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EX-32.1 - EXHIBIT 32.1 - BLUE SPHERE CORP.v333476_ex32-1.htm
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EX-32.2 - EXHIBIT 32.2 - BLUE SPHERE CORP.v333476_ex32-2.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

 

For the transition period from _________ to ________

 

Commission File No. 333-147716

 

 

Bluesphere Corp.
(Exact name of registrant as specified in its charter)

 

Nevada 98-0550257

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

35 Asuta Street, Even Yehuda, Israel 40500
(Address of principal executive offices) (zip code)

 

972-9-8917438
(Registrant’s telephone number, including area code)

 

 
(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act of 1934.  Yes o No x

 

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

Yes x  No ¨

 

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

Yes x  No ¨

 

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨   Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨  No x

 

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date: As at February 19, 2013, there were 509,124,803 shares of common stock, par value $0.001 per share, issued and outstanding.

 

 
 

 

TABLE OF CONTENTS

 

Part I – Financial Information  
   
Item 1. Financial Statements 4 
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation  13
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk  19
   
Item 4. Controls and Procedures  19
   
Part II – Other Information  
   
Item 1. Legal Proceedings  21
   
Item 1A. Risk Factors  21
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  21
   
Item 3. Defaults upon Senior Securities  21
   
Item 4. Removed and Reserved  21
   
Item 5. Other Information  21
   
Item 6. Exhibits  21
   
Signatures  22

 

2
 

 

Forward Looking Statements

This quarterly report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, without limitation, (i) uncertainties regarding our ability to obtain adequate financing on a timely basis including financing for specific projects, (ii) uncertainties regarding the market for and value of carbon credits, including carbon credits associated with industrial gases, (iii) uncertainties regarding the market for and value of renewable energy in the countries where we have the opportunity to produce it, (iv) political and governmental risks associated with the foreign countries in which we operate, (v) unanticipated delays associated with project implementation including designing, constructing and equipping projects, as well as delays in obtaining required host country and United Nations approvals, (vi) the development stage of our business and (vii) our lack of operating history.

 

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

 

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are stated in United States dollars (U.S. $) and are prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”). In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars.

 

As used in this quarterly report, the terms “we”, “us”, “our”, “Blue Sphere” or the “Company” mean Blue Sphere Corp. and its wholly-owned subsidiary, Eastern Sphere, Ltd., unless the context clearly requires otherwise.

 

3
 

 

ITEM 1. FINANCIAL STATEMENTS

 

BLUE SPHERE CORP.

(A development stage company)

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands except share and per share data)

   December 31,   September 30, 
   2012   2012 
   Unaudited   Audited 
Assets          
CURRENT ASSETS:          
Cash and cash equivalents  $81   $22 
Short term investments   6    - 
Other current assets   136    43 
Total current assets   223    65 
           
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation   5    6 
Total assets  $228   $71 
Liabilities and Stockholders’ Equity (Deficit)          
CURRENT LIABILITIES:          
Accounts payables  $11   $11 
Other accounts payable   630    482 
Debentures and notes   288    246 
Total current liabilities   929    739 
STOCKHOLDERS' DEFICIT:          
Common shares of $0.001 par value each:          
Authorized: 1,750,000,000 shares at December 31, 2012 and September 30, 2012, Issued and outstanding: 277,074,803 shares and 184,695,507 shares at December 31, 2012 and September 30, 2012, respectively   277    184 
Proceeds on account of shares   176    - 
Additional paid-in capital   25,947    25,744 
Accumulated deficit during the development stage   (27,101)   (26,596)
Total Stockholders’ Equity (Deficit)   (701)   (668)
Total liabilities and Stockholders’ Equity (Deficit)  $228   $71 

 

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

 

4
 

 

BLUE SPHERE CORP.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands except share and per share data)

 

           Cumulative 
           from July 17, 
   Three months ended   2007 through 
   December 31   December 31, 
   2012   2011   2012 
   (Unaudited)   Unaudited 
OPERATING EXPENSES -               
General and administrative expenses *  $486  $1,792   $27,017
FINANCIAL EXPENSES, net   19    3    74 
    505    1,795    27,091 
Other losses   -    -    10 
NET LOSS FOR THE PERIOD  $505  $1,795   $27,101
                
Net loss per common share - basic and diluted  $(0.002)  $(0.02)     
                
Weighted average number of common shares outstanding during the period - basic and diluted   253,493,094    119,490,514      

 

* In the three months period ended December 31, 2012 and 2011 - includes $96 thousand and $1,559 thousand, respectively of share-based compensation.

 

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

 

5
 

 

BLUE SPHERE CORP.

(A development stage company)

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

(U.S. dollars in thousands, except share and per share data)

 

               Accumulated         
               deficit   Proceeds     
   Common Stock, $0.001
Par Value
   Additional
paid-in
   during the
development
   on account
of
   Total
Stockholders'
 
   Shares   Amount   Capital   stage   shares   Equity (deficit) 
COMMON STOCK ISSUED, JULY 17, 2007 (DATE OF INCEPTION)   1,900,000   $2   $67   $-   $-   $69 
CHANGES DURING THE PERIOD FROM JULY 17, 2007 THROUGH SEPTEMBER 31, 2012 (audited):                              
Issuance of common stock   996,948    1    217    -         218 
Share split of 35:1   64,600,000    65    (65)   -         - 
Common stock issued as direct offering costs   2,000,000    2    995    -         997 
Share based compensation   16,025,609    16    16,105    -         16,121 
Exercise of Options   24,965,751    24    (16)   -         8 
Issuance of shares for services   37,680,823    37    5,703    -         5,740 
Share based compensation   -    -    2,609    -         2,609 
Issuance of common stock in respect of issuance of convertible notes   36,526,376    37    129    -         166 
Net loss for the period   -    -    -    (26,596)        (26,596)
                               
BALANCE AT SEPTEMBER 30, 2012 (audited)   184,695,507   $184   $25,744   $(26,596)  $-   $(668)
CHANGES DURING THE PERIOD OF THREE MONTHS ENDED DECEMBER 31, 2012 (unaudited):                              
Proceeds on account of shares                       176    176 
Share based compensation   -    -    96    -         96 
Issuance of common stock, net of issuance expenses   48,000,000    48    12    -         60 
Issuance of shares for services   20,000,000    20    64    -         84 
Issuance of common stock in respect of issuance of convertible notes   24,379,296    25    31    -         56 
Net loss for the period   -    -    -    (505)        (505)
                               
BALANCE AT DECEMBER 31, 2012 (Unaudited)   277,074,803   $277   $25,947   $(27,101)  $176   $(701)

 

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

 

6
 

 

BLUE SPHERE CORP.

(A development stage company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

           For the period 
           From July 17, 
   Three months ended   2007 through 
   December 31   December 31, 
   2012   2011   2012 
   (Unaudited)   (Unaudited) 
CASH FLOWS FROM OPERATING ACTIVITIES:               
Profit (Net loss) for the period  $(505)  $(1,795)  $(27,101)
Adjustments required to reconcile net loss to net cash used in operating activities:               
Share based compensation expenses   96    1,559    18,826 
Depreciation   1    1    3 
Expenses in respect of convertible notes   20    1    39 
Issuance of shares for services   84    76    5,825 
Issuance of shares in respect of issuance of Convertible notes   -    -    52 
Decrease (increase) in other current assets   (93)   (27)   (116)
Increase in accounts payables   -    1    10 
Increase in other account payables   148    88    631 
Net cash used in operating activities   (249)   (96)   (1,831)
CASH FLOWS FROM INVESTING ACTIVITIES:               
Payments on account of short term investments   (6)   -    (6)
Payment for purchasing of fixed assets   -    -    (9)
Net cash used in investing activities   (6)   -    (15)
CASH FLOWS FROM FINANCING ACTIVITIES:               
Proceeds from options exercise   -    -    8 
Proceeds on account of shares   176    -    176 
Loan granted   -    -    (30)
Loans received   158    -    188 
Loans repaid   (80)   -    (80)
Proceeds from issuance of convertible debenture   -    33    321 
Proceeds from stock issued for cash   60    20    1,344 
Net cash provided by financing activities   314    53    1,927 
                
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   59   (43)   81 
                
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   22    50    - 
                
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $81   $7   $81 

 

The accompanying notes are an integral part of the consolidated financial statement

 

7
 

 

BLUE SPHERE CORP.

(A development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

NOTE 1 - 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.. ("the Company”). These consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended September 30, 2012, as filed with the Securities and Exchange Commission. The results of operations for the three months ended December 31, 2012 are not necessarily indicative of results that could be expected for the entire fiscal year.

 

NOTE 2 - GENERAL

 

a.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 as well as a project integrator in the clean energy production and waste to energy markets. The Company seeks to generate revenue through sales of carbon credits, energy generation, project development and sale of byproducts.

 

We offer potential project partners (e.g., owners of biomass waste, landfills, dairies, liquid waste treatment plants and farms) a turnkey or build, own and operate (BOO) project implementation in producing renewable energy and valuable by-products, such as soil amendments and compost. We will execute the process needed to make the project produce clean energy, and/or become more energy efficient, choose the most suitable technology, arrange for the financing, arrange for feedstock supplies and power and other by-product offtakers, oversee construction of the project, obtain eligibility for and sell greenhouse gas reduction credits and manage the project for its 20-25 year life.

 

During the second quarter of 2012, the Company's 50%-owned subsidiary, Puresphere Ltd, commenced its operations. The results of its operations and balance sheet as of December 31, 2012 have not been material.

 

On September 13, 2012, the Company, together with Biogas Nord AG, a German public company listed on the Frankfurt Stock Exchange, established Bino Sphere LLC. The Company holds 75% of the rights of Bino Sphere. On October 19, 2012, Bino Sphere signed two definitive project agreements to acquire 100% of Orbit Energy Inc.’s right, title and interest in, to and under two waste to energy projects in the United States. Based on the signed agreement the Company would pay Orbit Energy Inc Development fee in the amount $900 thousand to the acquired North Carolina agreement and $600 thousand for the acquired Road Island agreement, in the event that the Company would succeed with financial closing in each of such projects.

 

8
 

 

BLUE SPHERE CORP.

(A development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

NOTE 3 - INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited interim consolidated financial statements as of December 31, 2012 and for the three months then ended, 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 three months ended December 31, 2012 are not necessarily indicative of the results that may be expected for the year ending September 30, 2013.

 

The September 30, 2012 Condensed Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2012.

 

NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES

 

The significant accounting policies applied in the annual financial statements of the Company as of September 30, 2012, are applied consistently in these financial statements.

 

NOTE 5 - GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2012, the Company had approximately $81 thousand in cash and cash equivalents, approximately $706 thousand in negative working capital, a stockholders’ deficit of approximately $701 thousand and an accumulated deficit during development stage of approximately $27,101 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.

 

9
 

 

BLUE SPHERE CORP.

(A development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

NOTE 6 - NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS:

 

No new accounting standards have been adopted since the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2012 was filed.

 

NOTE 7 – COMMON SHARES:

 

On February 21, 2012, the Company executed a promissory note (the “Promissory Note”) pursuant to which it borrowed $30,000 from Jean-Marc Karouby, M.D., an individual residing in France (the “French Lender”). Part of the consideration for the Promissory Note was the issuance of 2,800,000 shares of common stock of the Company. In connection with such issuance of shares, the Company also granted to the French Lender piggy-back registration rights. As a result, such shares may be registered under the S-1.

 

The maturity date of the Promissory Note was November 20, 2012. Under the terms of the Promissory Note, interest accrues on the basis of a 270-day year at a rate of 18% per annum or at a higher rate of 24% per annum if such higher rate is permissible under Nevada law. The Promissory Note is governed under the laws of Nevada. The default rate of interest under the Promissory Note is 35% per annum, and a default shall be declared upon a declaration by the Company of bankruptcy under Chapter 7 or Chapter 11 under the applicable federal United States bankruptcy laws or upon the failure to make payments when due on or before 10 days after an applicable due date. Monthly interest payments of $600 are due on or before the 20th of each month while the Promissory Note remains outstanding. In addition to payment of the default interest rate and principal, upon a default the Company shall also issue to the French Lender additional shares of its common stock equal to 150% of the value of the principal and interest due converted at the applicable trading price for the Company’s shares at the time of default. Cash payments due under the Promissory Note have been personally guaranteed by Shlomo Palas, the Company’s Chief Executive Officer. On November 11, 2012 the Company repaid the promissory note in full.

 

On November 5, 2012 the Company entered into an agreement with a non-US investor to sell 30,000,000 shares of common stock at December 25, 2012 for an aggregated amount of $70,000.

 

On December 20 2012, the Company entered into an agreement with a non-US investor to sell 35,000,000 shares of common stock at a price of $0.00286 per share for $100,000 and to purchase another 17,500,000 shares of common stock for $50,000 in January 2013 and another 17,500,000 shares of common stock for $50,000 in February 2013. Additionally, the Company (i) obligated to issue such investor 10,000,000 shares of common stock in February 2013 at no additional cost and (ii) issue to such investor an option to purchase 7,500,000 shares of common stock for one year for 0.02 per share and to purchase 7,500,000 shares of common stock for two years at a price per share of $0.04.

 

The Company has estimated the aggregate fair value of such options granted using the Black-Scholes option pricing to be approximately $76 thousands. As of balance sheet date, the non-US investor transferred the Company $170,000 on account of the agreement and the shares he was entitled to were issued by the Company in February 2013. On February 5, 2012, we issued such investor 87,000,000 shares in full satisfaction of our obligations to him (other than our obligations in respect of the options described above).

 

On November 20, 2012, the Company agreed to issue 37,500,000 shares of the Company to the order of a certain party arranging investments in the Company to a non-US investor in exchange for introducing the investor to the Company. Such shares have been issued on January 11, 2013 and were valued based on the share price of the Company to be $101 thousands.

 

10
 

 

BLUE SPHERE CORP.

(A development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

NOTE 7 – COMMON SHARES (continue):

 

On November 5, the Board of Directors of the Company approved the issuance of 6,000,000 shares of the Company to its Chief Executive officer, 5,000,000 shares to the Chairman of the Board, 5,000,000 shares to the Executive Vice-President and 4,000,000 shares to the Chief Carbon Officer and general counsel of the Company.

 

On October 25, 2012 the Company entered into a Subscription Agreement with a non-US investor for the sale of 10,000,000 shares of common stock for an aggregated amount of $20,000.

 

On October 25, 2012 the Company entered into an agreement with a non-US investor to sell 43,000,000 shares of common stock for an aggregated amount of $50,000 of which 38,000,000 shares were issued to balance sheet date and the remaining issued after balance sheet date.

 

NOTE 8 – DEBENTURES AND NOTES:

 

On September 16, 2011, the Company signed a securities purchase agreement with Asher Enterprises Inc., a Delaware corporation with a head office in New York (“Asher”), pursuant to which Asher purchased an aggregate amount of U.S. $45,000 of our 8% convertible notes (the “Notes”). The Notes are 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 Notes. The Company has the right to prepay the Notes under the certain conditions for 180 days following the issue date. On each of November 11, 2011 and January 26, 2012, Asher purchased an additional U.S. $32,500 of our 8% convertible notes (for an aggregate total of U.S. $65,000). Such additionally-purchased notes, together with the Notes, are referred to as the “Asher Notes”.

 

On March 19, 2012 Asher transferred 100% of the Asher Notes to third parties. During April 2012, such third parties converted $110 thousand (i.e., 100% of the principal amount) of the Principal amount of the Asher Notes into 28,893,043 shares of the Company (a conversion price of $0.0039802 per share).

 

On March 26, 2012, and May 7, 2012 Asher purchased an additional U.S. $53,000 and $32,500, respectively of our 8% convertible notes.

 

On September 13, 2012 the Company signed on an additional U.S. $32,500, 8% convertible note with Asher.

 

On October 4, 2012 Asher converted $53 thousands of principal amount of March 26, 2012 loan into 24,379,296 shares of the Company.

 

On November 1, 2012 the Company repaid the May 7, 2012 Asher's $32,500 principal loan for $50,000.

 

On November 6, 2012 Asher purchased an additional U.S. $32,500 of our 8% convertible notes.

 

11
 

 

BLUE SPHERE CORP.

(A development stage company)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

 

NOTE 8 – DEBENTURES AND NOTES (continue):

 

On July 1, 2012, the Company signed a placement agreement with Fidelity Venture Capital Limited (“Fidelity”) pursuant to which Fidelity undertook to raise U.S. $1,000,000 in notes convertible into shares of common stock or more senior equity securities of the Company (if any) for a period of three and one half years at prices ranging from USD 0.02 cents to USD 0.10 cents per share or a discount of 20% of the then market price of the Company’s shares depending on when any such conversion is consummated (the “Fidelity Notes”). The Fidelity Notes will bear annual interest of 6.5% to be paid semi-annually in arrears. The Company has committed to pay off the outstanding principal of the Fidelity Notes by paying to the holders of such Fidelity Notes 7% of gross income and making certain pre-payments of the principal during the term of the notes. Each holder of Fidelity Notes is to receive shares of common stock of the Company worth USD 0.70 cents for each dollar it invested in the Fidelity Notes (the “Incentive Shares”). The Company has pledged the income from its projects to such holders as security to pay the Fidelity Notes in full. Fidelity will receive nine percent of the gross proceeds it raises for the Company. To-date, the Company has received an aggregate amount of U.S. $50,000 (less commissions) from sales of Fidelity Notes.

 

On December 25, 2012 and following the failure of Fidelity to raise U.S $1,000,000 in notes based on the placement agreement above, the Company notified Fidelity on the termination of the placement agreement. The Company is in negotiations with Fidelity as to the term and conditions applicable to the $50,000 principal note it had received from Fidelity.

 

On September 4, 2012, September 21, 2012, September 25, 2012, October 14, 2012 and November 29, 2012, we signed Convertible Promissory Notes with Jelton Finance Corp., a Belize corporation, with offices in Lichtenstein (“Jelton”), pursuant to which Jelton agreed to purchase an aggregate of $132,500 of our 7% convertible notes due in each case three months after their respective issue dates (the “Jelton Notes”). The Jelton Notes are convertible into shares of the Company at a discount to the applicable market price on the date of conversion. The Company has the right to prepay the Jelton Notes under certain conditions for 90 days following their issue date. In January and February 2013 the Jelton Notes were converted into 107,250,000 shares for total investment of $128,500, of which $93 thousand were received as of balance sheet date.

 

12
 

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

OVERVIEW

 

 Overview

 

We are a project integrator in the clean energy production and waste to energy markets. We aspire to become a key player in these global markets, working with enterprises with clean energy, waste to energy and related by-product potential to generate clean energy, soil amendments, compost and other by-products. We believe that these markets have tremendous potential insofar as there is an endless supply of waste that can be used to generate power and valuable by-products. Not only is there an endless supply of waste, but in most, if not all cases, disposing of such waste in most parts of the world today is a costly problem that requires an environmentally-damaging solution, such as landfilling. We offer a cost-effective, environmentally-safe alternative. Additionally, the demand for energy in virtually every country in the world is increasing every year and governments everywhere are welcoming and supporting such clean energy and waste to energy initiatives.

 

Our business is presently primarily focused on the United States, Africa and China.  We seek to generate revenue through sales of:

 

·Energy
·Tipping fees
·carbon credits
·energy efficiency technology
·project development services
·compost
·soil amendments
·other by-products

 

As a project integrator, we are partnering with owners of biomass waste, landfills, livestock and other animal farms, agricultural enterprises, liquid waste treatment plants and other high volume producers of organic material to produce clean energy.

 

Our comprehensive service solution consists of:

 

·managing the entire process of producing clean energy based on a BOO model (Build, Own and Operate)
·selecting the most suitable technology for the project
·arranging project financing (debt and equity)
·arranging feedstock supply
·devising and implementing ways for the project to become more energy efficient
·obtaining eligibility for and receive carbon credits, renewable energy credits and other ecologically-related benefits
·constructing and equipping the project on a turnkey basis
·managing the project for the duration of its revenue-producing life

 

We are currently focusing on seven projects for which we have signed, definitive agreements to own and implement such projects and which are in various stages of development:

 

United States

 

·Concord, NC Waste to Energy Anaerobic Digester 5.2 MW Plant
·Johnston, RI Waste to Energy Anaerobic Digester 3.2 MW Plant

 

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Ghana

 

·Oti Sanitary Landfill Waste to Energy 1 MW Plant
·Sofokrom Sanitary Landfill Waste to Energy 1 MW Plant
·Oblogo/Mallam Landfill Waste to Energy 500 KW Plant
·Ablekuma Landfill Waste to Energy 250 KW Plant
·Accra General Landfill Waste to Energy 1 MW Plant

 

Each of these projects are dependent upon, and will require, an infusion of significant capital, a portion of which, subject to our obtaining additional financing, we anticipate being required to contribute directly.  We anticipate a lead-time of at least six to twelve months from funding before any project becomes operational. We anticipate receipt of revenue from sales of electricity and other by-products as soon as such projects become operational.

 

In respect of our Concord and Johnston waste to energy projects in the United States, we have a 10% ownership interest in each project until such time as our financial partner in the project recoups 100% of its investment. After that, our ownership interest in these projects will be 50%.

 

We have a 20% ownership interest in our Oti Sanitary Landfill project in Ghana until such time as our partner in the project recoups 140% of its investment. After that, our ownership interest in the Oti project will be 50%.

 

Our ownership interest in our other projects will vary depending on a variety of factors.  In some cases, e.g., in respect of our Concord and Johnston projects, we will be required to pay a certain percentage of our profits to third-parties.

 

In addition, we are engaged in discussions relating to a range of clean energy projects in the United States, Europe and Asia focusing mainly on waste to energy projects.

 

Our preferred mode of operation when we identify a project with potential is to sign a term sheet or other form of preliminary agreement, conduct due diligence and arrange financing and, if necessary, technology, equipment, procurement and construction party, feedstock supplies and off-takers and, if the result of due diligence is positive and we are successful in arranging financing, to sign a final, definitive project agreement.

 

Corporate History

 

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 accumulated a deficit of approximately $64,000.  During the second quarter of 2010, we changed our business model to our current business. In connection with such 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, issued, and outstanding common stock, increasing our authorized common stock from 50,000,000 shares to 1,750,000,000 shares and increasing our outstanding common stock 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, and Eliezer Weinberg, our then non-executive chairman of the board.  Mssrs. Palas and Weinberg 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. As at the date of this annual report, Mr. Palas owns 20,121,917 shares of common stock of the Company.

 

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On March 3, 2010, Mssrs. 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 and also acts as our general counsel. Mr. Radom is receives a monthly salary of U.S. $7,000 and is entitled to receive five percent of the net profits of any project he introduces to the Company and two percent of the net profits of any other project the Company implements. On August 23, 2011, Mr. Radom received 4,500,000 shares of common stock of the Company. In January 2012 Mr. Radom received another 500,000 shares of common stock of the Company. In November 2012, Mr. Radom received an additional 4,000,000 shares of common stock of the Company. As at the date of this annual report, Mr. Radom owns 9,000,000 shares of common stock of the Company, none of which are subject to any forfeiture.

 

On July 28, 2011, we appointed Roy Amizur our Executive Vice-President. Mr. Amizur. At such time, Mr. Amizur received 12,500,000 shares of common stock of the Company. If Mr. Amizur resigns from the Company prior to July 25, 2013, he will forfeit a pro rata portion of his shares back to the Company (the amount subject to forfeiture being equal to the number of days, which Mr. Amizur did not serve as Executive Vice-President out of the two year term of his management services agreement. In August 2011, Mr. Amizur received 1,075,000 shares of common stock as a bonus, which are not subject to any forfeiture. In November 2012, Mr. Amizur received an additional 5,000,000 shares of common stock, which are not subject to any forfeiture. As at the date of this annual report. Mr. Amizur owns 18,575,000 shares of common stock of the Company. As of July 2012, we agreed to start paying Mr. Amizur a monthly salary of U.S. $10,000.

 

On January 9, 2012, we appointed Shlomo Zakai as our new chief financial officer on a non-exclusive basis. Mr. Zakai is entitled to receive U.S. $1,500 per month for the work he performs for the Company. We have four persons providing us services on a full-time basis –our non-executive chairman, our chief executive officer, our executive vice-president and our chief carbon officer. We have three part-time employees – our chief financial officer, an office manager and a book-keeper. We have an advisory agreement with our non-executive chairman, a service agreement with our chief executive officer and executive vice-president and a consulting agreement with our chief carbon officer. We have no other employment or similar agreements with any of our employees.

 

In February 2012, our then non-executive chairman, Eliezer Weinberg, resigned from the board of directors. He no longer has any role in the Company. In his place, we appointed Joshua Shoham non-executive director and chairman of the board. Mr. Shoham received 4,000,000 shares of stock, which are subject to pro-rata forfeiture in the event that Mr. Shoham does not serve his full term of two years as director. In November 2012, Mr. Shoham received an additional 5,000,000 shares of common stock, which are not subject to any forfeiture. As at the date of this annual report, Mr. Shoham owns 9,000,000 shares of common stock of the Company. As of July 2012, we agreed to pay Mr. Shoham $10,000 per month plus VAT.

 

Sales and Issuances of Securities during the Quarter Ending December 31, 2012

 

On September 4, 2012, September 21, 2012, September 25, 2012, October 14, 2012 and November 29, 2012, we signed Convertible Promissory Notes with Jelton Finance Corp., a Belize corporation, with offices in Lichtenstein (“Jelton”), pursuant to which Jelton agreed to purchase an aggregate of $132,500 of our 7% convertible notes due in each case three months after their respective issue dates (the “Jelton Notes”). The Jelton Notes are convertible into shares of the Company at a discount to the applicable market price on the date of conversion. The Company has the right to prepay the Jelton Notes under certain conditions for 90 days following their issue date. In January and February 2013 the Jelton Notes were converted into 107,250,000 shares for total investment of $128,500, of which $93 thousand were received as of the balance sheet date.

 

On October 25, 2012 the Company entered into a subscription agreement with a non-US investor for the sale of 10,000,000 shares of common stock for an aggregate amount of $20,000.

 

On October 25, 2012 the Company entered into an agreement with a non-US investor to sell 43,000,000 shares of common stock for an aggregate amount of $50,000 of which 38,000,000 shares were issued to balance sheet date and the remaining issued after balance sheet date.

 

On November 5, the Board of Directors of the Company approved the issuance of 6,000,000 shares of the Company to its Chief Executive officer, 5,000,000 shares to the Chairman of the Board, 5,000,000 shares to the Executive Vice-President and 4,000,000 shares to the Chief Carbon Officer and general counsel of the Company.

 

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On November 6, 2012, we issued U.S. $32,500 of our 8% convertible notes to a US investor. The principal and accrued interest is due on August 8, 2013. Such notes are convertible into shares of our common stock at an approximate 50% discount to the trading price on the date of conversion. We have the right to pre-pay such notes at a premium to the principal amount and accrued interest.

 

In November 5, 2012 we entered into an agreement with a non-US investor to sell 30,000,000 shares of common stock at December 25, 2012 for an aggregated amount of $70,000, which we received. On December 20 2012, we entered into an agreement with a non-US investor to sell 35,000,000 shares of common stock at a price of $0.00286 per share for $100,000, which we received and to purchase another 17,500,000 shares of common stock for $50,000 in January 2013 and another 17,500,000 shares of common stock for $50,000 in February 2013. Additionally, we (i) are obligated to issue such investor 10,000,000 shares of common stock in February 2013 at no additional cost and (ii) issue to such investor an option to purchase 7,500,000 shares of common stock for one year for 0.02 per share and to purchase 7,500,000 shares of common stock for two years at a price per share of $0.04.

 

On February 10, 2012, we issued such investor 87,000,000 shares in full satisfaction of our obligations to him (other than our obligations in respect of the options described above).

 

Strategy

 

Our primary focus is providing tailored solutions internationally to produce clean energy out of waste. In this connection, we expect to generate revenue through sales of (i) thermal and electrical energy, (ii) energy efficiency technologies, (iii) project development services and (iv) by-products and from the receipt of tipping fees for accepting waste.

 

We offer potential project partners (e.g., owners of biomass waste, landfills, dairies, liquid waste treatment plants and farms) a turnkey or build, own and operate (BOO) project implementation in producing renewable energy and valuable by-products, such as soil amendments and compost. We will execute the process needed to make the project produce clean energy, and/or become more energy efficient, choose the most suitable technology, arrange for the financing, arrange for feedstock supplies and power and other by-product offtakers, oversee construction of the project, obtain eligibility for and sell greenhouse gas reduction credits and manage the project for its 20-25 year life.

 

We are currently focused on the United States, Africa and China. We have signed projects in the United States and Africa and a pipeline of projects in the United States, Africa and China. We are also in various stages of pursuing opportunities in Europe and elsewhere in Asia.

 

A component of the clean energy business in general and the waste to energy business in particular is greenhouse gas (“GHG”) offset credits. Thus far, each of our projects has the potential to generate revenue through the sale of such credits. Outside the United States, the Company’s GHG reduction activities operate under the rubric originally created by the Kyoto Protocol and implemented through the United Nations, the EU, and many national governments. Within the United States, the Company’s GHG reduction regime is based on the compliance market in California and the various corporations and voluntary buyers who have a specific objective to support climate change mitigation by buying carbon credits.

 

Another component of the clean energy and waste to energy business in the United States is renewable energy credits (“RECs”). A REC represents a MW/hr or Kw/hr of clean energy. Many states, including North Carolina and Rhode Island, the sites of our two US projects, require that their utilities prove that a portion of the energy they sell is produced from clean or renewable sources. A REC is used to demonstrate that the relevant unit of energy has a clean/renewable source. As such, utilities purchase RECs from producers of clean/renewable energy.

 

In respect of our African projects, we have signed an agreement with Vattenfall Energy Trading Netherlands N.V., a subsidiary of the Sweden’s national utility company, to purchase all carbon credits we will receive from our African waste to energy projects through 2020. In respect of our United States waste to energy projects, we are in negotiations with various companies to sell our credits for use in the California compliance market. In China, there is a domestic carbon credit market that we expect to provide a source of buyers for carbon credits from waste to energy projects that we will implement in the future.

 

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In fact, from 2010 to the end of 2011, we were primarily focused on implementing carbon credit projects in the developing world under the auspices of the Kyoto Protocol. In this connection, we commenced our landfill projects in Ghana (as described more fully below) in 2011. However and despite starting what we hope is a promising set of landfill gas-to-energy projects in Africa, in the last quarter of 2011, we realized that we were positioned for a much greater opportunity: waste-to-energy.

 

Our model in respect of waste-to-energy is to build, own and operate. We first select projects with signed, long-term agreements with waste producers or waste haulers in respect of the feedstock, with national governments or electricity corporations in respect of the energy output and with private entities in respect of other project by-products (such as renewable energy credits, heat, compost and fertilizer), in each case, prior to initiation of such projects.

 

Our role is to integrate all activities and components that make up a project, providing a turnkey, one-stop shop solution and do everything needed to make our projects successful. We will work with and outsource key components of such projects to the Engineering Procurement Construction (“EPC”)/technology providers and other project participants that provide the best and most economical solution for each individual project. This will provide us the flexibility and freedom to tailor the best solution for each project. We will stay involved in managing and financing all aspects of the relevant project for its lifetime or until the project is sold, when that proves to be the best financial decision. This assures all of the involved parties - including waste producers, financing parties and EPC/technology providers and customers - that there is long-term overall continuity and responsibility for each project as a whole.

 

We are therefore now focusing most of our efforts and resources toward waste-to-energy projects. As described more fully below, we have signed definitive agreements in respect of two projects in the United States (North Carolina and Rhode Island), we have a binding option on eight more similar projects across the United States and are in the process of developing a pipeline of dozens more of such projects in the United States, China, Africa and elsewhere. There is a virtually endless supply of waste suitable for such projects and the demand for renewable energy in general and from such projects in particular is growing every year and exceeds the amount of renewable energy available to satisfy such demand.

 

Aiming to be distinctive in the “clean, green” market, Blue Sphere’s specific intentions are to:

 

·provide a one-stop, turn-key/build own and operate/transfer 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
·to receive almost all of its revenues in dollars, euros and renminbi whether operating in the United States, Europe, China or other parts of the developing world.

 

Recent Events

 

Not applicable.

 

Results of Operations

 

Revenue

 

We have recorded no revenue since inception.

 

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General and administrative expenses

 

General and administrative expenses for the three-month period ended December 31, 2012 were $486,000 as compared to $1,792,000 for the three-month period ended December 31, 2011. The decrease is mainly attributable to the decrease in share-based compensation for employees and service providers.

 

Net Loss

 

As a result of the above, we incurred a net loss of $505,000 for the three-month period ended December 31, 2012, as compared to a net loss of $1,795,000 for the three-month period ended December 31, 2011.  We anticipate losses in future periods. The decrease is mainly attributable to the decrease in share-based compensation for employees and service providers.

 

Inflation

 

Our results of operations have not been materially affected by inflation and management does not expect that inflation risk would cause material impact on its operations in the future.

 

Seasonality

 

Our results of operations are not materially affected by seasonality and we do not expect seasonality to cause any material impact on our operations in the near future.

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation of financial statements. No new accounting standards have been adopted since the Company’s Annual Report on Form 10-K/A for the fiscal year ended September 30, 2011 was filed.

 

Liquidity

 

As of December 31, 2012, we had cash of $81,000 compared to $7,000 as of December 31, 2011. As of December 31, 2012, we had working capital deficit of $706,000 compared to working capital of $289,000 as of December 31, 2011. Management anticipates that existing cash resources, including the proceeds of the equity private placements described below will not be sufficient to fund our planned operations during the next 12 months. We estimate that, in order to fund our continued existence, we will require a minimum of $1,000,000 in cash over the next 12 months. This does not include amounts we will have to invest in the implementation of our projects. Assuming we finance each project with 30% equity and 70% debt, we will require approximately $12,000,000 in additional capital to make equity investments in each of our US-based projects and $11,000,000 for our Ghanaian projects. There is no assurance that we will be successful in financing our projects with 30% equity and 70% debt (such amounts could be more or less) and, even if successful, there is no assurance that we will raise such capital at all or in a timely manner.

 

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 and any meaningful equity financing will likely result in significant dilution to our existing shareholders. 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.

 

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Capital Resources

 

As at December 31, 2012, we had no commitments for any capital expenditures. Based on project agreements signed to-date and projects in the pipeline, we anticipate the incurrence of such commitments during the fiscal year ending September 30, 2013. We expect to fund such commitments partly with equity to be contributed by us and partly with debt to be raised from financial institutions. In order to make any equity contribution, we will be forced to raise additional funds in the form of an equity investment in us of from external investors.

 

Off-Balance Sheet Arrangements

 

As at December 31, 2012, we had no off-balance sheet arrangements of any nature.

 

Market Risk and Contingent Liabilities

 

The Company is seeking to operate largely in the developing world (such as, e.g., countries in Africa 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. In the last year, there was an overall improvement in the world (and, consequently, developing world) economic environment. 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, political or social problems or a reversal of foreign investment policies, it is likely that any such change 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.

 

Risks inherent in foreign operations include nationalization, war, terrorism, and other political risks and risks of increases in foreign taxes or changes in U.S. tax treatment of foreign taxes paid and the imposition of foreign government royalties and fees.

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not Applicable.

 

ITEM 4.  CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, including our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as at December 31, 2012. Based on such review, our chief executive officer and chief financial officer have determined that in light of their conclusion with respect to the effectiveness of our internal control over our financial reporting as of such date, we had in place effective controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

 

Our management, under the supervision of our chief executive officer and chief financial officer, is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act of 1934. The Company’s internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes policies and procedures that:

 

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  ¨ pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions;

 

  ¨ provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

  ¨ provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our internal control over financial reporting as on December 31, 2012 based on the framework for Internal Control-Integrated Framework set forth by The Committee of Sponsoring Organizations of the Treadway Commission (“Treadway Commission Framework”). Management’s evaluation concluded that there were no material weaknesses with respect to segregation of duties that may not provide reasonable assurance regarding the reliability of internal control over financial reporting and may not prevent or detect misstatements.

 

Based on this evaluation, our management concluded that the Company’s internal controls over financial reporting were effective as at December 31, 2012.

 

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Commission that permit us to provide only management’s report in this Annual report.

 

On March 31, 2011, we appointed Mark Radom our internal control officer and finalized and adopted an internal control plan and policy for the Company going forward.

 

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PART II - OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company, we are not required to provide the information required by this item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

In November 5, 2012 we entered into an agreement with a non-US investor to sell 30,000,000 shares of common stock at December 25, 2012 for an aggregated amount of $70,000, which we received.

 

On December 20 2012, we entered into an agreement with a non-US investor to sell 35,000,000 shares of common stock at a price of $0.00286 per share for $100,000, which we received and to purchase another 17,500,000 shares of common stock for $50,000 in January 2013 and another 17,500,000 shares of common stock for $50,000 in February 2013. Additionally, we (i) are obligated to issue such investor 10,000,000 shares of common stock in February 2013 at no additional cost and (ii) issue to such investor an option to purchase 7,500,000 shares of common stock for one year for 0.02 per share and to purchase 7,500,000 shares of common stock for two years at a price per share of $0.04.

 

On February 10, 2012, we issued such investor 87,000,000 shares in full satisfaction of our obligations to him (other than our obligations in respect of the options described above).

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFTEY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. 

 

No. Description
31.1 Rule 13a–14(a)/15d–14(a) Certifications (ii) Rule 13a–14/15d–14 Certification Chief Executive Officer
31.2 Rule 13a–14(a)/15d–14(a) Certifications (ii) Rule 13a–14/15d–14 Certification Chief Financial Officer
32.1 Section 1350 Certification Chief Executive Officer
32.2 Section 1350 Certification Chief Financial Officer

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

BLUE SPHERE CORP.

 

By: /s/ Shlomi Palas  
  President, Chief Executive Officer, Secretary and Director  
  (Principal Executive Officer)  
  Date:  February 19, 2013  
     
By: /s/ Shlomo Zakai  
  Chief Financial Officer and Treasurer  
  (Principal Accounting Officer and Principal Financial Officer)  
  Date:  February 19, 2013  

 

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