus $0.01, but not less than a “Company Designated Minimum Put Share Price” (as defined below), if any, subject to certain dollar and share volume limitations for each Put. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put. “Company Designated Minimum Put Share Price” means a minimum purchase price per Put share at which Centurion may purchase shares of common stock pursuant to the Company’s Put notice. The Company Designated Minimum Put Share Price, if applicable, shall be no greater than 80% of the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the Company’s Put notice and shall be no less than 50% of the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the Company’s Put notice.

Centurion may sell our shares of common stock described in this prospectus at prevailing market prices or at privately negotiated prices. Centurion is an “underwriter” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the resale of our common stock under the Equity Funding Facility. For more information on the resale of our common stock, please see the section of this prospectus titled “Plan of Distribution” beginning on page 48.

Our common stock is traded on the OTC Bulletin Board under the symbol “BLSP”. The closing price of our stock on December 12, 2011 was $0.06.

You should understand the risks associated with investing in our common stock. Before making an investment, please read the “Risk Factors,” which begin on page 12 of this prospectus.

For more information on the resale of our common stock, please see the section titled “Plan of Distribution” which begins on page 48 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is December 14, 2011.

TABLE OF CONTENTS

		Page

PROSPECTUS SUMMARY		6

RISK FACTORS		12

FORWARD-LOOKING STATEMENTS		21

USE OF PROCEEDS		22

BUSINESS		24

MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS		29

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION		30

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS		36

EXECUTIVE COMPENSATION		40

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		46

SELLING STOCKHOLDERS		47

PLAN OF DISTRIBUTION		48

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		50

DESCRIPTION OF SECURITIES		51

EXPERTS		52

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES		52

LEGAL MATTERS		53

WHERE YOU CAN FIND MORE INFORMATION		53

INDEX TO INTERIM FINANCIAL STATEMENTS		54

INDEX TO YEAR END FINANCIAL STATEMENTS		F-8

PART II		55

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is contained in this prospectus. This prospectus may be used only where it is legal to sell these securities. The information in this prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of securities. Information contained on our website at www.bluespherecorporate.com does not constitute part of this prospectus.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus; it does not contain all of the information you should consider before investing in our common stock. Before making an investment decision, you should read the entire prospectus carefully, including the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis or Plan or Operation,” as well as our financial statements and related notes. Throughout this prospectus, the terms “we,” “us,” “our,” “Blue Sphere” or the “Company” refer to Blue Sphere Corporation, a Nevada corporation , and its wholly-owned subsidiaries, Eastern Sphere, Ltd. and Blue Sphere USA, Inc., unless the context otherwise requires.

Company Overview

We are a development stage company focused on project integration for greenhouse gas emission reduction and renewable energy production. We aspire to become a key player in the global carbon reduction and renewable energy market, working with enterprises with high greenhouse gas (“GHG”) emissions or renewable energy potential to reduce such emissions and/or generate renewable energy. Our business is presently primarily focused on Africa, China, the United States and Canada. We expect to generate revenue through sales of carbon credits, sales of thermal and electrical energy, sales of compost and/or soil amendments and by- products and project development.

The carbon credit component of our business is based on the Kyoto Protocol and certain voluntary and/or local regimes in certain countries such as China and the United States. The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These targets amount to an average emission reduction of five per cent of 1990 levels over the five-year period 2008-2012. The various voluntary and/or local regimes applicable to Blue Sphere are similar in structure to the Kyoto Protocol in that they incentivize reduction of greenhouse gas emissions by awarding carbon credits that can be sold in the relevant local markets.

Carbon Credit Projects

We have 7 signed agreements (including definitive agreements and non-binding term sheets) to implement projects with carbon credit potential, energy generation and compost and/or soil amendments. We are currently (i) evaluating each project to determine its optimal method of implementation, (ii) identifying suitable experts to assist us in project implementation and (ii) arranging for necessary financing. We are also continuing to pursue new projects with high volume potential.

Renewable Energy Generation

Six of our signed carbon credit project agreements have renewable energy and compost and/or soil amendments potential. We are separately evaluating non-carbon credit projects or projects with low volumes of carbon credits for renewable energy generation and compost and/or soil amendments production. As with our carbon credit projects, we are currently (i) evaluating the renewable energy component of each project to determine its optimal method of implementation, (ii) identifying suitable experts to assist us in project implementation and (iii) arranging for necessary financing. We are also continuing to pursue new projects with renewable energy potential.

During the three-month period ended June 30, 2011, we signed two binding term sheets with respect to the implementation of renewable energy projects at one site in Canada, two sites in Cyprus and one site in Greece. We are in the process of performing due diligence on such projects and, if we are satisfied, we will have the option, but not the obligation, of negotiating and entering into definitive agreements for the implementation of such projects.

In July 2011 we signed a joint venture agreement with Clinci Investment Ltd, a UK company. Clinci Investment Ltd. is also an affiliate of Beijing Clinci Energy and Environment Technology Co. Ltd., a Chinese company with over 30 renewable energy projects across China that implement carbon credit, renewable energy and compost and/or soil amendments projects at dairies and farms in China.

In July 2011, we also signed a joint venture agreement with B Pure Environmental Group Ltd., an Israeli company and affiliate of B Pure Ltd., to finance and implement two of our landfill gas projects in Ghana. One of these projects has renewable energy potential. The signed agreement also contains an option to finance and implement up to seven more carbon credit and renewable energy projects. In August 2011, we commenced the registration process for the first two projects by commissioning Climaloop, an independent environmental consultancy firm, to prepare a project design document (PDD), which is required to be submitted to the Executive Board of the Clean Development Mechanism for our projects to be registered and receive carbon credits. The PDD will cover and effect registration of an unlimited number of landfill projects in Ghana and Nigeria over the next 29 years.

We were incorporated in Nevada in July 2007 under the name Jin Jie Corp. Prior to the second quarter of fiscal 2010 we were engaged in the business of developing and promoting automotive internet websites. That business generated no revenue and an accumulated deficit of approximately $64,000. During the second quarter of 2010 we changed our business to our current business. In connection with the change, we took the following actions: (i) effective February 17, 2010, we changed our name to our current name by merging into our company a wholly-owned subsidiary formed for that purpose (ii) effective February 17, 2010, we effected a 35-for-1 forward split of our authorized and issued and outstanding common stock, as a result of which our authorized common stock increased from 50,000,000 shares to 1,750,000,000 shares and our outstanding common stock increased from 1,900,000 shares to 66,500,000 shares, (iii) effective February 26, 2010, certain former shareholders of our company sold an aggregate of 34,800,000 shares of our common stock held by them, representing approximately 38% of our then outstanding stock, to new investors for an aggregate purchase price of $34,800 and (iv) effective March 3, 2010, we entered into employment agreements with Shlomo Palas, our CEO, Eliezer Weinberg, our Chairman and Shmuel Keshet, our former COO. Messrs. Palas, Weinberg and Keshet were each granted two-year time-vested stock options to purchase 8,321,917 shares of common stock, representing 9% of our then outstanding shares, at an exercise price of $.001 per share.

On March 3, 2010, Messrs. Palas and Weinberg were elected as members of our board of directors, with Mr. Weinberg being elected as non-executive Chairman. In April and May 2010, the remaining management and board members of our company prior to the change of business resigned. On October 25, 2010, we appointed Mark Radom as our Chief Carbon Officer. Mr. Radom serves in this capacity on a full-time basis. We have seven full-time employees— our non-executive chairman (who is not an officer of the Company, but has an employment agreement nonetheless), our chief executive officer, our Executive Vice President, our chief carbon officer, our chief financial officer, our office manager and our book-keeper. We also have a representative in China who assists us in identifying projects in China. We have (i) employment agreements with our non-executive chairman and our chief executive officer, (ii) a consulting and employment agreement with our executive vice president, (iii) a consulting agreement with our chief carbon officer and (iv) a service agreement with our chief financial officer. We have no other employment or similar agreements with any of our employees. By mutual agreement, we terminated our employment agreement with our former chief operating officer in August 2011.

On August 19th, 2011, the Company’s Board of Directors appointed Amit Zilbershtein to replace Alex Werber as our Chief Financial Officer who had served in that capacity since April 8, 2010.

On July 28, 2011, we appointed Roy Amitzur our Executive vice president.

Our principal executive offices and our principal place of business is 35 Asuta Street, Even Yehuda, Israel 40500. Our telephone number is 972-9-8917438.

Our common stock is traded on the over-the-counter market and quoted on the over-the-counter bulletin board (the “OTCBB”) under the symbol “BLSP.” On December 12, 2011, the closing price for shares of our common stock as reported on the OTCBB was $0.06.

The Offering

Number of shares of common stock being registered in this offering		12,812,500 shares of common stock ((i) 10,267,445 shares issuable to Centurion as Put Shares and (ii) 2,545,055 shares already issued to Centurion as commitment shares and fee shares).

Number of shares of common stock currently outstanding		124,683,620 shares of common stock (includes the 2,545,055 shares of common stock already issued to Centurion).

Number of shares of common stock outstanding after the offering if all the shares registered hereunder are issued to and resold by the selling stockholder		134,951,065 shares of common stock (124,683,620 + 10,267,445 )

Market for our common stock		OTCBB

Use of Proceeds		We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by Centurion. However, we will receive proceeds from the sale of the Put Shares to Centurion upon our exercise of the Equity Funding Facility. The net proceeds from the sale of the Put Shares under the Equity Funding Facility will be used to fund our project development and general and administrative expenses. See “Use of Proceeds” on page 22 below.

Equity Funding Facility

We may sell the Put Shares to Centurion from time to time at a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of our common stock or (ii) the Market Price of our common stock minus $0.01, but not less than a Company Designated Minimum Put Share Price, if any, subject to certain dollar and share volume limitations for each Put, until the earlier of (a) 36 calendar months from the date of the Investment Agreement or (b) until all Puts under the Investment Agreement have reached an aggregate gross sales price equal to $20 million. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put (the “Pricing Period”).

	The number of Put Shares that Centurion shall be obligated to purchase in a given Put shall not exceed a share volume limitation equal to the lesser of: (i) 15% of the aggregate trading volume in our common stock during any Pricing Period for such Put excluding any block trades that exceed 20,000 shares of our common stock and excluding any days where the lowest intra-day trade price is less than the Trigger Price (defined below), (iii) the number of Put Shares which, when multiplied by their respective Put Share prices, equals $750,000, and (iv) such number of Put Shares that when added to the number of shares of our common stock then beneficially owned by Centurion would exceed 4.9% of the number of shares of our common stock outstanding. For any Pricing Period, the “Trigger Price” means the greater of (i) the Company’s specified minimum Put Share price, plus $0.01, or (ii) the Company’s designated minimum Put Share price divided by 0.98.

Risk Factors	There are significant risks involved in investing in our company. For a discussion of risk factors you should consider before buying our common stock, please see “Risk Factors” beginning on page 12.

Dilutive Effects

Under the Investment Agreement, the purchase price of the Put Shares to be sold to Centurion will be at a price equal to the lesser of (i) 98% of the Market Price of our common stock or (ii) the Market Price of our common stock minus $0.01, but not less than a Company Designated Minimum Put Share Price, if any. The table below illustrates an issuance of shares of common stock to Centurion under the Investment Agreement for a hypothetical draw down amount of $50,000 at an assumed Market Price of $0.06, which was the closing price of our common stock on December 12, 2011.

									Number of
Draw Down							Price to be Paid by		Shares
Amount		Market Price		Discount			Centurion		to be Issued
$	50,000	$	0.06	$	(- 0.01	)	$	0.05		1,000,000

By comparison, if the Market Price of our common stock was lower than $0.06, the number of shares that we would be required to issue in order to have the same draw down amount of $50,000 would be greater, as shown by the following table:

Draw Down							Price to be Paid by		Number of Shares
Amount		Market Price		Discount			Centurion		to be Issued
$	50,000	$	0.05	$	(- 0.01	)	$	0.04		1,250,000

Accordingly, there would be dilution of an additional 250,000 issued due to the lower stock price. In effect, if we are interested in receiving a fixed funding amount, a lower price per share of our common stock means a higher number of shares to be issued to Centurion in order to receive that fixed funding amount, which equates to greater dilution of existing stockholders. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Centurion, and because our existing stockholders may disagree with a decision to sell shares to Centurion at a time when our stock price is low, and may in response decide to sell additional numbers of shares, further decreasing our stock price.

The actual number of shares that will be issued to Centurion under the Equity Funding Facility will depend upon the Market Price of our stock at the time of our Puts to Centurion. Based on the closing price of our common stock as of December 12, 2011, the total number of shares issuable under the Equity Funding Facility (assuming we access the full amount of the Equity Funding Facility) would be approximately 400,000,000 shares, which, if issued, would represent approximately 76.24% of the total shares of common stock outstanding after the issuance. If the Market Price of our stock for all Puts made under the Equity Funding Facility is not at least $.06, we would need to issue more than 400,000,000 shares to receive the entire $20,000,000 available under the Equity Funding Facility. This prospectus relates to the registration of 12,812,500 shares of our common stock, of which 10,267,445 may be issued under the Equity Funding Facility. If issued, these 10,267,445 shares would represent approximately 7.6% of the total shares of common stock outstanding after issuance of all registered shares (10,267,445 + 124,683,620 = 134,951,065 ).

Likelihood of Accessing the Full Amount of the Equity Funding Facility

Notwithstanding that the Equity Funding Facility is in an amount of $20,000,000, the likelihood that we would access the full $20,000,000 and issue 400,000,000 shares of common stock to Centurion is low. This is due to several factors: (i) our annual budget is between $750,000 and $1,000,000, and thus the Equity Funding Facility may expire before we would need to obtain the maximum amount; (ii) we may utilize other funding facilities and obtain financing from other sources; (iii) the Equity Funding Facility’s share volume limitations will limit our use of the Equity Funding Facility; and (iv) the Market Price may increase and thus fewer shares will need to be issued.

We determined to register in this registration statement a total of 12,812,500 shares, which represent approximately thirty percent (30%) of the Company’s public float (after subtracting the holdings of insiders and controlling shareholders), and which reflect our utilizing approximately $ 640,625 of the $ 20,000,000 available under the Equity Funding Facility, based on the closing price of our common stock on December 12, 2011.

RISK FACTORS

Investing in our common stock involves a high degree of risk, and you should be able to bear the complete loss of your investment. You should carefully consider the risks described below, the other information in this Prospectus, the documents incorporated by reference herein and the risk factors discussed in our other filings with the Securities and Exchange Commission when evaluating our company and our business. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known by us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our common stock could decline and investors could lose all or a part of the money paid to buy our common stock.

Risk Factors related to our Business

1. We have no operating history and have maintained losses since inception, which we expect to continue into the future.

We were incorporated in July 2007 and are a development stage company. We have a history of losses totaling $16,458,000 through June 30, 2011. We expect to incur additional substantial operating losses for the foreseeable future, and we may never achieve or maintain profitability. We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our common stock and investors would in all likelihood lose their entire investment.

2. Our independent auditors’ report states that there is a substantial doubt that we will be able to continue as a going concern.

Our independent registered public accounting firm, Brightman Almagor Zohar & Co., a member firm of Deloitte Touche Tohmatsu, state in their audit report, dated December 27, 2010, that our having incurred recurring losses from operations raise substantial doubt about our ability to continue as a going concern.

We will, in all likelihood, continue to incur expenses without generating significant revenues into the foreseeable future, at least until some of our projects become operational. Our only source of funds to date has been the sale of our common stock and a convertible debt financing. Because we cannot ensure that any of our projects will become operational or that we will be able to generate any significant revenues or income, the identification of new sources of equity or debt financing will be difficult. If we are successful in closing on any new equity financing, existing investors will experience substantial dilution. Our ability to obtain additional debt financing is also severely impacted by our financial condition given that we do not have revenues or profits to pay interest or repay principal.

As a result, if we are unable to obtain additional financing at this stage in our operations, our business will fail and our stockholders may lose some or all of their investment in our common stock.

3. We will require additional funding, and our future access to capital is uncertain. Insufficient funds may limit our ability to develop projects that become operational and revenue generating.

Our business can change unpredictably due to a variety of factors, including competition, regulation, legal proceedings, or other events, which could impact our funding needs or our cash flow from operations or increase our required capital expenditures. In addition, all of our current projects will require some amount of financing from us and/or our partners. Those projects that do not require financing from us may provide that our partners’ initial investments are repaid, in whole or in part, before we receive any income generated by our projects, creating a need for additional financing to support our operations until income accrues to us from such projects.

Our estimates of the funds necessary to develop projects that become operational and revenue generating may be inaccurate, or we may undertake other business ventures or acquire other assets in the future, in each case which could require additional funds. Furthermore, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. We may seek the additional capital through public or private equity offerings, debt financings, and collaborative and joint venture arrangements. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise additional funds through collaboration and joint venture arrangements with third parties, we may have to relinquish valuable rights to or in our projects, or grant licenses or other rights to or in our project that are not favorable to us.

Adequate funds, whether through the financial markets or from other sources, may not be available when we need them or on terms acceptable to us. For example, the United States has recently experienced an economic recession, the long-term impact of which cannot be predicted. Furthermore, as a result of the recent volatility in domestic and international capital markets, the cost and availability of credit has been and may continue to be adversely affected as compared to its normal function. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to borrowers. Insufficient funds could cause us to delay, scale back, or choose not to develop currently planned or future projects.

4. Changes in laws and regulations over which we have no control can significantly affect our business and results of operations.

Any governmental entity that regulates our operations or projects in the country in which they are located may enact new legislation or adopt new laws and regulations or policies at any time, and new judicial decisions may change the interpretation of existing legislation or regulations at any time in any of the countries in which our operations or projects are located. We have no control over any such changes. Any new laws or regulations governing our operations or projects could have an adverse impact on our business, results of operations and prospects.

5. Uncertainty in Brokering or Dealing in Environmental Commodities could have an adverse impact on our results of operations.

The recent worldwide recession and associated uncertainty surrounding a global approach to carbon emissions has had a negative effect on the price of carbon credits and transaction volume has declined as a result. We cannot make any predictions about (i) the timing or the pace of the worldwide economic recovery, (ii) whether the price of carbon credits or the transaction volume for such credits will continue to decline or when or whether they will increase, (iii) the extent to which countries will attempt to reduce their environmental emissions in order to achieve compliance with international and U.S.-based initiatives. Continuation of the recession, declines in the price or transaction volume for carbon credits and reductions in efforts by countries to reduce their environmental emissions will each have an adverse impact on our business, results of operations and prospects.

The first commitment period of the Kyoto Protocol upon which our carbon credit business is based was originally valid until the end 2012. At the 17th Conference of the Parties to the United Nations Convention on Climate Change held in Durban, South Africa in December 2011, the first commitment period of the Kyoto Protocol was provisionally extended until 2017. Also, a commitment was undertaken to begin negotiations for a new legally binding treaty to take effect in 2020. Therefore, although greenhouse gases are recognized as a worldwide concern, the future revisions to the Kyoto Protocol and their effects of those provisions remain unclear. It is impossible to predict the provisions of the international agreement that will replace the Kyoto Protocol. Under such new agreement, it is possible that the projected income of the Company that is based on carbon emission reduction may be reduced significantly or even disappear.

6. Our reliance on the owners and operators of our projects in various countries poses significant risks to our business and prospects.

We contract with the owners and operators of the projects that will be essential to our operations. If the owners or operators experience unanticipated changes in their businesses or in the business or operations of our projects, we may incur additional costs. For example:

the owners or operators of our projects may face delays due to natural disasters or strikes, lock-outs or other such actions;

the owners or operators of our projects could make strategic changes in the operations of our projects; and

some of our owners or operators may be small companies which are more likely to experience financial and operational difficulties than larger, well-established companies, because of their limited financial and other resources.

As a result of any of these factors, we may be required to find alternative owners, operators or projects on which we rely. Accordingly, we may experience unanticipated interruptions or delays in the operations of our projects, which could adversely affect our revenues, financial condition, and results of operations, cash flow and liquidity.

7. Our operations in foreign markets could cause us to incur additional costs and risks associated with doing business internationally.

Our operations will involve the brokering of carbon credits in countries that are signatories to international treatises. Our operations in geographic markets outside of the United States will subject us to a number of risks and potential costs, including:

different regulatory requirements governing the energy marketplace;

difficulty in establishing, staffing and managing international operations;

United States, federal, state and local laws, including tax laws, related to foreign operations, including compliance with United States, federal, state and local foreign corrupt practices laws;

differing intellectual property laws;

differing contract laws that prevent the enforceability of agreements between energy suppliers and energy consumers;

the imposition of special taxes, including local taxation of our fees or of transactions through our exchange;

strong local competitors;

currency fluctuations; and

political and economic instability.

Our business is headquartered in Israel and our executive officers are based in Israel. Therefore, our results of operations could be adversely affected by political, economic and military instability in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect our operations and could make it more difficult for us to raise capital.

Our failure to manage the risks associated with international operations could limit the future growth of our business and adversely affect our operating results. We may be required to make a substantial financial investment and expend significant management efforts in connection with our international operations.

8. Our operations in the developing world could cause us to incur additional risks associated with doing business in developing markets.

The Company is seeking to operate largely in the developing world (such as, e.g., countries in Africa, Central Asia and Southeast Asia), making it susceptible to changes in the economic, political, and social conditions therein. The developing world has experienced political, economic and social uncertainty in recent years, including an economic crisis characterized by increased inflation, high domestic interest rates, in some cases, negative economic growth, reduced consumer purchasing power and high unemployment. Currently, many of the countries in the developing world where we have projects have been pursuing economic stabilization policies, including the encouragement of foreign trade and investment and other reforms. Nevertheless, no assurance can be given that the countries in which we currently or will operate will continue to pursue these policies, that these policies will be successful if pursued or that these policies will not be significantly altered. In case of a decline in the world economy, increases in political or social problems or a reversal of foreign investment policies, it is likely that any such changes will have an adverse effect on the Company's results of operations and financial condition. Additionally, inflation may lead to higher wages and salaries for local employees and increases in the cost of materials, which would adversely affect the Company's profitability.

9. If our strategy is unsuccessful, we will not be profitable and our stockholders could lose their investment.

We do not believe there are track records for companies pursuing our specific strategy, and there is no guarantee that our strategy will be successful or profitable. If our strategy is unsuccessful, we will fail to meet our objectives and not realize the revenues or profits from the business we pursue, which would cause the value of the Company to decrease, thereby potentially causing in all likelihood, our stockholders to lose their investment.

10. We may face intense competition and may not be able to successfully compete.

We may not have the resources to compete with our existing competitors or with any new competitors. We intend to compete with the various participants in the carbon credit and renewable energy market, almost all of which have significantly greater personnel, financial and managerial resources than we have. This competition from other environmental companies with greater resources may result in our failure to maintain or expand our business. Moreover, as the demand for carbon credits increases, new companies may enter the market, and the influx of added competition will pose an increased risk to our Company. Increased competition may lead to price wars, which would harm us since we would be unable to compete with companies with greater resources.

11. We rely on key personnel and, if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.

The development of our business will continue to place a significant strain on our limited personnel, management, and other resources. Our future success depends upon the continued services of our executive officers and the engagement of key employees and contractors who have critical industry experience and relationships that we will rely on to implement our business plan. The loss of the services of any of our officers or the lack of availability of other skilled personnel would negatively impact our ability to develop our Company, which could adversely affect our financial results and impair our growth. In order to support our projected growth, we will be required to effectively recruit, hire, train and retain additional qualified management personnel. Our inability to attract and retain the necessary personnel could have a material adverse effect on the Company. We have no “key man” insurance on any of our key employees.

12. Investors may incur dilution.

The Company may issue additional shares of its equity securities or incur additional debt convertible into equity securities in order to raise additional cash to fund acquisitions or for working capital. If the Company issues additional shares of its capital stock or incurs additional debt that is converted into shares of capital stock, investors in this offering will experience dilution in their respective percentage ownership in the Company.

13. There is no intention to pay dividends at the present time.

The Company has never paid dividends or made other cash distributions on the common stock, and does not expect to declare or pay any dividends in the foreseeable future. The Company intends to retain future earnings, if any, for working capital and to finance current operations and expansion of its business. Investors should not count on dividends in evaluating an investment in our common stock.

14. Certain shareholders with a significant ownership percentage in the company may not vote in a manner that is inconsistent with the votes of other shareholders of the Company.

Amir Rachmani holds approximately 25.22% of our shares of common stock. Through his beneficial ownership of a 25.22% interest of our outstanding shares, he has a significant say in all matters requiring stockholder approval. It is possible that he will vote some or all of his shares against any proposed management recommendation that requires shareholder approval, which may lead to an inability on the part of our current management and Board to pursue strategic growth, which, in turn, may have a material adverse impact on shareholder value. In addition, he may initiate a contest for control of the Company, which could distract our management from operations, divert Company resources, and negatively impact the Company’s financial condition, profitability and prospects.

15. Because our officers and directors collectively own approximately 31.26% of our outstanding shares, investors may find that corporate decisions influenced by them are inconsistent with the best interests of other stockholders.

Eliezer Weinberg, Shlomo Palas, Roy Amizur and Mark Radom, are our Chairman, Chief Executive Officer, Executive Vice President and Chief Carbon Officer, respectively. Messrs. Weinberg and Palas each beneficially own (as of December 12, 2011) 10,441,434 of our shares or approximately 7.98% of our outstanding shares each. Mr. Amizur owns 17,500,000 of shares or approximately 14.04% of our outstanding shares. Mr. Radom owns 4,500,000 of our shares or approximately 3.61% or our outstanding shares. Collectively our officers and directors beneficially own 42,882,868 shares of our common stock as of December 12, 2011 or approximately 31.26% of our outstanding shares. Accordingly, they will have a significant influence in determining the outcome of all corporate transactions or other matters, including mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The offer or sale of a large number of shares at any price may cause the market price to fall. Sales of substantial amounts of common stock or the perception that such transactions could occur may materially and adversely affect prevailing market prices for our common stock.

Risks Relating to the Offering

16. The market price of our Common Stock is likely to be highly volatile and subject to wide fluctuations.

Dramatic fluctuations in the price of our Common Stock may make it difficult to sell our Common Stock. The market price of our Common Stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factors that are beyond our control.

17. Our largest shareholder received his shares of our Common Stock at a price of $.001 per share.

Amir Rachmani, our largest shareholder, holds approximately 25.22% of our shares of common stock. He received his shares of our Common Stock at a price of $.001 per share. The low purchase price for such shares may make it more likely that the shares will be sold at lower trading prices. The sale of such shares into the market could have a depressive effect on the trading price of our Common Stock, if then traded.

18. Draw Downs Under the Equity Funding Facility Will Dilute Existing Shareholders.

Centurion has committed to purchase up to $20,000,000 in shares of our commons stock, subject to certain dollar and share volume limitations for each Put. From time to time during the term of the Equity Funding Facility, and at our sole discretion, we may present Centurion with a Put notice requiring them to purchase shares of our common stock. The price per share for each Put will be a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of our common stock or (ii) the Market Price of our common stock minus $0.01, but not less than a Company Designated Minimum Put Share Price, if any. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put. As a result, our existing shareholders will experience immediate dilution upon the purchase of any of the Put Shares by Centurion.

In addition, the issue and resale of the shares under the Investment Agreement may have an adverse effect on the market price of our common stock. Centurion may resell some, if not all, of the shares that we issue to it under the Investment Agreement and such sales could cause the market price of our common stock to decline significantly. To the extent of any such decline, any subsequent Puts would require us to issue and sell a greater number of shares to Centurion in exchange for each dollar of proceeds to be received from the sale of Put Shares. Under these circumstances, the existing shareholders of the Company will experience greater dilution. The effect of this dilution may, in turn, cause the price of our common stock to decrease further, both because of the downward pressure on the stock price that would be caused by a large number of sales of our shares into the public market by Centurion, and because our existing stockholders may disagree with a decision to sell shares to Centurion at a time when our stock price is low, and may in response decide to sell additional numbers of shares, further decreasing our stock price. If we draw down amounts under the Equity Funding Facility when our share price is decreasing, we will need to issue more shares to raise the same amount of funding.

19. There Is No Guarantee That We Will Satisfy The Conditions To The Investment Agreement.

Although the Investment Agreement provides that we can require Centurion to purchase, at our discretion, up to $20 million shares of our common stock in the aggregate, there can be no assurances that we will be able to satisfy the closing conditions applicable for each Put. The closing conditions include an effective registration statement, continued listing on the OTCBB, and current public information on the Company. If we fail to satisfy the applicable closing conditions, we will not be able to sell the Put Shares to Centurion.

20. There is no Guarantee that We will be able to Fully Utilize the Equity Funding Facility.

There are limitations on the number of Put Shares that may be sold in each Put. The number of Put Shares that Centurion shall be obligated to purchase in a given Put shall not exceed a share volume limitation equal to the lesser of: (i) 15% of the aggregate trading volume in our common stock during any pricing period for such Put excluding any block trades that exceed 20,000 shares of our common stock and excluding any days where the lowest intra-day trade price is less than the Trigger Price, (ii) the number of Put Shares which, when multiplied by their respective Put Share prices, equals $750,000, and (iii) such number of Put Shares that when added to the number of shares of our common stock then beneficially owned by Centurion would exceed 4.9% of the number of shares of our common stock outstanding. Thus, our ability to access the bulk of the funds available under the Equity Funding Facility depends in part on Centurion’s resale of stock purchased from us in prior Puts. If with regard to a particular Put, the share volume limitation is reached in connection with a prior Put, we will not be able to sell any additional proposed Put Shares to Centurion. Accordingly, the Equity Funding Facility may not be available at any given time to satisfy our funding needs.

21. Sales under the Investment Agreement could Result In the Possibility of Short Sales

Any downward pressure on the market price of our common stock caused by the issue and resale of shares to and by Centurion could encourage short sales by third parties. In a short sale, a prospective seller borrows shares of common stock from a shareholder or broker and sells the borrowed shares of common stock. The prospective seller hopes that the common stock market price will decline, at which time the seller can purchase shares of common stock at a lower price for delivery back to the lender. Since the seller would be purchasing shares of common stock at a price that is lower than the sale price of the borrowed shares of common stock, the seller profits when the common stock market price declines. Such sales could place downward pressure on the market price of the common stock by increasing the number of shares of common stock being sold, which could further contribute to any decline of the market price of the common stock. Furthermore, Centurion may enter into any short sale or other hedging or similar arrangement it deems appropriate with respect to Put Shares after it receives a Put notice with respect to such Put Shares so long as such sales or arrangements do not involve more than the number of the Put Shares specified in the applicable Put notice.

22. Centurion will Pay Less than the Then-Prevailing Market Price for our Common Stock.

The common stock to be issued to Centurion pursuant to the Investment Agreement will be purchased (i) at a discount of 2% of the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put or (ii) at a discount of one cent (whichever discount is greater). Centurion will have a financial incentive to exert downward pressure on the market price of our common stock during the Put pricing period in order to acquire the Put Shares at a discounted price.

23. There Is Uncertainty as to the Amount that Centurion will pay for the Put Shares

The actual amount of proceeds that we will receive in any particular Put or in total under the Investment Agreement is uncertain. Subject to certain limitations in the Investment Agreement, we have the discretion to give a Put notice at any time throughout the term. However, since the price per share of each Put Share will fluctuate based on the Market Price of our common stock during the Put pricing period, the actual amount that Centurion will pay for the Put Shares included in any particular Put will decrease if the Market Price of our common stock declines.

24. Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations, which may limit a stockholder's ability to buy and sell our stock.

Our common stock is subject to the regulations of the SEC promulgated under the Exchange Act that require additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The SEC regulations define penny stocks to be any non-NASDAQ equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Unless an exception is available, those regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a standardized risk disclosure schedule prepared by the SEC, to provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, monthly account statements showing the market value of each penny stock held in the purchaser’s account, to make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a stock that becomes subject to the penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage market investor interest in and limit the marketability of our common stock.

25. As an issuer of “penny stock,” the protection provided by the federal securities laws relating to forward looking statements does not apply to the Company.

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, the Company will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by the Company contained a material misstatement of fact or was misleading in any material respect because of the Company’s failure to include any statements necessary to make the statements not misleading. Such an action could adversely affect our financial condition.

26. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the Over-The-Counter Bulletin Board, such as Blue Sphere, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. Currently we have sufficient resources to comply with our future reporting requirements; however, should we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on our Company.

27. Volatility in foreign exchange currency rates could adversely affect our financial condition, results of operations and trading prices of our stock .

Any currency exchange rate movements between the U.S. dollar and the various currencies of the jurisdictions in which the Company operates or receives payment (including the Euro) that make doing business more expensive or revenue in foreign currencies less valuable may have a material, adverse impact on the Company’s earnings, cash flow and/or financial position and, as a result, could adversely impact the trading prices of our stock.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements, which reflect the views of our management with respect to future events and financial performance. These forward-looking statements are subject to a number of uncertainties and other factors that could cause actual results to differ materially from such statements. Forward-looking statements are identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “targets ” and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on the information available to management at this time and which speak only as of this date. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. For a discussion of some of the factors that may cause actual results to differ materially from those suggested by the forward-looking statements, please read carefully the information under “Risk Factors” beginning on page 12.

The identification in this document of factors that may affect future performance and the accuracy of forward-looking statements is meant to be illustrative and by no means exhaustive. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You may rely only on the information contained in this prospectus.

We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor the sale of common stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these securities in any circumstances under which the offer or solicitation is unlawful.

USE OF PROCEEDS

We will not receive any proceeds from the resale of the common stock offered by Centurion pursuant to this prospectus. All proceeds from the resale of such shares will be for the account of Centurion. However, we will receive proceeds from the sale of the Put Shares to Centurion pursuant to the Investment Agreement. The net proceeds from the sale of the Put Shares under the Equity Funding Facility will be used to fund our project development and general and administrative expenses. The amounts and timing of our expenditures will depend on numerous factors, such as the progress made in our project development activities. As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from the sale of shares to Centurion. Accordingly, we will retain broad discretion over the use of such proceeds.

We have agreed to bear the expenses relating to the registration of the shares for Centurion.

DETERMINATION OF THE OFFERING PRICE

The 12,812,500 shares of our common stock being registered hereunder may be offered and resold by Centurion at prevailing market prices or at privately negotiated prices. The offering price utilized herein is based on the current price per share of our common stock as traded on the OTCBB. The closing price of our stock on December 12, 2011 was $0.06.

Equity Funding Facility with Centurion

Investment Agreement

We entered into an Investment Agreement with Centurion, dated as of August 17, 2011, for the provision of an equity funding facility up to the amount of $20 million. Pursuant to the terms and conditions of the Investment Agreement, we may sell newly issued shares of our common stock (the “Put Shares”) to Centurion (each such sale, a “Put”) from time to time at a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of our common stock or (ii) the Market Price of our common stock minus $0.01, but not less than a Company Designated Minimum Put Share Price, if any, subject to certain dollar and share volume limitations for each Put, until the earlier of (a) 36 calendar months from the date of the Investment Agreement, or (b) until all Puts under the Investment Agreement have reached an aggregate gross sales price equal to $20 million. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put.

Centurion’s discount from the market price was arrived at through negotiations between Centurion and the Company and represents a premium for the stand-by nature of Centurion’s purchase commitment and the amount of investment agreed to by Centurion.

The Investment Agreement provides that prior to exercising any Put we must have a registration statement declared effective with respect to the Put Shares.

The number of Put Shares that Centurion shall be obligated to purchase in a given Put shall not exceed a share volume limitation equal to the lesser of: (i) 15% of the aggregate trading volume in our common stock during any pricing period for such Put excluding any block trades that exceed 20,000 shares of our common stock, and excluding any days where the lowest intra-day trade price is less than the Trigger Price (defined below), (ii) the number of Put Shares which, when multiplied by their respective Put Share prices, equals $750,000, and (iii) such number of Put Shares that when added to the number of shares of our common stock then beneficially owned by Centurion would exceed 4.9% of the number of shares of our common stock outstanding. For any Pricing Period, the “Trigger Price” means the greater of (i) the Company’s specified minimum Put Share price, plus $0.01, or (ii) the Company’s designated minimum Put Share price divided by 0.98.

Logistically, in terms of timing of each Put, the Investment Agreement provides that at least 5 business days but no more than 10 business days prior to any intended Put date, we must deliver a Put notice to Centurion, stating the number of shares included in the Put and the Put date.

The closing conditions for each Put include the following:

an effective registration statement under the Securities Act that covers the resale of the Put Shares by Centurion;

our common stock continues to be quoted on the OTC Bulletin Board and has not been suspended from trading;

we are current on all periodic public filings required to be made with the SEC;

no injunction shall have been issued and remains in force against us, and no action commenced by a governmental authority exists which has not been stayed or abandoned, prohibiting the purchase or the issuance of the shares to Centurion;

we have complied with our obligations and are not in breach of nor in default under, the Investment Agreement, the Registration Rights Agreement, or any other agreement executed in connection therewith with Centurion;

The Investment Agreement further provides that Centurion is entitled to customary indemnification from us for any losses or liabilities it suffers as a result of any breach by us of any provisions of the Investment Agreement or our registration rights agreement with Centurion, or as a result of any lawsuit brought by a third-party arising out of or resulting from their execution, delivery, performance or enforcement of the Investment Agreement or the registration rights agreement, excluding lawsuits arising out a breach by Centurion of its representations or warranties or out of Centurion’s fraud or willful misconduct.

The Investment Agreement also contains representations and warranties of each of the parties. The assertions embodied in those representations and warranties were made for purposes of the Investment Agreement and are subject to qualifications and limitations agreed to by the parties in connection with negotiating the terms of the Investment Agreement. In addition, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what a stockholder or investor might view as material, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts.

As consideration for the provision of the Equity Funding Facility, we originally issued to Centurion 2,385,989 commitment shares and 159,066 fee shares to cover Centurion’s transaction fees.

BUSINESS

Overview

We are a project integrator for greenhouse gas emission reduction and renewable energy production. We aspire to become a key player in the global carbon reduction and renewable energy market, working with enterprises with high greenhouse gas (“GHG”) emissions or renewable energy potential to reduce such emissions and/or generate renewable energy. Our business is supported by the implementation of the Kyoto Protocol. The Kyoto Protocol is an international agreement linked to the United Nations Framework Convention on Climate Change. The major feature of the Kyoto Protocol is that it sets binding targets for 37 industrialized countries and the European community for reducing greenhouse gas (GHG) emissions. These targets amount to an average of five per cent against 1990 levels over the five-year period 2008-2012. The major distinction between the Protocol and the Convention is that while the Convention encouraged industrialized countries to stabilize GHG emissions, the Protocol commits them to do so. Recognizing that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity, the Protocol places a heavier burden on developed nations under the principle of “common but differentiated responsibilities.” The Kyoto Protocol was adopted in Kyoto, Japan, on 11 December 1997 and entered into force on 16 February 2005. 184 Parties of the Convention have ratified its Protocol to date. The detailed rules for the implementation of the Protocol were adopted at the 7th Conference of the Parties to the United Nations Convention on Climate Change in Marrakesh in 2001, and are called the “Marrakesh Accords.” The first commitment period of the Kyoto Protocol was originally valid until the end 2012. At the 17th Conference of the Parties to the United Nations Convention on Climate Change in Durban, South Africa in December 2011, the first commitment period of the Kyoto Protocol was provisionally extended until 2017. Also, a commitment was undertaken to begin negotiations for a new legally binding treaty to take effect in 2020.

The Company seeks to generate revenue through sales of carbon credits, energy generation, project development, compost and/or soil amendments and sale of byproducts. The Company offers potential partners (owners of: landfills, dairies, farms, etc) a kind of turnkey operation in dealing with the emission reduction. The Company service consists of: executing the process needed in order to make the project eligible for carbon credits, choosing the most suitable technology to be applied, arranging for the financing, constructing and managing the project for its life. Our business is presently primarily focused on Africa, China, the United States and Canada.

As a project integrator, we seek to partner with owners of landfills, livestock and other animal farms and other high volume GHG producers to reduce their level of GHG emissions. Our comprehensive service solution consists of managing the entire process of obtaining eligibility for and receiving carbon credits, generating renewable energy, producing compost and/or soil amendments and other by-products, selecting the most suitable technology to be applied, arranging project financing, constructing and equipping the project and managing the project for the duration of its revenue-producing life.

Carbon Credit Projects

We have 7 signed agreements (including definitive agreements and term-sheets) to implement carbon credit, renewable energy and compost and/or soil amendments projects and are currently (i) evaluating each project to determine its optimal method of implementation, (ii) identifying suitable experts to assist us in project implementation and (iii) arranging for necessary financing. We are also continuing to pursue new carbon credit, renewable energy and compost and/or soil amendments projects with high volume potential.

Renewable Energy Generation

Six of our signed carbon credit project agreements have renewable energy and compost and/or soil amendments energy potential. We are separately evaluating non-carbon credit projects or projects with low volumes of carbon credits for renewable energy generation and compost and/or soil amendments production. As with our carbon credit projects, we are currently (i) evaluating the renewable energy component of each project to determine its optimal method of implementation, (ii) identifying suitable experts to assist us in project implementation and (iii) arranging for necessary financing. We are also continuing to pursue and sign new projects with renewable energy potential.

Our 7 projects for which we have signed agreements (including definitive agreements and term-sheets) with the facility owners are in various stages of early development. Each of these projects is dependent upon, and will require, an infusion of significant capital, a portion of which, subject to our obtaining additional financing, we will be required to contribute directly. Our partners or facility owners will be required to contribute the remaining capital required. To the extent that our partners are the sole providers of any required capital for any of our projects, they may be entitled to receive preferences over us in the receipt of any income generated by any such projects until their capital is returned in full.

We anticipate a lead-time of at least six to twelve months from funding before any project becomes operational for emissions reduction or renewable energy generation. For carbon credit projects without any renewable energy component, we anticipate a lead-time of another twelve to twenty four months before we receive any revenue. For renewable energy projects, we anticipate revenue generation as soon as such projects become operational. Our interest in any particular project will vary depending on a variety of factors. Set forth below is a list of the 7 projects for which we have signed agreements (including definitive agreements and term sheets):

	China		Ghana			Cyprus		Greece
·	1 methane from manure to carbon credit and renewable energy project	·	3 landfill carbon credit project (2 of which have a compost and/or soil amendments and renewable energy component and 1 of which includes a transfer station)*		·	2 Agriculture waste to energy	·	1 Agriculture waste to energy

*A transfer station is a waste collection station where, prior to delivery to a final disposal site, the waste is sorted and, where applicable, recycled and utilized.

In addition, we are engaged in discussions relating to a range of additional carbon credit and renewable energy projects in Africa, China and Canada and certain projects in the United States, focusing on methane to electricity. We have a pipeline of, among others, 14 manure-to-electricity and compost and/or soil amendments projects in China, five dairy and landfill projects in the United States, one wood biomass-to-energy project in Canada, three waste-related projects in Ghana (including liquid waste and two landfills) and five landfill projects in Nigeria.

Corporate History

On March 3, 2010, Messrs. Palas and Weinberg were elected as members of our board of directors, with Mr. Weinberg being elected as non-executive Chairman. In April and May 2010, the remaining management and board members of our company prior to the change of business resigned. On October 25, 2010, we appointed Mark Radom as our Chief Carbon Officer. Mr. Radom serves in this capacity on a full-time basis. We have seven full-time employees, our non-executive chairman (who is not an officer of the Company, but has an employment agreement nonetheless), our chief executive officer, our Executive Vice President and our chief carbon officer, our chief financial officer, an office manager, a book-keeper and a representative in China, who assists us in identifying projects in China. We have employment agreements with our non-executive chairman and our chief executive officer, a consulting and employment agreement with our executive vice president, a consulting agreement with our chief carbon officer and a service agreement with our chief financial officer. We have no other employment or similar agreements with any of our employees. By mutual agreement, we terminated our employment agreement with our former chief operating officer on August 31, 2011.

On August 19th, 2011, the Company’s Board of Directors appointed Amit Zilbershtein to replace Alex Werber as our Chief Financial Officer who had served in that capacity since April 8, 2010.

On July 28, 2011 we appointed Roy Amitzur our Executive vice president.

Strategy

We provide tailored solutions internationally to reduce significantly the more potent greenhouse gas emissions (including, but not limited to, methane) and, where economically feasible, generate clean, renewable energy and compost and/or soil amendments. We expect to generate revenue through sales of carbon credits, sales of thermal and electrical energy, sales of compost and/or soil amendments and by- products and project development.

We offer potential project partners (e.g., owners of landfills and Farms (Cows, Pigs, Chickens) a turnkey operation in achieving the emission reduction. We will execute the process needed to make the project eligible for greenhouse gas credits, thermal and electrical energy production and compost and/or soil amendments, choose the most suitable technology to be applied, arrange for the financing, and then oversee construction of the project and manage the project for its life (20-25 years).

Initially, our focus has been in the following countries:, China, Ghana, USA, Canada, Cyprus and Greece. Outside the U.S., the Company’s greenhouse gas reductions operate under the rubric originally created by the Kyoto Protocol and implemented through the United Nations, the EU, and many national governments.

Payments for these greenhouse gas reductions come principally from the United Nations, national governments, or major corporations buying greenhouse gas credits. In the U.S., payments flow from sales of various state renewable energy credits and from sales of renewable-derived thermal and electrical energy. Aiming to be distinctive in the “clean, green” market, Blue Sphere intends to:

provide a one-stop, turn-key solution that is unique in the market today;

identify and obtain the rights to lucrative projects without incurring material expense;

deliver seamless and professional project implementation through a combination of its own expertise and the use of third-party experts with a track-record of success;

be open to the use of any mature and well-known technology and, thus, be able to tailor make cost-efficient and effective solutions for each project;

leverage its management’s more than 30 years of experience in successful implementation of large and complex projects in the developing world;

build local and international teams to support each project;

obtain political, property, non-performance and insolvency insurance for its projects; and

receive almost all of its revenues in euros, renminbi and dollars although operating in various parts of the developing world.

Material Features of our Concessions (i.e., Rights to Perform Our Projects)

Although we can offer no assurances going forward, to-date, we have structured each of the above-listed projects as a binding option in our favor with our counter-parties granting us rights to implement and participate in such projects, subject to (i) our ability to obtain any financing required to be provided by us and (ii) our right to suspend performance and/or terminate such agreements, in each case, without prejudice, if at any time, in our reasonable judgment, continuing performance of our obligations becomes economically unattractive.

We have also negotiated control over the implementation of and revenue participations in all of our projects for the entire revenue earning life of such projects. Under the rules of the Kyoto Protocol, the maximum revenue earning life from receipt of carbon credits is 21 years. Renewable energy generation and sales are separate from the Kyoto Protocol and may be continued indefinitely. Accordingly, we anticipate exercising control over and participating in such projects for so long as it remains profitable or beneficial for us to do so.

Competition

There are a number of other companies operating in the carbon credit and renewable energy space. Such companies range from service or equipment providers, to consultants and managers and to buyers and/or investors. In contradistinction to the standard market approach in this space (i.e., being a service or equipment provider, a consultant or manager or a buyer or investor), and as referred to above, we seek to provide a one-stop shop, turn-key solution to project owners. In other words, our business model is to initiate, finance, develop and manage all aspects of project implementation and sales of the project’s carbon credits and/or alternative energy starting from identifying the opportunity and ending with terminating the project’s operations after its revenue-earning life is over (if at all). We believe that this one-stop shop approach is attractive to project owners and will differentiate us in a positive manner from our competition.

Government Approval

Each of the projects we have signed to-date requires the approval of the relevant governments. To-date, we have received the preliminary approval from the Ghanaian government for two of our landfill projects. We can offer no assurances that we will receive any approvals that have not been obtain and are still outstanding.

Effect of Existing or Probable Government Regulations on Our Business

Our signed carbon credit projects are located in jurisdictions in which there are no government regulations materially affecting our business. We are not aware of any probable or proposed governmental regulations that, if enacted, will have a material impact on our business

Costs and Effects of Compliance with Environmental Laws

We are aware of no material costs or effects of compliance with environmental laws with respect to our current business, except for our Ghanaian projects where an environmental impact assessment (“EIA”) is a requirement to receive government approval. We expect to perform an EIA for each of our Ghanaian projects as part of the preparation of materials we will submit to the United Nations in order to receive carbon credits. We expect each EIA to cost $10,000.

Employees

As of December 12, 2011, we had seven full-time employees, our non-executive chairman, Eliezer Weinberg (who is not an officer of the Company, but has an employment agreement nonetheless); our chief executive officer, Shlomo Palas; our executive vice president, Roy Amizur; and our chief carbon officer, Mark Radom; our chief financial officer, Amit Zilbershtein; an office manager and a book-keeper. We also have a representative in China who assists us in identifying projects in China. We have employment agreements with non-executive chairman, our chief executive officer and our chief operating officer, an employment and consulting agreement with our executive vice president and a services agreement with our chief financial officer. We have no other employment or similar agreements with any of our employees.

MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS

Our stock is currently traded on the OTCBB under the symbol BLSP. On December 12, 2011, the closing price for our common shares as reported on the OTCBB was $0.06.

The high and the low bid prices for our common shares are based on inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

We had no trades of our securities until the second quarter of fiscal 2010. The table below sets forth the range of high and low bid information for our common shares as quoted on the OTCBB for each of the quarters during the fiscal year ended September 30, 2010 and September 30, 2009:

For the Fiscal Year Ended September 30, 2010
For the Quarter ended	High		Low
December 31	No trades in our stock		No trades in our stock
March 31	$	1.23	$	1.11
June 30	$	1.15	$	.25
September 30	$	.47	$	.28

For the Fiscal Year Ended September 30, 2009
For the Quarter ended	High	Low
December 31	No trades in our stock	No trades in our stock
March 31	No trades in our stock	No trades in our stock
June 30	No trades in our stock	No trades in our stock
September 30	No trades in our stock	No trades in our stock

Holders

On December 12, 2011, we had approximately 20 shareholders of record of our common stock.

Dividends

As of December 12, 2011, we had not paid any dividends on shares of our common stock and we do not expect to declare any or pay any dividends on shares of our common stock in the foreseeable future. We intend to retain earnings, if any, to finance the development and expansion of our business. Our future dividend policy will be subject to the discretion of our Board of Directors and will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by the Board.

Purchase of Equity Securities by the Small Business Issuer and Affiliated Purchasers

We did not repurchase any shares of our common stock during the year ending September 30, 2010.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the notes to those statements included elsewhere in this prospectus. This discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this prospectus, our actual results may differ materially from those anticipated in these forward-looking statements.

EXECUTIVE OVERVIEW

We were incorporated in Nevada in July 2007 under the name Jin Jie Corp. Prior to the second quarter of fiscal 2010 we were engaged in the business of developing and promoting automotive internet websites. That business generated no revenue and an accumulated deficit of approximately $64,000. During the second quarter of 2010 we changed our business to our current business. In connection with the change, we took the following actions: (i) effective February 17, 2010, we changed our name to our current name by merging into our company a wholly-owned subsidiary formed for that purpose (ii) effective February 17, 2010, we effected a 35-for-1 forward split of our authorized and issued and outstanding common stock, as a result of which our authorized common stock increased from 50,000,000 shares to 1,750,000,000 shares and our outstanding common stock increased from 1,900,000 shares to 66,500,000 shares, (iii) effective February 26, 2010, certain former shareholders of our company sold an aggregate of 34,800,000 shares of our common stock held by them, representing approximately 38% of our then outstanding stock, to new investors for an aggregate purchase price of $34,800 and (iv) effective March 3, 2010, we entered into employment agreements with Shlomo Palas, our CEO, Eliezer Weinberg, our Chairman and Shmuel Keshet, our COO. Messrs. Palas, Weinberg and Keshet were each granted two-year time-vested stock options to purchase 8,321,917 shares of common stock, representing 9% of our then outstanding shares, at an exercise price of $.001 per share.

We are a development stage company with limited operations and no revenues from our business operations. Our registered independent public accounting firm have issued a going concern opinion. This means that our registered independent auditors believe there is substantial doubt that we can continue as an on-going business for 12 months from the date of the audited consolidated financial statements.

In August 2011, we entered into an investment agreement with Centurion Private Equity, LLC (the “Investor”), an affiliate of Roswell Capital Partners, for the provision of an equity funding facility of up to the amount of $20 million. Pursuant to the terms and conditions of the Investment Agreement, we may sell newly issued shares of our common stock (the “Put Shares”) to the Investor (each such sale, a “Put”) from time to time at a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of our common stock or (ii) the Market Price of our common stock minus $0.01, subject to certain dollar and share volume limitations for each Put, until the earlier of (a) 36 calendar months from the date of the Investment Agreement, or (b) until all Puts under the Investment Agreement have reached an aggregate gross sales price equal to $20 million. The Investment Agreement provides that prior to exercising any Put we must have a registration statement declared effective with respect to the Put Shares. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for our common stock during the fifteen consecutive trading day period immediately following the date specified by us on which we intend to exercise the applicable Put. As consideration for the provision of the equity funding facility, we originally issued to the Investor 2,385,989 commitment shares and 159,066 fee shares to cover the Investor’s transaction fees.

Over the next twelve months, we plan to:

commence implementation of our existing projects in Ghana, Europe and China

find and develop additional projects of the same nature

expand geographically

RESULTS OF OPERATIONS

Nine months ended June 30, 2011 compared to the nine months ended June 30, 2010

Revenue

We have recorded no revenue since inception.

General and administrative expenses

General and administrative expenses for the nine-month period ended June 30, 2011 were $10,204,000 as compared to $3,554,000 for the nine-month period ended June 30, 2010. The increase is mainly attributable to an increase in share-based compensation amounting to $7,013,000 in the nine month period ended June 30, 2011 compared to $3,117,000 in the nine month period ended June 30, 2010.

Net Loss

As a result of the above, we incurred a net loss of $10,206,000 for the nine-month period ended June 30, 2011, as compared to a net loss of $3,559,000 for the nine month period ended June 30, 2010. We anticipate losses in future periods.

Year ended September 30, 2010 compared with year ended September 30, 2009

Revenue

We have recorded no revenue since inception.

General and administrative expenses

General and administrative expenses for the year ended September 30, 2010 were $6,192,000, as compared to $18,000 for the year ended September 30, 2009. The increase is primarily attributable to non-cash charges totaling $5,455,000 for stock options and warrants granted to employees in March 2010, project due diligence and implementation expenses of $131,000 relating chiefly to the preparation of project design documents for two of our projects, marketing expenses of $94,000 relating to website development and engagement of a public relations firm, as well as compensation and other expenses associated with the commencement of our GHG emission reduction activities in March 2010. Legal expenses amounted to $120,000, as compared to $10,000 for year ended September 30, 2009. The increase is attributable to expenses incurred in connection with the switch in business model from automotive website development to our current business.

Net Loss

As a result of the above, we incurred a net loss of $6,188,000 year period ended September 30, 2010, as compared to a net loss of $18,000 for the year ended September 30, 2009. We anticipate losses in future periods.

LIQUIDITY AND CAPITAL RESOURCES

As outlined in the overview above, in August 2011, we entered into an investment agreement with Centurion Private Equity, LLC, an affiliate of Roswell Capital Partners, for the provision of an equity funding facility of up to the amount of $20 million. Drawing funds from this facility is at our sole discretion and will be based on our ongoing needs for capital. We will be able to begin drawing funds from the facility once we have an effective registration statement. At that point, the facility will be available until 36 calendar months after the date of the investment agreement with Centurion. During this period we will be working towards securing additional sources of capital.

However, until a registration statement relating to the equity funding facility is in effect, we can give no assurance that we will be able to obtain additional capital or that any additional capital that we are able to obtain will be sufficient to meet our needs, which raises substantial doubt about our ability to continue operating as a going concern. We do not have any bank credit lines. In addition to the equity funding facility with Centurion, we are continuing in the process of fund raising in the private equity markets. Furthermore, we may seek to obtain funding through joint ventures with other entities involved in the green energy industry. We can give no assurances regarding our ability to obtain additional funding from these sources, or that such funding will be available to us on favorable terms.

Given the current pace of project development activities, and until a registration statement relating to the equity funding facility is in effect, we estimate that we have sufficient cash on hand to fund our project development activities only through December 31, 2011. If we are unable to raise additional capital or enter into strategic partnerships or joint ventures, we will be required to cease operations or curtail our desired development activities, which will delay the development of our projects. Moreover, we will need additional financing after development of our projects until we can achieve profitability, if ever.

Pursuant to an agreement between the Company and Asher Enterprises, Inc. (“Asher”), Asher agreed to purchase an 8% convertible note (the “Note”) of the Company in the aggregate principal amount of $45,000. Asher purchased the Note from the Company on October 2, 2011 by transferring $45,000 to the Company.

The Note is convertible into shares of common stock of the Company from time to time, and at any time, beginning March 14, 2012 and ending, absent any condition of default, on June 14, 2012, subject to certain limitations and conditions set forth in the Note. The Company has the right to prepay the Note under certain conditions during the period beginning 91 days from September 16, 2011 until 180 days following such date. The Note plus, at the option of the holder, accrued and unpaid interest (including any default interest at 22%) shall be convertible into common stock of the Company at a rate of 55% of the Company’s market price. For purposes of the Note, market price shall mean the average of the lowest three closing bid prices of the Company’s common stock during the ten trading days immediately preceding the conversion date. Notwithstanding the foregoing, Asher shall not be entitled to convert the Note into an amount of common shares which when added to any shares of common stock already held by it and its affiliates causes their collective ownership of the Company’s common stock to exceed of 4.99% of the outstanding shares of the common stock of the Company. Under the terms of the Note, the Company cannot incur any additional indebtedness (excluding certain indebtedness such as trade debt incurred in the ordinary course of business) without the consent of Asher.

As of June 30, 2011

As at June 30, 2011, we had cash of $27,000 compared to $137,000 as at June 30, 2010. As at June 30, 2011, we had a negative working capital of $162,000 compared to a positive working capital $60,000 as at June 30, 2010. We also had as at June 30, 2011 stockholders’ equity deficit of approximately $153,000 and an accumulated deficit of approximately $16,458,000. We anticipate that existing cash resources will not be sufficient to fund our planned operations during the next 12 months. In addition to requiring capital to fund our corporate activities, the capital needs of our project development activities will be significant and will likely require equity investment on our part. As a result, we are seeking to raise additional funds in the private equity markets. There can be no assurance that additional funds will be available on terms acceptable to us, or at all. These conditions raise substantial doubt about our ability to continue to operate as a going concern. The financial statements contained in this report do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

For the nine months ended June 30, 2011, net cash used in operating activities was $526,000 compared to net cash used in operating activities of $372,000 for the nine months ended June 30, 2010. In both years, cash used in operating activities was used to fund our losses for the respective periods.

For the nine months ended June 30, 2011, we used $1,000 for incidental investing activities.

Net cash flows from financing activities for the nine months ended June 30, 2011 were $199,000, which resulted primarily from net proceeds from the issuance of our common stock for cash. Net cash flows from financing activities for the nine months ended June 30, 2010 was $497,000 and which also resulted primarily from the issuance of our common stock for cash.

Contractual Obligations

As at June 30, 2011, we had no commitments for any capital expenditures. Based on project agreements signed to-date, we do not currently anticipate the incurrence of such commitments during the fiscal year ending September 30, 2012.

Recent Private Placements

On November 28, 2011, the Company issued five hundred and seventy-five thousand (575,000) shares of common stock to Nir Bareket for project finance services.

On October 31, 2011, the Company sold three hundred and twenty-five thousand (325,000) shares of common stock to Issac Amar for $11,000.

On October 25, 2011, the Company entered into a Consulting Agreement with He Mu for business development and project management services in China. Pursuant to the agreement, the Company issued three million (3,000,000) shares of common stock to He Mu in exchange for such services. Such shares have been issued; however, they are currently held in escrow and subject to a clawback provision that will revert one million, five hundred thousand (1,500,000) back to the Company should the agreement terminated for any reason prior to its eighteen month anniversary.

On October 4, 2011, the Company sold two hundred thousand (200,000) shares of common stock to Issac Amar for $10,000.

On August 17, 2011, we entered into an investment agreement with Centurion Private Equity, LLC, an affiliate of Roswell Capital Partners, for the provision of an equity funding facility of up to the amount of $20 million.

On July 28, 2011 the Company issued three hundred thousand (300,000) shares to Mr. Ran Cohen in lieu of a cash fee for his services as a tax expert.

On June 16, 2011, the Company issued four hundred thousand (400,000) shares to Mr. Ofer Raviv, an economist, in lieu of cash for his project assessment and appraisal services.

On January 10, 2011 the Company issued and delivered 2,300,000 shares of common stock to Green Logic Ltd. (“GL”), a company organized and existing under the laws of the state of Israel, in exchange for the non-exclusive provision of fund-raising and promotional services. The Company also issued 1,000,000 additional shares of common stock to be delivered to GL subject to the satisfaction of certain subsequent conditions. GL failed to fulfill such conditions. Consequently the Company never delivered such shares to GL and has cancelled such shares.

In March 2011, the Company entered to an agreement with Green Logic Ltd. (“GL”) in which for consideration of 2,500,000 common stock of the Company it will receive an amount of NIS 690,000 which will be paid to the Company in two installments and the rights to market and distribute in Europe a water heating technology based on magnetic induction. As of June 30, 2011 the Company received NIS 345,000 as the second installment in the amount of NIS 345,000 was received on May 9, 2011. The Company issued 2,500,000 shares as of March 2011.

Going Concern

Our registered independent auditors have included an explanatory paragraph in their report on our December 31, 2010 consolidated financial statements regarding our ability to continue as a going concern. The consolidated financial statements also contain additional note disclosures describing the circumstances that lead to this disclosure by our registered independent auditors. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

Until a registration statement relating to the equity funding facility is in effect, we expect our current funds will be sufficient only to enable us to continue our operations as currently planned until approximately the end of our first quarter of 2011. We currently estimate that we will require an additional $750,000 to $1,000,000 to fund our operations for the subsequent 12 month period.

However, until a registration statement relating to the equity funding facility is in effect, there are no assurances that we will be able to obtain funds required for our continued operation. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Off-Balance Sheet Arrangements

As at June 30, 2011, we had no off-balance sheet arrangements of any nature.

CRITICAL ACCOUNTING POLICIES

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods. We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and could have a material impact on our financial statements.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topics 505 and 718. Stock-based compensation for stock options is measured based on the estimated fair value of each award on the date of grant using the Black-Scholes valuation model. Stock-based compensation for restricted shares is measured based on the closing fair market value of the Company's common stock price on the date of grate. The Company recognizes stock-based compensation costs as expense ratably on a straight-line basis over the requisite service period

We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC Topic 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by ASC Topic 505. As of December 31, 2010, we have adopted a stock option plan and have granted stock options. Refer to Notes 1 and 6 to the Notes to Consolidated Financial Statements for further information.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note 1 to the Consolidated Financial Statements for the year ended September 30, 2010 entitled “Newly issued accounting pronouncements” and Note 6 to the interim consolidated financial statements for the period ended June 30, 2011 entitled “Recently Adopted and Recently Issued Accounting Pronouncements” included in this Registration Statement for a discussion of recent accounting pronouncements and their impact on our Financial Statements.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Officers and Directors

The following individuals serve as the Directors and executive officers of our Company. All Directors of our Company hold office until the next annual meeting of our shareholders or until their successors have been elected and qualified. The executive officers of our Company are appointed by our Board of Directors and hold office until their death, resignation, or removal from office:

Name	Age	Position Held with our Company	Date First Elected or Appointed
Eliezer Weinberg	61	Chairman	March 3, 2010
Shlomo Palas	50	Chief Executive Officer and Director	March 3, 2010
Amit Zilbershtein	38	Chief Financial Officer	August 19, 2011
Mark Radom	43	Chief Carbon Officer	October 25, 2010
Roy Amizur	49	Executive Vice President	July 28, 2011

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each Director, executive officer, and key employee of our Company, indicating the person's principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Eliezer Weinberg, Chairman

Aside from his position with Blue Sphere, Mr. Weinberg is a member of the board of three other private companies that are not related to Blue Sphere, including Green Biofuels Holdings Ltd. (“Green Biofuels”), a company focused on the development of energy projects in China, Liraz and Wapis Business Development Ltd. Mr. Weinberg is an expert in the clean-tech sector and was chairman of the environment desk at the Israeli chamber of commerce. Mr. Weinberg previous positions include CEO of Delta Galil Europe, Managing Director of Delta Socks, CEO of Amnir Recycling Industries (the leading Israeli company in the environmental field), CEO of Tradetex International and CFO of Scitex Europe. Mr. Weinberg has established the largest commercial algae farm in China together with one of China’s largest electrical utilities. He has also developed and is operating a biodiesel production facility in China. Since 2006, Mr. Weinberg has been a director of Green Biofuels.

Mr. Weinberg received his M.Sc. in Business Administration & Industrial Engineering from the Technion and a B.A. in Economics & Statistics from the Hebrew University in Jerusalem.

The Board has concluded that Mr. Weinberg should serve as Chairman of the Company because of his experience as a chief executive in a number of companies, and his international experience in the green energy sector.

Shlomo Palas, Chief Executive Officer and Director

Mr. Palas is a highly experienced entrepreneur who has held executive positions at a number of leading Israeli firms. He was a senior consultant with Mitzuv, a leading management consulting firm. For the past four years, Mr. Palas has specialized in the renewable and clean tech industries. He has gained significant experience in renewable and clean tech manufacturing, off-take contracts with leading petrol companies, legal/financial structuring, and fundraising for these industries. He has also developed a large network in private and government sectors in many cities across China. Mr. Palas served as chief executive officer of Becco Biofuels China Ltd., which was a company active in the biofuel industry. Mr. Palas has established the largest commercial algae farm in China together with one of China’s largest electrical utilities. He has also developed and is operating a biodiesel production facility in China. Since 2006, Mr. Palas has been a director and the general manager of Green Biofuels.

Mr. Palas received his M.A. Degree in Marketing from Baruch College and a B.A. degree, majoring in statistics and management at Haifa University.

The Board has concluded that Mr. Palas should serve as director of the Company because of his background in the renewable and clean tech industries and his experience and his executive level international experience.

Amit Zilbershtein, Chief Financial Officer

Mr. Zilbershtein is a Certified Public Accountant with 10 years of financial management and auditing experience in privately held and publicly traded companies. From 2007 to 2010, he has served as Controller for Vertex Venture Capital, an Israeli venture capital firm with over $600 million under management. From 2000 to 2007, he was a Senior Manager at Ernst & Young Israel, the leading accounting firm in Israel.

Mr. Zilbershtein obtained a B.A. in Economics and Accounting from Ben-Gurion University where he also completed post-graduate studies in Accounting.

Mark Radom, Chief Carbon Officer

Mr. Radom has extensive experience in the carbon and renewable energy sector. He was legal counsel for a number of carbon and ecological project developers and was responsible for structuring joint ventures and advising on developing projects through the CDM/JI registration cycle and emission reduction purchase agreements. He advised aviation companies on the inclusion of aviation in the third phase of the EU ETS and was an executive of a European-based developer and integrator of carbon and ecological projects. Mr. Radom has experience in identifying and implementing promising industrial gas (N2O and SF6), methane (landfill, compost and/or soil amendments, coal mine, waste water and associated gas), fuel switch (from diesel to natural gas) and a range of renewable energy projects (wind, solar and biogas to energy). Mr. Radom has assisted in the preparation of project design documents and has prepared complex projects for validation. Prior to this, he worked on Wall Street and in the City of London as a US securities and capital markets lawyer where he represented sovereigns, global investment banks and fortune 500 companies across a broad range of capital raising and corporate transactions. Prior to 2007, Mr. Radom was an attorney in private practice in London. Mr. Radom was Chief Operating Officer of Carbon Markets Global Limited, a London based company focusing on developing and trading carbon credits, from 2007 to 2009 and was promoted to its Chief Executive Officer in 2009. In 2009 through Februrary of 2010, Mr. Radom was managing director of Carbon MPV Limited. In February 2010, Mr. Radom became Chief Carbon Officer of the Company

Mr. Radom He is a graduate of Duke University and Brooklyn Law School. Mr. Radom is admitted to practice law in New York and New Jersey.

Roy Amizur, Executive Vice President

Mr. Amizur has significant experience with clean tech companies and related project development. He started his career as a liaison officer between the Israeli Defense Industries and the UDS Defense Industries. From 1980 to 1983 he served as an attaché at the Israeli Embassy in Washington D.C. From 1989 to 1994, Mr. Amizur was founder and Chief Executive Officer of Coni, Ltd, a group that specialized in turnover project and trading activities in the Eastern European countries. In 1994 he joined Zina Investment Ltd, a private equity fund seeded by members of the Mozes family operating from Israel. As a managing partner of the fund’s general partner, he had an aggregate of $80M under management and targeted investments principally in the media and telecommunication sector. In 1999 Mr. Amizur joined Comverse Technology, Inc., a Nasdaq traded company, as vice president. In 2004 Mr. Amizur became a seed investor and the manager of various start-ups that were funded by venture capital groups in the US. From 2008 till today Roy Amizur has specifically focused on green technology companies through the Clean Technologies Group, Ltd., which specializes in investment in this sector worldwide. Marvin to insert

Mr. Amizur graduated from the University of Maryland in 1987 with a BSC in Computer Science and obtained an MBA in 1989.

Board Leadership Structure

Although we have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined, we have determined that it is currently in the best interests of the Company and its shareholders to separate these roles. Mr. Eliezer Weinberg has served as our Chairman since March 2010, and Mr. Shlomo Palas has been our Chief Executive Officer and a director since March 3, 2010.

Our board of directors is primarily responsible for overseeing our risk management processes. The board of directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our company’s assessment of risks. The board of directors focuses on the most significant risks facing our company and our company’s general risk management strategy, and also ensures that risks undertaken by our Company are consistent with the board’s appetite for risk. While the board oversees our company’s risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our company and that our board leadership structure supports this approach.

Family Relationships

There are no family relationships among our Directors or executive officers.

Involvement in Certain Legal Proceedings

None of our Directors, executive officers, promoters or control persons has been involved in any of the following events during the past ten years:

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Committees of the Board of Directors

At present, we do not have any committees of the Board of Directors.

Code of Ethics

At present, we have not adopted a Code of Ethics applicable to our principal executive, financial and accounting officers; however, our securities counsel JSBarkats and our Board are considering implementation of such a Code in the near future.

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the Exchange Act requires our Directors, executive officers and persons who own more than 10 percent of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our Common Shares and other equity securities, on Forms 3, 4 and 5 respectively. Directors, executive officers and persons who own more than 10 percent of a registered class of our equity securities are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our Directors, executive officers, and persons who own more than 10 percent of a registered class of our equity securities were complied with.

Audit Committee

We do not presently have a separately constituted audit committee or any other committees of our Board of Directors. Nor do we have an audit committee “financial expert.” As such, our entire Board of Directors acts as our audit committee.

Board’s Role in Risk Oversight

The Board assesses on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive, and operational risks. The Board dedicates time at each of its meetings to review and consider the relevant risks faced by the Company at that time. In addition, since the Company does not have an Audit Committee, the entire Board is also responsible for the assessment and oversight of the Company’s financial risk exposures.

DIRECTORS

According to our By-laws, Directors are elected at the annual meeting of shareholders, and each Director holds office until his successor is elected and qualified.

Mssrs. Weinberg and Palas became directors of the Company in January 2010. Mr. Palas is director and Chief Executive Officer and Mr. Weinberg is Chairman of the Board of Directors, but does not have an officer role in the Company. Mr. Palas derives his compensation for serving as Chief Executive Officer. Mr. Weinberg derives his compensation for serving as Chairman of the Board of Directors. The Company intends to retain additional directors in 2012. Neither Mr. Palas or Mr. Weinberg is independent. The Company intends to elect new independent directors in 2012.

EXECUTIVE COMPENSATION

The particulars of compensation paid to the following persons during the fiscal period ended September 30, 2010, are set out in the summary compensation table below:

our Chief Executive Officer (Principal Executive Officer);

our Chief Financial Officer (Principal Financial Officer);

each of our three most highly compensated executive officers, other than the Principal Executive Officer and the Principal Financial Officer, who were serving as executive officers at the end of the fiscal year ended September 30, 2010; and

up to two additional individuals for whom disclosure would have been provided under the item above but for the fact that the individual was not serving as our executive officer at the end of the fiscal year ended September 30, 2010;

(Collectively, the “Named Executive Officers”):

SUMMARY COMPENSATION TABLE

Name	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Eliezer Weinberg	2010		70,000		-		-		1,818,262		-		-		-		1,888,262
Shlomo Palas	2010		70,000		-		-		1,818,262		-		-		-		1,888,262
Shmuel Keshet (1)	2010		70,000		-		-		1,818,262		-		-		-		1,888,262
Alex Werber (2)	2010		12,000		-		-		-		-		-		-		12,000
Cally Ka Lai Lai (3)	2010		0		-		-		-		-		-		-		0

Notes:

(1)

Served as Chief Operating Officer from March 3, 2010 until August 30, 2011.

(2)

Served as Chief Financial Officer and Treasurer from April 8, 2010 until August 19, 2011.

(3)

Served as President, Treasurer and Secretary from incorporation until April 15, 2010.

Stock option grants

The following table sets forth information as of September 30, 2010 concerning unexercised options, unvested stock and equity incentive plan awards for the executive officers named in the Summary Compensation Table.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date
Eliezer Weinberg		1,040,239		7,281,678		-	$	.001	5/13/12
Shlomo Palas		1,040,239		7,281,678		-	$	.001	5/13/12

Employment Contracts and Termination of Employment Agreements

Effective March 3, 2010, we entered into an employment agreement with Eliezer Weinberg to serve as the Company’s Chairman of the Board of our wholly owned subsidiary for a term of two years. As Chairman, Mr. Weinberg, among other duties, provides leadership to the Company’s board of directors and assists the executive officers in planning and directing the Company’s activities to achieve stated/agreed targets and standards for financial and trading performance, quality, culture and legislative adherence. Under the agreement, Mr. Weinberg receives monthly remuneration at a gross rate of USD$10,000 + VAT increasing to a gross monthly rate of USD$15,000 + VAT upon the completion of outsourced technical project reports (“PDDs”) for two projects. Mr. Weinberg will be entitled to participate in any Company bonus plan or incentive compensation plan for its employees adopted by the Company. Mr. Weinberg’s employment may be terminated without cause by any of the parties with a prior notice of six months if terminated within a period of 24 months or with a notice of three months if terminated after 24 months from the effective date of the agreement. The employment agreement contains a 24-month confidentiality clause and 12-month non-competition and non-solicitation clauses. The employment agreement is construed and interpreted in accordance with the laws of the State of Israel.

Effective March 3, 2010, we entered into an employment agreement with Shlomo Palas to serve as the Company’s CEO for a term of two years. As CEO, Mr. Palas, among other duties, is responsible for setting the overall corporate direction for the Company, including establishing and maintaining budgets for the Company and ensuring the Company has adequate capital for its operations, marketing and general corporate activities, all subject to any applicable law and to instructions provided by the board of directors of the Company. Under the agreement, Mr. Palas receives monthly remuneration at a gross rate of USD$10,000 + VAT increasing to a gross monthly rate of USD$15,000 + VAT upon the completion of PDDs for two projects. Mr. Palas will be entitled to participate in any Company bonus plan or incentive compensation plan for its employees adopted by the Company. Mr. Palas’ employment may be terminated for no cause by any of the parties with a prior notice of six months if terminated within a period of 24 months or with a notice of three months if terminated after 24 months from the effective date of the agreement. The employment agreement contains a 24-month confidentiality clause and 12-month non-competition and non-solicitation clauses. The employment agreement is construed and interpreted in accordance with the laws of the State of Israel.

In connection with the Project Assignment Agreement and effective February 22nd, 2010, the Company and Mr. Radom entered into a Business Development Agreement whereby the Company retained Mark Radom as an independent contractor to perform, or procure the performance of, services necessary with respect to the projects assigned to the Company pursuant to the Project Assignment Agreement.

Pursuant to the terms of the agreement, Mr. Radom services include, among other things, selecting third-party services, goods and technology providers, overseeing the registration process, overseeing the project implementation and the generation of new business relating to carbon credit and ecological projects. Under the agreement, Mr. Radom receives monthly remuneration of USD$7,000 for his services. Mr. Radom is also entitled to participate in any future grant options available to employees and will be considered a senior manager for the purpose of such a grant. Subject to the ability to terminate the agreement for material breach and other the conditions described below, the agreement will terminate on the earlier of (i) 25 years from the effective date or (ii) termination of Kyoto Protocol or (iii) April 15, 2010 if Mr. Radom fails to deliver by such time to the Company at least two signed project agreements and two signed project memoranda of understanding. After April 15, 2010, the Company may terminate the agreement on 90 days’ written notice to Mr. Radom for any reason or no reason at all. After March 1, 2011, Mr. Radom may terminate the agreement on 90 days’ written notice to the Company for any reason or no reason at all. The agreement contains a confidentiality clause and specifically states that the relationship between the parties is that of an independent contractor without the authority to bind the other party.

On July 28, 2011 the Board adopted a resolution approving an amendment to the Consulting Agreement of its Chief Carbon Officer Mr. Mark Radom and authorized the issuance of an aggregate of four million five hundred thousand (4,500,000) shares of the Registrant’s common stock. All such shares are to be held in escrow for a period of 24 months and are restricted for that same period

Under the terms of the Consulting and Employment Agreement with Mr. Amizur dated as of July 25, 2011, Mr. Amizur agreed, for a period of 24 months, to serve as Executive Vice President of the Company reporting directly to the Chief Executive Officer of the Company. During such period Mr. Amizur shall serve as Executive Vice President of the Company and shall focus on funds raising and on marketing the Company in the financial communities. Pursuant to the agreement, the Company issued to Amizur an aggregate of twelve million and five hundred (12,500,000) Shares in exchange for all services provided by him as Executive Vice President and for any other consulting services provided in accordance with the terms of the Agreement. Such shares are restricted for a period of 24 months and held in escrow until vested, which vesting shall occur in equal, quarterly installments beginning in September 2011.

Under the terms of the Consulting and Employment Agreement with Mr. Amizur, Mr. Amizur is entitled to participate on similar terms as the other executives of the Company in bonus plans or incentive compensation plans for its employees. For services rendered under the agreement, Mr. Amizur will be paid a monthly fee, payable within 10 days after the end of each month against an invoice, at a gross monthly rate of US$10,000 + VAT when applicable. Under the agreement, Mr. Amizur will be entitled to fees only after the Company has raised an aggregate amount of at least $450,000. Subsequently, such fee will increase to a gross monthly rate of USD $15,000 + VAT after the Company has raised an aggregate equity investment against its shares of $2,000,000. The Company may terminate the agreement by giving 30 days written notice to Mr. Amizur if he has not assisted the Company in raising at least $1,000,000 in equity financing within a period of 12 months from the date of the agreement.

There are currently no arrangements or plans in which we provide pension, retirement or similar benefits for our Directors and officers; however our Board of Directors may approve any such plan at any time in their discretion, in which case Mr. Weinberg, Mr. Palas and Mr. Amizur and Mr.Radom would be entitled to participate. We currently do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our Directors or officers

Director Compensation

Currently, each of our directors has an employment agreement with the Company, the terms of which are described above. Under the terms of each agreement, each director is required to perform duties in addition to their duties as directors, and the compensation paid to each of them under the applicable agreement covers all duties, including both director and non-director duties. The Board has not delineated the portion of compensation applicable to director and non-director duties as such duties often overlap. Currently there are no directors on the Board who serve only in a director capacity. As a result, the Board has not determined compensation and expense reimbursement arrangements for individuals serving only as a director. Compensation and expense reimbursement arrangements for persons serving only as directors will be determined at the time any such individuals joins the Board.

DIRECTOR COMPENSATION TABLE FOR FISCAL 2010

Name

Fees

earned

paid

cash

($)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Change in

Pension Value

Nonqualified

Deferred

Compensation

Earnings

($)

All Other

Compensation

($)

Total

($)

Eliezer Weinberg

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

Shlomo Palas

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

See

Summary

Table

Above

Cally Ka Lai Lai(1)

Wei Xiang Zeng(1)

Notes:

(1)	Resigned from the Board of Directors of Blue Sphere on May 6, 2010.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the date of this report, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of his/her shares and possess voting and dispositive power with respect to the shares.

Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership(1)			Percentage of Class(2)
Amir Rachmani No. 19 Shamai Street, P.O.B 2020, Jerusalem 91020, Israel	Common Stock		31,450,000			25.22	%
Roy Amitzur	Common Stock		17,500,000	(3)		14.04	%
Eliezer Weinberg	Common Stock		10,441,434	(4)		7.98	%(7)
Shlomo Palas	Common Stock		10,441,434	(5)		7.98	%(7)
Shmuel Keshet (6)	Common Stock		9,630,242			7.72	%
Mark Radom	Common Stock		4,500,000			3.61	%
Directors and Executive Officers as a Group (4 people)	Common Stock		42,882,868			31.26	%(8)
Directors and Executive Officers and 5% Stockholders as a Group	Common Stock		83,963,110			61.21	%

Notes:

(1)

Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each person listed is c/o Blue Sphere Corporation 35 Asuta Street, Even Yehuda, Israel 40500.

(2)	Based on 124,683,620 shares of common stock issued and outstanding as of December 12, 2011.

(3)

Under the terms of the Consulting and Employment Agreement with Mr. Amizur,the Company issued to Amizur an aggregate of twelve million and five hundred (12,500,000) Shares in exchange for all services provided by him as Executive Vice President and for any other consulting services provided in accordance with the terms of the Agreement. Such shares are restricted for a period of 24 months and held in escrow until vested in equal, quarterly installments beginning in September of 2011.

(4)	We issued 8,321,917 options to Eliezer Weinberg, of which 6,241,434 have vested or are exercisable within 60 days.

(5)	We issued 8,321,917 options to Shlomo Palas, of which 6,241,434 have vested or are exercisable within 60 days.

(6)	Mr. Keshet resigned as Chief Operating Officer in August 31, 2011. As a result, his shares are not included in the shares held by directors and officers as a group

(7)	Assumes the exercise of the applicable outstanding options exercisable within 60 days.

(8)	Assumes the exercise of all applicable outstanding options exercisable within 60 days.

SELLING STOCKHOLDERS

This prospectus relates to the possible resale by the selling stockholder, Centurion Private Equity, LLC, of shares of common stock that (i) we may issue to Centurion pursuant to the Investment Agreement that we entered into with Centurion on August 17, 2011, and (ii) we issued to Centurion pursuant to the Investment Agreement as commitment shares and fees shares. We are filing the Registration Statement of which this prospectus is a part pursuant to the provisions of the registration rights agreement we entered into with Centurion on August 17, 2011.

The selling stockholder may from time to time offer and sell pursuant to this prospectus any or all of the shares that it acquires or acquired under the Investment Agreement.

No estimate can be given as to the amount or percentage of our common stock that will be held by the selling stockholder after any sales made pursuant to this prospectus because the selling stockholder is not required to sell any of the shares being registered under this prospectus. The following table assumes that the selling stockholder will sell all of the shares listed in this prospectus.

The following table presents information regarding Centurion and the shares that it may offer and resell from time to time under this prospectus. This table is prepared based on information supplied to us by the selling stockholder. As used in this prospectus, the term “selling stockholder” includes Centurion and any donees, pledgees, transferees or other successors in interest selling shares received after the date of this prospectus from a selling stockholder as a gift, pledge or other non-sale related transfer. The number of shares in the column “Number of Shares Offered” represents all of the shares that the selling stockholder may offer under this prospectus. The selling stockholder may sell some, all, or none of its shares. We do not know how long the selling stockholder will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling stockholder regarding the sale of any of the shares.

	Shares Beneficially Owned						Number of		Shares Beneficially Owned
	Prior to the Offering						Shares		After the Offering
Name of Beneficial Owner	Number			Percent			Offered		Number			Percent
Centurion Private Equity, LLC (1)		12,812,500	(2)		9.49	%(3)		12,812,500		0	(4)		0.00	%

(1) The address of Centurion is: Centurion Private Equity LLC, 1120 Sanctuary Parkway, Suite 325, Alpharetta, GA 30009. Michael C. Kendrick and Eric S. Swartz are the natural persons who have voting and/or investment control over our securities that Centurion is deemed to own.

(2) Consists of (i) 2,545,055 shares of common stock already issued as commitment shares and fee shares, and (ii) 10,267,445 shares of common stock issuable under the Investment Agreement entered into with Centurion on August 17, 2011. For the purposes hereof, we assumed the issuance of the entire amount of Put Shares being registered hereunder and issuable to Centurion under the Equity Funding Facility, and no resale of any shares by Centurion. We will file subsequent amendments to the Registration Statement to cover the resale of any additional shares of common stock issued to Centurion by us.

(3) Based on 134,951,065 shares of the Company’s common stock, representing 124,683,620 issued and outstanding shares of the Company’s common stock on December 12, 2011 which number includes 2,545,055 shares of common stock already issued to Centurion, plus 10,267,445 shares of common stock being registered hereunder and issuable as Put shares under the Investment Agreement entered into with Centurion on August 17, 2011.

(4) For the purposes hereof, we assumed the resale of all of the shares held by Centurion.

RELATIONSHIPS BETWEEN THE ISSUER AND THE SELLING STOCKHOLDERS

The selling stockholder has not at any time during the past three years acted as one of our employees, officers or directors and has not had a material relationship with us.

PLAN OF DISTRIBUTION

We are registering 12,812,500 shares of common stock under this prospectus on behalf of Centurion. To our knowledge, Centurion has not entered into any agreement, arrangement or understanding with any particular broker or market maker with respect to the shares of common stock offered hereby, nor do we know the identity of any brokers or market makers that may participate in the resale of the shares.

Centurion may decide not to sell any shares. Centurion may from time to time offer some or all of the shares of common stock through brokers, dealers or agents who may receive compensation in the form of discounts, concessions or commissions from Centurion and/or the purchasers of the shares of common stock for whom they may act as agent. In effecting sales, broker-dealers that are engaged by Centurion may arrange for other broker-dealers to participate. Centurion is an “underwriter” within the meaning of the Securities Act. Any brokers, dealers or agents who participate in the distribution of the shares of common stock may also be deemed to be “underwriters,” and any profits on the sale of the shares of common stock by them and any discounts, commissions or concessions received by any such brokers, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. Because Centurion may be deemed to be an underwriter, Centurion may be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Centurion will act independently of us in making decisions with respect to the timing, manner and size of each sale. Such sales may be made, on the over-the-counter market, otherwise or in a combination of such methods of sale, at then prevailing market prices, at prices related to prevailing market prices or at negotiated prices. The shares of common stock may be sold according to one or more of the following methods:

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

privately negotiated transactions;

broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;

a combination of any such methods of sale; or

any other method permitted pursuant to applicable law.

Any shares covered by this prospectus which qualify for sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus. In addition, Centurion may transfer the shares by other means not described in this prospectus.

Broker-dealers engaged by the selling security holders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling security holders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. To our knowledge, Centurion does not expect these commissions and discounts relating to its sales of shares to exceed what is customary in the types of transactions involved.

Centurion and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Because Centurion may be deemed to be underwriters within the meaning of the Securities Act, it may be subject to the prospectus delivery requirements of the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of common stock will be paid by Centurion and/or the purchasers. Centurion represented and warranted to us in the Investment Agreement that it had no arrangement or intention to sell the common stock of the Company to or through any person or entity.

To our knowledge, other than Centurion itself, there is no underwriter or coordinating broker acting in connection with any proposed resale of the shares by Centurion.

Centurion may from time to time pledge or grant a security interest in some or all of the shares owned by it and, if it defaults in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors-in-interest as selling stockholders under this prospectus. Upon our being notified in writing by Centurion that any material arrangement has been entered into with a broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon our being notified in writing by Centurion that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for a period of two business days prior to the commencement of the distribution. In addition, Centurion will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by Centurion or any other person. We will make copies of this prospectus available to Centurion and have informed it of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale.

We are required to pay certain fees and expenses incurred by us incident to the registration of the shares. We have agreed to indemnify Centurion against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Centurion may not assign its obligations under the Investment Agreement.

Centurion may enter into any short sale or other hedging or similar arrangement it deems appropriate with respect to Put Shares after it receives a Put notice with respect to such Put Shares so long as such sales or arrangements do not involve more than the number of the Put Shares specified in the applicable Put notice.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Since the beginning of the fiscal year preceding the last fiscal year and except as disclosed below, none of the following persons has had any direct or indirect material interest in any transaction to which our Company was or is a party, or in any proposed transaction to which our Company proposes to be a party:

any Director or officer of our Company;

any proposed Director of officer of our Company;

any person who beneficially owns, directly or indirectly, shares carrying more than 5 percent of the voting rights attached to our common stock; or

any member of the immediate family of any of the foregoing persons (including a spouse, parents, children, siblings, and in- laws).

Mr. Shlomo Palas is not an Independent Director of the Company as he is an executive officer. Mr. Eliezer Weinberg is not an Independent Director as he has an employment agreement with the Company. The determination of independence of Directors has been made using the definition of "Independent Director" contained under Nasdaq Marketplace Rule 4200(a)(15).

DESCRIPTION OF SECURITIES

Authorized Capital and Outstanding Shares

Our authorized capital stock consists of 1,750,000,000 shares of common stock, $0.001 par value. As of December 12, 2011, there were 124,683,620 shares of our common stock outstanding that were held of record by approximately 20 stockholders. We have issued 16,643,834 stock options to certain directors, officers, employees and consultants of the Company, of which 10,402,390 stock options were fully vested as of December 12, 2011.

Common Stock

The holders of our common stock have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our board of directors. Holders of common stock are also entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs.

All shares of common stock now outstanding are fully paid and non-assessable.

The holders of shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose and in such event, the holders of the remaining shares will not be able to elect any of our directors. The holders of 50% percent of the outstanding common stock constitute a quorum at any meeting of shareholders, and the vote by the holders of a majority of the outstanding shares are required to effect certain fundamental corporate changes, such as liquidation, merger or amendment of our articles of incorporation.

Dividends

We have not paid any dividends on our common stock. The payment of cash dividends in the future, if any, will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our board of directors. It is the present intention of the board of directors to retain all earnings, if any, for use in our business operations and, accordingly, the board does not anticipate paying any cash dividends in the foreseeable future.

Registration Rights

The shares covered by the Registration Statement and prospectus, which may be resold by Centurion in connection with the Investment Agreement, have registration rights. In connection with establishing the Equity Funding Facility with Centurion, we entered into a registration rights agreement with Centurion. Pursuant to the registration rights agreement, we filed a registration statement, of which this prospectus forms a part, with the SEC. We have agreed to use our commercially reasonable efforts to cause the Registration Statement to be declared effective by the SEC. The effectiveness of this registration statement is a condition precedent to our ability to utilize the Equity Funding Facility and sell the shares of common stock subject to the Registration Statement to Centurion under the Investment Agreement.

Transfer Agent

Our transfer agent is VStock Transfer, LLC.

EXPERTS

The financial statements for the years ended September 30, 2010 and 2009 included in this prospectus have been audited by Brightman Almagor Zohar & Co., a Member Firm of Deloitte Touche Tohmatsu, to the extent and for the periods indicated in their report thereon.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

Our Articles of Incorporation provide that no officer or director shall be personally liable to us or our stockholders for monetary damages except as provided pursuant to the Nevada Revised Statutes. Our Articles of Incorporation also provide that we will indemnify and hold harmless each person who serves at any time as a director, officer, employee or agent of us from and against any and all claims, judgments and liabilities to which such person shall become subject by reason of the fact that he is or was a director, officer, employee or agent of us, and shall reimburse such person for all legal and other expenses reasonably incurred by him or her in connection with any such claim or liability. We also have the power to defend such person from all suits or claims in accordance with the Nevada Revised Statutes. The rights accruing to any person under our bylaws and Articles of Incorporation do not exclude any other right to which any such person may lawfully be entitled, and we may indemnify or reimburse such person in any proper case, even though not specifically provided for by the bylaws and Articles of Incorporation.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer for expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

LEGAL MATTERS

The validity of our common stock offered hereby will be passed upon for us by JS Barkats PLLC.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a Registration Statement on Form S-1 under the Securities Act for the common stock offered under this prospectus. We are subject to the informational requirements of the Exchange Act, and file annual and current reports, proxy statements and other information with the Commission. These reports, proxy statements and other information filed by Blue Sphere Corporation, Inc. can be read and copied at the Commission’s Public Reference Room at 100 F Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330.

The Commission also maintains a website that contains reports, proxy statements, information statements and other information concerning Blue Sphere Corporation. located at http://www.sec.gov. This prospectus does not contain all the information required to be in the Registration Statement (including the exhibits), which we have filed with the Commission under the Securities Act and to which reference is made in this prospectus.

Blue Sphere Corp.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF June 30, 2011

TABLE OF CONTENTS

CONSOLIDATED FINANCIAL STATEMENTS IN U.S. DOLLARS:
Balance Sheets		F-1
Statements of operations		F-2
Statements of changes in shareholders' equity (capital deficiency)		F-3
Statements of cash flows		F-4
Notes to financial statements		F—5 F-7

Blue Sphere Corp.

(A Development Stage Company)

Consolidated Balance Sheets

(In thousands except share and per share data)

	As of June 30,			As of September 30,
	2011			2010
	Unaudited
ASSETS

CURRENT ASSETS
Cash		27			355
Other current assets		11			24
Total Current Assets		38			379

PROPRERTY AND EQUIPMENT, NET		9			8

Total Assets	$	47		$	387

Liabilities and Stockholders’ Equity

Current Liabilities
Accounts payable		200			115
Other accounts payables		-			3

Total Current Liabilities	$	200		$	118

Stockholders’ Deficit
Common shares, $0.001 par value; 1,750,000,000 shares authorized		-			-
On June 30, 2011 and September 30, 2010, 73,300,000 shares and 66,500,000 issued and outstanding at June 30, 2011 and September 30, 2010, respectively		75			69
Additional paid in capital		16,230			6,452
Deficit accumulated during the development stage		(16,458	)		(6,252	)

Total Stockholders’ Equity		(153	)		269

Total Liabilities and Stockholders' Equity	$	47		$	387

See accompanying notes to financial statements

F-1

Blue Sphere Corp.

(A Development Stage Company)

Consolidated Statements of Operations

(In thousands except share and per share data)

	Nine Months Ended June 30,				Three Months Ended June 30,				For The Period form May 17, 2007 (Inception) to June 30
	2011		2010		2011		2010		2011

OPERATING EXPENSES
General and administrative expenses*	$	10,204	$	3,554	$	2,730	$	2,629	$	16,460
Financial expenses (income), net		2		5		1		4		(2	)
NET LOSS		10,206		3,559		2,731		2,633		16,458

Net loss per common share – basic and diluted	$	0.14	$	0.05	$	0.04	$	0.04

Weighted average number of common shares outstanding during the period – basic and diluted		71,067,033		66,935,897		72,371,823		66,500,000

* In the Nine month period ended June 30, 2011 and June 30, 2010 - includes $7,013 and $3,117 thousands share-based compensation respectively.

The accompanying notes are an integral part of the condensed consolidated financial statements.

F-2

Blue Sphere Corp.

Statement of Stockholders' Equity (Deficit)

(In thousands, except share and per share data)

	Common Stock				Additional			Accumulated			Total Stockholders'
	Shares		Amount		Paid in Capital			Deficit			Equity
Common stock issued, July 17, 2007 (date of inception)		1,900,000	$	2	$	67		$	-		$	69

Net loss for the period ended September 30, 2007		-		-		-			(14	)		(14	)

Balance, September 30, 2007		1,900,000		2		67			(14	)		55
Net loss for the year ended September 30, 2008		-		-		-			(32	)		(32	)

Balance, September 30, 2008		1,900,000		2		67			(46	)		23

Net loss for the year ended September 30, 2009		-		-		-			(18	)		(18	)

Balance, September 30, 2009		1,900,000		2		67			(64	)		5

Share split of 35:1		64,600,000		65		(65	)		-			-

Proceeds from common stock issued net of direct offering expenses		2,000,000		2		995			-			997

Share based compensation		-		-		5,455			-			5,455

Net loss for the year ended September 30, 2010		-		-		-			(6,188	)		(6,188	)
Balance, September 30, 2010		68,500,000		69		6,452			(6,252	)		269

Share based compensation		-		-		7,013			-			7,013
Issuance of common stock		471,948		1		198						199
Common stock issued for services		4,328,052		5		2,567						2,572

Net loss for the period ended June 30, 2011		-		-		-			(10,206	)		(10,206	)
Balance, June 30, 2011		73,300,000	$	75	$	16,230		$	(16,458	)	$	(153	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

F-3

Blue Sphere Corp.

(A Development Stage Company)

Statements of Cash Flows

(In thousands except share and per share data)

	For the period Ended June 30,						For the period from July 17, 2007 (Inception) to
	2011			2010			June 30, 2011

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,206	)	$	(3,559	)	$	(16,458	)
Adjustments required to reconcile net loss to net cash used in operating activities
Share based compensation expenses		7,013			3,117			12,468
Issuance of shares for services		2,572						2572

(Increase) in other current assets		13			(22	)		(11	)
Increase in accounts payables		85			7			200
Increase (decrease) other in accounts payables		(3	)		85			-

Net Cash Used In Operating Activities		(526	)		(372	)		(1,299	)

CASH FLOWS USED FROM INVESTING ACTIVITIES

Increase in Property and Equipment		(1	)		-			(9	)
Net Cash Used In Investing Activities		(1	)		-			(9	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issued for cash		199			497			1,265
Net Cash Provided By Financing Activities		199			497			1,265

Net increase (decrease) in cash		(328	)		125			27

Cash - beginning of year/period		355			12			-

Cash - end of year/period	$	27		$	137		$	27

F-4

BLUE SPHERE CORP.

(DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Continued

NOTE1 - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and results of operations of Blue Sphere Corp. and subsidiary ("the Company”). These consolidated financial statements and notes thereto are unaudited.

NOTE 2 - General

The Company was incorporated in the state of Nevada on July 17, 2007 and was in the business of developing and promoting automotive internet sites. During the second quarter of 2010 the management of the Company decided to change its business focus to that of Greenhouse Gas (GHG) emission reduction, .The Company seek to generate revenue through sales of carbon credits, energy generation, project development and sale of byproducts.

The Company offers potential partners (owners of: landfills, coal mines, fertilizer factories, etc) a kind of turnkey operation in dealing with the emission reduction. The Company service consists of: executing the process needed in order to make the project eligible for carbon credits, choosing the most suitable technology to be applied, arranging for the financing, constructing and managing the project for its life. We operate primarily in countries from the former Soviet Union, China and the USA.

In March 2011, the Company entered to an agreement with Green Logic Ltd. (“GL”) in which for consideration 2,500,000 common stock of the Company it will receive an amount of NIS 690,000 which will be paid to the Company in two instalments and the rights to market and distribute in Europe a water heating technology based on magnetic induction. As of June 30, 2011 the Company received NIS 345,000 and the second instalment in the amount of NIS 345,000 was received on May 9, 2011. The Company issued 2,500,000 shares in March 2011 and is currently holding a stock certificate in such amount in the name of GL.

NOTE 3 - INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements as of June 30, 2011, have been prepared in accordance with accounting principles generally accepted in the United States relating to the preparation of financial statements for interim periods. Accordingly, they do not include all the information and footnotes required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the Nine months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending September 30, 2011.

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies applied in the annual financial statements of the Company as of September 30, 2010, are applied consistently in these financial statements.

F-5

NOTE 5 - GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of June 30, 2011, the Company had approximately $27,000 in cash, approximately $162,000 in negative working capital, a negative stockholders’ equity of approximately $153,000 and an accumulated deficit of approximately $16,458,000. Management anticipates that their business will require substantial additional investments that have not yet been secured. The Company anticipates that the existing cash will not be sufficient to continue its operations through the next 12 months. Management is continuing in the process of fund raising in the private equity markets as the Company will need to finance future activities and general and administrative expenses. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability.

NOTE 6 - RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13 “Revenue Recognition (ASC Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how the arrangement consideration should be allocated among the separate units of accounting. ASU 2009-13 will be effective for fiscal years beginning on or after June 15, 2010 with early adoption permitted. The guidance may be applied retrospectively or prospectively for new or materially modified arrangements. The new standard did not have a material impact on our consolidated financial position, results of operations and cash flows.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures About Fair Value Measurements,” which provides amendments to ASC 820 “Fair Value Measurements and Disclosures,” including requiring reporting entities to make more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements including information on purchases, sales, issuances, and settlements on a gross basis and (4) the transfers between Levels 1, 2, and 3. The standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. The adoption of this standard did not have a material impact on our consolidated financial statements.

On February 24, 2010, the FASB issued ASU 2010-09, which amends ASC 855 to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent-events procedures. The new standard did not have a material impact on our consolidated financial position, results of operations and cash flows.

NOTE 7 - RELATED PARTY TRANSACTIONS

On March 3, 2010, the Company entered into employment agreements with Eliezer Weinberg the Company Chairman of the Board, Shlomo Palas the Company’s CEO and Shmuel Keshet the

Company’s COO for a term of two years. The officers receive monthly remuneration at a gross rate of USD$10,000. The remuneration will increase to a gross monthly rate of USD$15,000 upon the completion of outsourced technical project reports (“PDDs”) for two projects. Each officer was granted stock options to acquire 8,321,917 or nine percent (9%) of common stock in the capital of the Company, exercisable at a par value (see note 9).

F-6

NOTE 7 - RELATED PARTY TRANSACTIONS (continued):

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available.

NOTE 8 - STOCK OPTIONS:

The 2010 share option plan was established On March 3, 2010.

Options to Directors and Employees:

On March 3, 2010, the Board of Directors of the Company granted of 24,965,751 options to three officers of the Company, exercisable for two years at exercise prices of $0.001 per share, to be vested by the end of each three month from the date of employment agreement.

The fair value of the stock options grants was estimated using the Black-Schooled option valuation model that used the following assumptions:

	Percent %
Risk free interest		3.75	%
Dividend yields		0
Volatility		177	%
Expected term (in years)		2

The fair value of the options granted above using the Black-Scholes model is $0.75 per option.

NOTE 9 - SUBSEQUENT EVENTS:

On July 10, 2011 the Company signed a joint venture agreement with BPure Environmental Improvement Group, Ltd. (“BPure”), an experienced project management Israeli company specializing in green development projects, to finance the entire capital and manage the equipment, procurement and construction work required to implement two (2) or our landfill projects in Ghana, Africa: (i) the Oti Sanitary Landfill in Kumasi and (ii) the Oblogo/Mallam Waste Disposal Site in Accra. Under the terms of the agreement, we will open a special purpose company to implement the projects of which we shall be equal owners, but BPure will be entitled to recoup 100% of its investment before the Company will be entitled to any dividends or distributions.

On July 28, 2011 the Company Board of Directors (BOD) decided to issue shares to the following officers and BOD members:

1 – Mr. Mr. Mark Radom who serves as a Chief Carbon Officer has been granted an aggregate amount of 4,500,000 Shares. All such Shares shall be held in escrow by the Corporation’s corporate counsel for a period of 24 months held in escrow, pursuant to the terms of the Amended Employment Agreement

2 – Mr. Roy Amizur the Company new Executive Vice President for marketing has been granted as part of his compensation an amount of 12,500,00 Shares in accordance with the terms of the Amizur Employment Agreement, such Shares to be restricted for a period of 24 months and held in Escrow.

3 - The Company granted to Mr. Shlomi Palas the Company CEO an aggregate of 4,200,000 ordinary shares of the Corporation’s common stock restricted for 24 months.

4 - The Company granted to Mr. Eli Weinberg the Company chairman an aggregate of 4,200,000 ordinary shares of the Corporation’s common stock restricted for 24 month.

5 - The Company ratified the agreement dated June 9, 2011 in which the Company will grant to the Legal consul 1,500,000 Shares.

6 – The Company granted to the following Messes. Shlomo Palas, Eli Weinberg and Roy Amizur 5,000,000 shares each. And 4,075,000 for to Mr. Barkats and Ms. Abramovitz at JSBarkats Pllc. The Company filed a Registration Statement on Form S-8 on August 9, 2011 with respect these Shares.

F-7

Blue Sphere Corp.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF September 30, 2010

TABLE OF CONTENTS

		Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-9

CONSOLIDATED FINANCIAL STATEMENTS IN U.S. DOLLARS:
Balance Sheets		F-10
Statements of operations		F-11
Statements of changes in shareholders' equity (capital deficiency)		F-12
Statements of cash flows		F-13
Notes to financial statements		F—14 F-21

F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Blue Sphere Corp. (A Development Stage Company)

We have audited the accompanying consolidated balance sheet of Blue Sphere Corp. and its subsidiary (a development stage company) as of September 30, 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year ended September 2010 and for the period from May 17, 2007 (date of inception) to September 30, 2010. These financial statements are the responsibility of the Company’s Board of Directors and management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audit, such consolidated financial statements present fairly, in all material respects, the financial position of Blue Sphere Corp. and its subsidiary as of September 30, 2010 and the results of their operations, stockholders' equity and their cash flows for the year ended September 30, 2010 and for the period from May 17, 2007 (date of inception) to September 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1a to the financial statements, the Company has incurred recurring losses from operations that raises substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in Note 1a. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Brightman Almagor Zohar & Co.

Certified Public Accountants

A Member Firm of Deloitte Touche Tohmatsu

Tel Aviv, Israel

December 27, 2010

F-9

Blue Sphere Corp.

(A Development Stage Company)

Consolidated Balance Sheets

(In thousands except share and per share data)

	September 30			September 30
	2010			2009

ASSETS

CURRENT ASSETS
Cash		355			12
Other current assets		24			1
Total Current Assets		379			13

PROPRERTY AND EQUIPMENT, NET		8			-
Total Assets	$	387		$	13


Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable		115			8
Related Parties		3			-
Total Current Liabilities	$	118		$	8

Stockholders’ Equity
Common shares, $0.001 par value; 1,750,000,000 shares authorized;		-			-
at September 30, 2010 and September 30, 2009, respectively
68,500,000 shares and 66,500,000 shares issued and outstanding
shares at September 30, 2010 and September 30, 2009, respectively		69			2
Additional paid in capital		6,452			67
Deficit accumulated during the development stage		(6,252	)		(64	)
Total Stockholders’ Equity		269			5

Total Liabilities and Stockholders' Equity	$	387		$	13

See accompanying notes to financial statements

F-10

Blue Sphere Corp.

(A Development Stage Company)

Consolidated Statements of Operations

(In thousands except share and per share data)

						For The Period from May 17, 2007 (Inception) to
	Year Ended September 30,					September 30
	2 0 1 0			2 0 0 9		2 0 0 9

OPERATING EXPENSES
General and administrative expenses*		6,192			18		6,256
Financial expenses (income), net		(4	)		-		(4	)
NET LOSS	$	6,188		$	18	$	6,252

Net loss per common share – basic and diluted	$	0.09		$	0.00

Weighted average number of common shares outstanding during the period – basic and diluted		67,300,000			66,500,000

* For the year ended September 30, 2010 - includes $5,455 share-based compensation.

The accompanying notes are an integral part of the condensed consolidated financial statements.

F-11

Blue Sphere Corp.

Statement of Stockholders' Equity (Deficit)

(In thousands, except share and per share data)

	Common Stock				Additional			Accumulated			Total Stockholders'
	Shares		Amount		Paid in Capital			Deficit			Equity
	2 0 1 0		2 0 0 9		2 0 1 0			2 0 0 9			2 0 0 9

Common stock issued, July 17, 2007 (date of inception)		1,900,000	$	2	$	67		$	-		$	69

Net loss for the period ended September 30, 2007		-		-		-			(14	)		(14	)

Balance, September 30, 2007		1,900,000		2		67			(14	)		55
Net loss for the year ended September 30, 2008		-		-		-			(32	)		(32	)

Balance, September 30, 2008		1,900,000		2		67			(46	)		23

Net loss for the year ended September 30, 2009		-		-		-			(18	)		(18	)

Balance, September 30, 2009		1,900,000		2		67			(64	)		5

Share split of 35:1		64,600,000		65		(65	)		-			-

Proceeds from common stock issued net of direct offering expenses		2,000,000		2		995			-			997

Share based compensation		-		-		5,455			-			5,455

Net loss for the year ended September 30, 2010		-		-		-			(6,188	)		(6,188	)

Balance, September 30, 2010		68,500,000	$	69	$	6,452		$	(6,252	)	$	269

The accompanying notes are an integral part of the condensed consolidated financial statements.

F-12

Blue Sphere Corp.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(In thousands except share and per share data)


	For the Year Ended September 30,						For the Period from July 17, 2007(Inception) to September 30,
	2 0 1 0			2 0 0 9			2 0 1 0
CASH FLOW – OPERATING ACTIVITIES

Net loss	$	(6,188	)	$	(18	)	$	(6,252	)
Adjustments required to reconcile net loss to net cash used in operating activities:

Share based compensation expenses		5,455			-			5,455
Decrease (increase) in other current assets		(23	)		3			(24	)
Increase (decrease) in accounts payables		107			4			115
Increase in related parties		3			-			3
Net cash used on operating activities		(646	)		(11	)		(703	)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in property and Equipment		(8	)		-			(8	)
		(8	)		-			(8	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stock issued for cash		997			-			1,066
Net cash provided by financing activities		997			-			1,066

Net increase (decrease) in cash		343			(11	)		355

Cash - beginning of year/period		12			23			-

Cash - end of year/period	$	355		$	12		$	355

F-13

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

Going concern considerations

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of September 30, 2010, the Company had approximately $355 thousand in cash, approximately $261 thousand in working capital, a stockholders’ equity of approximately $269 thousand and an accumulated deficit of approximately $6,252 thousand. Management anticipates that their business will require substantial additional investments that have not yet been secured. The Company anticipates that the existing cash will not be sufficient to continue its operations through the next 12 months. Management is continuing in the process of fund raising in the private equity markets as the Company will need to finance future activities and general and administrative expenses. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability.

General

The Company was incorporated in the state of Nevada on July 17, 2007 and was in the business of developing and promoting automotive internet sites. During the second quarter the management of the Company decided to change its business focus to that of Greenhouse Gas (GHG) emission reduction, The Company seeks to generate revenue through sales of carbon credits, energy generation, project development and sale of byproducts.

The Company offers potential partners (owners of: landfills, coal mines, fertilizer factories, etc) a kind of turnkey operation in dealing with the emission reduction. The Company's service consists of: executing the process needed in order to make the project eligible for carbon credits, choosing the most suitable technology to be applied, arranging for the financing, constructing and managing the project for its life. We operate primarily in countries from the former Soviet Union, China and the USA.

F-14

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Functional Currency

The currency of the primary economic environment in which the operations of the Company are conducted is the U.S dollar (“$” or “dollar").

Most of the Company’s expenses are incurred in dollars. Most of the Company’s external financing is in dollars. The Company holds most of its cash and cash equivalents in dollars. Thus, the functional currency of the Company is the dollar.

Since the dollar is the primary currency in the economic environment in which the Company operates, monetary accounts maintained in currencies other than the dollar are re-measured using the representative foreign exchange rate at the balance sheet date. Operational accounts and non-monetary balance sheet accounts are measured and recorded at the rate in effect at the date of transaction. The effects of foreign currency re-measurement are reported in current operations (as “financial expenses - net) and have not been material to date.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Eastern Sphere, Ltd.

Inter-company balances and transactions have been eliminated upon consolidation.

Cash equivalents

Cash equivalents are short-term highly liquid investments which include short term bank deposit (up to three months from date of deposit), that are not restricted as to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired.

Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Assets are depreciated using the straight-line method over their estimated useful lives.

Computers, software and electronic equipment are depreciated over three years. Tools and equipment are depreciated over five years. Furniture is depreciated over fourteen years.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results may differ from those estimates.

F-15

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Share-based payments

The Company accounts for awards classified as equity awards using the grant-date fair value method. The fair value of share-based payment transactions is recognized as expense over the requisite service period, net of estimated forfeitures.

Loss per share

Net loss per share, basic and diluted, is computed on the basis of the net loss for the period divided by the weighted average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted average number of common shares and of common shares equivalents outstanding when dilutive. Common shares equivalents include: (i) outstanding stock options under the Company’s Long-Term Incentive Plan and warrants which are included under the treasury share method when dilutive, and (ii) Common shares to be issued under the assumed conversion of the Company’s outstanding convertible debentures, which are included under the if-converted method when dilutive. The computation of diluted net loss per share for the years ended September 30, 2010, and 2009, does not include common share equivalents, since such inclusion would be anti-dilutive.

Deferred income taxes

Deferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax rates expected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has provided a full valuation allowance with respect to its deferred tax assets.

Comprehensive loss

The Company has no component of comprehensive income loss other than net loss.

F-16

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued):

Newly issued accounting pronouncements:

In October 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-13 “Revenue Recognition (ASC Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how the arrangement consideration should be allocated among the separate units of accounting. ASU 2009-13 will be effective for fiscal years beginning on or after June 15, 2010 with early adoption permitted. The guidance may be applied retrospectively or prospectively for new or materially modified arrangements. The new standard is not expected to have a material impact on our consolidated financial position, results of operations and cash flows.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures About Fair Value Measurements,” which provides amendments to ASC 820 “Fair Value Measurements and Disclosures,” including requiring reporting entities to make more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements including information on purchases, sales, issuances, and settlements on a gross basis and (4) the transfers between Levels 1, 2, and 3. The standard is effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

On February 24, 2010, the FASB issued ASU 2010-09, which amends ASC 855 to address certain implementation issues related to an entity’s requirement to perform and disclose subsequent-events procedures. The new standard is not expected to have a material impact on our consolidated financial position, results of operations and cash flows.

NOTE 2 - RELATED PARTY TRANSACTIONS

On March 3, 2010, the Company entered into employment agreements with Eliezer Weinberg the Company Chairman of the Board, Shlomo Palas the Company’s CEO and Shmuel Keshet the Company’s COO for a term of two years. The officers receive monthly remuneration at a gross rate of USD$10,000. The remuneration will increase to a gross monthly rate of USD$15,000 upon the completion of outsourced technical project reports (“PDDs”) for two projects. Each officer was granted stock options to acquire 8,321,917 or nine percent (9%) of common stock in the capital of the Company, exercisable at a par value (see note 7).

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available.

F-17

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - SHARE CAPITAL:

Common shares

The Company's shares are traded on the Over-The-Counter Bulletin Board.

Common stock confers on its investors the right to receive notice to participate and vote in general meetings of the Company, the right to a share in the excess of assets upon liquidation of the Company, and the right to receive dividends, if declared.

On March 3, the Company issued on a Private Placement Subscription Agreement of 1,000,000 units at a price of $0.50 per unit each unit consisting of one share of common stock and one two-year warrant to purchase one share of common stock at an exercise price of $0.50 per share. The gross proceeds in the amount of $500,000 have been received.

On July 13, 2010 the Company issued on a Private Placement Subscription Agreement of 1,000,000 units at a price of $0.50 per unit each unit consisting of one share of common stock and one two-year warrant to purchase one share of common stock at an exercise price of $0.60 per share. The gross proceeds in the amount of $500,000 have been received.

NOTE 4 - STOCK OPTIONS:

The 2010 share option plan was established On March 3, 2010.

Options to Directors and Employees:

The fair value of the stock options grants was estimated using the Black-Schooled option valuation model that used the following assumptions:

	%
Risk free interest	3.75%
Dividend yields	0
Volatility	177%
Expected term (in years)	2

The fair value of the options granted above using the Black-Scholes model is $0.75 per option.

F-18

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - STOCK OPTIONS (continued):

A summary of the status of the stock options granted to employees and directors as of September 30, 2010, and changes during the year ended on those dates, is presented below:

	2010
			Weighted
	Number		average
	of		exercise
	options		price
				$

Options outstanding at beginning of year		-
Changes during the year:
Granted - at an exercise price above market price		24,965,751		0.001
Options outstanding at end of year		24,965,751		0.001
Options exercisable at end of year		7,281,677
Weighted average fair value of options granted during the year	$	0.001

Costs incurred in respect of stock based compensation for employees and directors, for the year ended September 30, 2010 were $5,455 thousand.

The following table presents summary information concerning the options outstanding as of September 30, 2010:

Weighted

Average

Weighted

Aggregate

intrinsic

value

(in thousands)

Range of

Remaining

average

exercise

Number

Contractual

exercise

prices

outstanding

Life

price

Years

0.001

24,965,751

1.33

0.001

8,214

F-19

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - STOCK OPTIONS (continued):

The following table presents summary information concerning the options exercisable as of September 30, 2010:

Weighted

Average

Weighted

Aggregate

Range of

Remaining

average

intrinsic

value

(in thousands)

exercise

Number

Contractual

exercise

prices

exercisable

Life

price

Years

0.001

7,281,677

1.33

0.001

2,396

NOTE 5 - INCOME TAXES:

US resident companies are taxed on their worldwide income for corporate income tax purposes at a statutory rate of 35%. No further taxes are payable on this profit unless that profit is distributed. If certain conditions are met, income derived from foreign subsidiaries is tax exempt in the US under applicable tax treaties to avoid double taxation.

The income of the company's Israeli subsidiary is taxed through 2010 at the rate of 25%. In July 2009, an amendment to the Income Tax Ordinance (No. 171) was passed by the "Knesset" (Israeli parliament), according to which the corporate tax rate is to be progressively reduced to the following tax rates: 2011 - 24%, 2012 - 23%, 2013 - 22%, 2014 - 21%, 2015 - 20%, 2016 and thereafter - 18%.

The Company accounts for income taxes using the liability method, which requires the determination of deferred tax assets and liabilities based on the differences between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which differences are expected to reverse. Deferred tax assets are adjusted by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred income taxes reflect the net effects of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The breakdown of the deferred tax asset as of September 30 and 2009 is as follows:

	2010			2009
Deferred tax assets:
Net operating loss carry-forward	$	225		$	22
Valuation allowance		(225	)		(22	)
	$	0		$	0

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Management has determined, based on its recurring net losses, lack of a commercially viable product and limitations under current tax rules, that a full valuation allowance is appropriate.

F-20

Blue Sphere Corp.

(A Development Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – INCOME TAXES (continued):

	U.S dollars in thousands
Valuation allowance, September 30, 2009	$	22
Increase		203
Valuation allowance, September 30, 2010	$	225

Carry forward losses of the Israeli subsidiary are approximately $320 thousand at September 30, 2010.

NOTE 6 - NET LOSS PER SHARE DATA

The shares issuable upon the exercise of options, and conversion of convertible debentures and warrants, which have been excluded from the diluted per share amounts because their effect would have been anti-dilutive, include the following:

	September 30, 2010
Options:
Weighted average number, in thousands		24,966
Weighted average exercise price	$	0.001

F-21

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

We estimate that expenses in connection with the distribution described in the Registration Statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares by the selling security holders) will be as set forth below. We will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange Commission registration fee, are estimates.

SEC registration fee	$	88.10
Accounting fees and expenses	$
Legal fees and expenses	$	65,000.00
Miscellaneous	$
Total	$

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under the provisions of Section 78.138 of Nevada Revised Statutes and Article 11 of our Articles of Incorporation, we may indemnify our directors, officers, employees and agents and maintain liability insurance for those persons. Section 78.138 provides that a corporation may indemnify a person made a party to a proceeding because the person is or was a director against liability incurred in the proceeding if the person's conduct was in good faith. In the case of conduct in an official capacity with the corporation, the person may be indemnified if the person reasonably believed that such conduct was in the corporation's best interests. In all other cases, the corporation may indemnify the person if the person reasonably believed that such conduct was at least not opposed to the corporation's best interests. In the case of any criminal proceeding, the person may be indemnified if the person had no reasonable cause to believe the person's conduct was unlawful.

Our Articles of Incorporation obligate us to indemnify our directors and officers to the fullest extent permitted under Nevada law. Additionally, our Articles of Incorporation and Bylaws grant us the authority to the maximum extent permitted by Nevada law to purchase and maintain insurance providing such indemnification. We have purchased directors' and officers' liability insurance policies for our directors and officers.

Insofar as indemnification for liabilities for damages arising under the Securities Act of 1933, as amended (the “Securities Act”) may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provision, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following information sets forth certain information with respect to all unregistered securities which we have sold during the past three years. Except as described below, we did not pay any commissions in connection with any of these sales.

On January 10, 2011 the Company issued and delivered 2,300,000 shares of common stock to Green Logic Ltd. (“GL”), a company organized and existing under the laws of the state of Israel, in exchange for the non-exclusive provision of fund-raising and promotional services. The Company also issued 1,000,000 additional shares of common stock to be delivered to GL subject to the satisfaction of certain conditions subsequent. GL failed to fulfill such conditions subsequent. Consequently the Company never delivered such shares to GL and has cancelled such shares.

In March 2011, the Company received from GL the rights to market and distribute in Europe a water heating technology based on magnetic induction and NIS 345,000 (out of a total monetary consideration of NIS 690,000) in checks in exchange for 2,500,000 shares of common stock to be delivered to GL after receipt of the balance of the amount owing to it – i.e., NIS 345,000. On May 9, 2011, the Company received an additional NIS 345,000 in post-dated checks from GL, which represented the remaining outstanding monetary balance owing to the Company. The Company delivered such 2,500,000 shares to GL on May 17, 2011.

On June 16, 2011, the Company issued four hundred thousand (400,000) shares to Mr. Ofer Raviv, an economist, in lieu of cash for his project assessment and appraisal services.

On July 28, 2011, the Company issued three hundred thousand (300,000) shares of common stock to Mr. Ran Cohen in lieu of a cash fee for his services as a tax expert.

On August 17, 2011, the Company entered into an investment agreement with Centurion Private Equity, LLC (the “Investor”), an affiliate of Roswell Capital Partners, for the provision of an equity line funding facility of up to the amount of $20 million. Pursuant to the terms and conditions of the Investment Agreement, the Company may sell newly issued shares of its common stock (the “Put Shares”) to the Investor (each such sale, a “Put”) from time to time at a price equal to the lesser of (i) 98% of the “Market Price” (as defined below) of its common stock or (ii) the Market Price of its common stock minus $0.01, subject to certain dollar and share volume limitations for each Put, until the earlier of (a) 36 calendar months from the date the investment agreement or (b) until all Puts under the Investment Agreement have reached an aggregate gross sales price equal to $20 million. The Investment Agreement provides that prior to exercising any Put, the Company must have a registration statement declared effective with the SEC with respect to the Put Shares. “Market Price” means the average of the three lowest daily volume weighted average prices published daily by Bloomberg LP for the Company’s common stock during the fifteen consecutive trading day period immediately following the date specified by the Company on which it intends to exercise the applicable Put. As consideration for the provision of the equity funding facility, the Company issued to the Investor 2,385,989 commitment shares and 159,066 fee shares to cover the Investor’s transaction fees.

On October 2, 2011, the Company entered into the Note Agreement with Asher Enterprises, Inc. (“Asher”), pursuant to which it sold to Asher an 8% convertible note (the “Note”) of the Company in the aggregate principal amount of $45,000.00. The Note is convertible into shares of common stock of the Company from time to time, and at any time, beginning March 14, 2012 and ending, absent any condition of default, on June 14, 2012, subject to the limitations and conditions set forth in the Note.

On October 4, 2011, the Company sold two hundred thousand (200,000) shares of common stock to Issac Amar for $10,000.

On October 31, 2011, the Company sold an additional three hundred and twenty-five thousand (325,000) shares of common stock to Issac Amar for $11,000.

On November 28, 2011, the Company issued five hundred and seventy-five thousand (575,000) shares of common stock to Nir Bareket for project finance services.

In connection with the foregoing, we relied on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, for transactions not involving a public offering.

ITEM 16. EXHIBITS

Exhibit	Description
No.
3.1	Articles of Incorporation (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
3.2	Articles of Merger (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
3.3	Certificate of Change (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
5.1*	Opinion of JS Barkats PLLC regarding the legality of the securities being registered.
10.1	Carbon Credit Project Contract Acquisition Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.2	Termination Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.3	Global Share Incentive Plan (2010) (incorporated by reference from our Registration Statement on Form S-8 filed on August 9, 2011)
10.4	Eil Weinberg Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.5	Shlomo Palas Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.6	Shmuel Keshet Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.7	Alex Werber Services Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.8	Amendment to Eli Weinberg Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.9	Amendment to Shlomo Palas Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.10	Amendment to Shmuel Keshet Employment Agreement (incorporated by reference from our Annual Report on Form 10K/A filed on March 9, 2011)
10.11	BPure Environmental Improvement Group, Ltd. Agreement with the Registrant dated July 18, 2011 (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
10.12	Consulting and Employment Agreement with JLS and Mr. Amizur (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
10.13	Investment Agreement with Centurion Private Equity, LLC dated August 17th, 2011 (incorporated by reference from our Current Report on Form 8-K filed on August 22, 2011).
10.14	Registration Right Agreement with Centurion Private Equity, LLC dated August 17th, 2011 (incorporated by reference from our Current Report on Form 8-K filed on August 22, 2011
10.15*	Convertible Promissory Note, dated September 16, 2011, between the Registrant and Asher Enterprises, Inc.

23.1*	Consent of Brightman Almagor Zohar & Co., a member firm of Deloitte Touche Tohmatsu
23.2*	Consent of Legal Counsel (incorporated in Exhibit 5.1).
99.1	Raviv Consulting Retainer Agreement (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
99.2	CCO Amended Project Management and Business Development Agreement (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
99.3	Form of Escrow Agreement (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
99.4	Tax Expert Consulting Services Agreement (incorporated by reference to our Current Report on Form 8-K filed on July 18, 2011)
99.5	Termination of Employment Agreement (incorporated by reference to our Current Report on Form 8-K filed on September 7, 2011)

*Filed herewith

ITEM 17. UNDERTAKINGS

A. Rule 415 Offering

We will:

(1) File, during any period in which we offer or sell securities, a post-effective amendment to this Registration Statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities Act.

(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) Include any additional or changed information on the plan of distribution.

(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time shall be the initial bona fide offering.

(3) File a post effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the Company undertake that in a primary offering of the Company’s securities pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv) Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

B. Request for Acceleration of Effective Date

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this Registration Statement to be signed on its behalf by the undersigned, in New York, on December 14, 2011.

	Blue Sphere Corporation

	By:	/s/ Shlomo Palas
		Shlomo Palas, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

By:	/s/ Shlomo Palas	By:	/s/ Amit Zilbershtein
	Name: Shlomo Palas		Name: Amit Zilbershtein
	Title: Chief Executive Officer		Title: Chief Financial Officer (Principal
	(Principal Executive Officer) and Director		Financial and Accounting Officer)

Dated: December 14, 2011

By:	/s/ Eliezer Weinberg
	Name: Eliezer Weinberg
	Title: Director

Dated: December 14, 2011

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