Blue Earth, Inc. - FORM 10-Q/A

Attached files

file	filename
EX-31.1 - CERTIFICATION - Blue Earth, Inc.	bblu_ex311.htm
EX-32.1 - CERTIFICATION - Blue Earth, Inc.	bblu_ex321.htm
EX-31.2 - CERTIFICATION - Blue Earth, Inc.	bblu_ex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

Form 10-Q/A

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

COMMISSION FILE NUMBER 0-54669

BLUE EARTH, INC.

(Exact Name of small business issuer as specified in its charter)


Nevada		98-0531496
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2298 Horizon Ridge Parkway, Suite 205, Henderson, NV 89052

(Address of principal executive offices) (Zip Code)

Registrant’s telephone Number: (702) 263-1808

N/A

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

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 [X]	Non-accelerated filer [ ]	Smaller reporting company [ ]
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of August 14, 2015 the issuer had 94,557,119 outstanding shares of Common Stock

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-QA amends the Annual Report on Form 10-Q/A for the three and six months ended June 30, 2015 (the “Original Report”) of Blue Earth, Inc. (the “Company”), which was filed with the Securities and Exchange Commission on August 17, 2015. The Company is filing this amended Form 10-Q/A to present on a retroactive basis the effect of several Type 1 subsequent events including the resolution of certain litigation and the discontinuance of a significant component of its operations. This amendment is filed in accordance with Topic 13 of the Financial Reporting Manual of the Securities and Exchange Commission due to the Company’s outstanding Form S-3. The amended Form 10-Q/A also incorporates revisions to the notes and Management’s Discussion and Analysis as the result of the response to review comments from the Securities and Exchange Commission staff. The filing of this Form 10-Q/A shall not be deemed an admission that the Original Report, when made, included any untrue statement of a material fact or omitted to state a material fact necessary to make a statement not misleading.

TABLE OF CONTENTS


PART I	1
ITEM 1. FINANCIAL STATEMENTS	1
Consolidated Balance Sheets	1
Consolidated Statements of Operations	3
Consolidated Statements of Cash Flows	4
Notes to Condensed Consolidated	6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	25
ITEM 4. CONTROLS AND PROCEDURES.	26
PART II	26
ITEM 1. LEGAL PROCEEDINGS.	26
ITEM 1A. RISK FACTORS.	27
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	27
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.	27
ITEM 4. MINE SAFETY DISCLOSURES	27
ITEM 5. OTHER INFORMATION.	27
ITEM 6. EXHIBITS.	28

iii

PART I

ITEM 1. FINANCIAL STATEMENTS

BLUE EARTH, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


ASSETS

			June 30,		December 31,
			2015		2014
			(restated)		(restated)
			(unaudited)
CURRENT ASSETS

	Cash and cash equivalents		$	2,005,330	$	2,883,621
	Restricted cash			20,027		632,102
	Accounts receivable, net			3,857,138		1,739,822
	Costs and revenues in excess of billings			903,117		3,967,207
	Inventory, net			475,714		352,862
	Construction in progress			71,128		68,213
	Other receivables, net			114,030		78,926
	Prepaid expenses and deposits			2,345,219		1,639,531
	Assets of discontinued operations			995,583		1,221,631

		Total Current Assets		10,787,286		12,583,915

PROPERTY AND EQUIPMENT, net				65,654,593		56,815,626

OTHER ASSETS
	Deposits			51,544		80,455
	Natural gas futures			2,251,711		2,426,266
	Long term receivables			1,293,987		1,587,548
	Equity method investment			8,461,352		9,353,402
	Contracts and technology, net			17,198,441		19,296,534

		Total Other Assets		29,257,035		32,744,205

		TOTAL ASSETS	$	105,698,914	$	102,143,746

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

BLUE EARTH, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


LIABILITIES AND STOCKHOLDERS' EQUITY

			June 30,		December 31,
			2015		2014
			(restated)		(restated)
			(unaudited)

CURRENT LIABILITIES

	Accounts payable		$	3,877,887	$	3,933,969
	Current portion of notes payable, net			427,869		121,466
	Related party payables			1,333,147		1,333,147
	Line of credit payable			3,000,000		-
	Convertible note payable			9,084,120		-
	Accrued expenses			3,326,926		2,857,597
	Payroll expenses payable			261,338		167,780
	Liabilities of discontinued operations			937,134		354,665

		Total Current Liabilities		22,248,421		8,768,624

LONG TERM LIABILITIES

	Long term portion of notes payable			-		-

		Total Liabilities		22,248,421		8,768,624

Commitments and contingencies

STOCKHOLDERS' EQUITY

	Preferred stock; 25,000,000 shares authorized
	at $0.001 par value, 400,000 and -0- shares issued
	and -0- and -0- shares outstanding, respectively			400		-
	Common stock; 500,000,000 shares authorized
	at $0.001 par value, 94,531,461 and 94,258,713
	shares issued and outstanding, respectively			94,532		94,259
	Additional paid-in capital			193,046,894		188,159,932
	Stock subscription receivable			(2,000,000)		-
	Accumulated deficit			(107,691,333)		(94,879,069)

		Total Stockholders' Equity		83,450,493		93,375,122

		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	105,698,914	$	102,143,746

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

BLUE EARTH, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)


			For the Three Months Ended				For the Six Months Ended
			June 30,				June 30,
			2015		2014		2015		2014
			(restated)		(restated)		(restated)		(restated)
REVENUES			$	3,576,400	$	1,889,184	$	7,328,414	$	3,768,352
COST OF SALES				3,208,867		1,569,616		6,631,211		2,821,242
GROSS PROFIT				367,533		319,568		697,203		947,110
OPERATNG EXPENSES
	Depreciation and amortization			1,075,146		1,076,938		2,156,725		2,025,758
	General and administrative			5,219,864		3,769,113		10,296,244		8,794,021
		Total Operating Expenses		6,295,010		4,846,051		12,452,969		10,819,779

LOSS FROM OPERATIONS				(5,927,477)		(4,526,483)		(11,755,766)		(9,872,669)
OTHER INCOME (EXPENSE)
	Other income			2,198		1,356		3,138		2,296
	Loss from equity investment			(1,064,490)		-		(1,292,050)		-
	Interest expense			(247,993)		(95,463)		(669,334)		(325,470)
	Mark futures to market			(8,284)		-		(174,555)		-
	Gain on sale of assets			1,483		2,802		9,470		14,037
	Gain (loss) on settlement of litigation			988,882		-		1,978,660		-
	TOTAL OTHER INCOME (EXPENSE)			(328,204)		(91,305)		(144,671)		(309,137)

LOSS BEFORE INCOME TAXES				(6,255,681)		(4,617,788)		(11,900,437)		(10,181,806)
INCOME TAX EXPENSE				-		-		-		-
LOSS FROM CONTINUING OPERATIONS				(6,255,681)		(4,617,788)		(11,900,437)		(10,181,806)

LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS, net of income taxes of $0				-		-		-		-
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes of $0				(249,700)		(94,054)		(911,827)		(216,496)

NET LOSS				(6,505,381)		(4,711,842)		(12,812,264)		(10,398,302)
PREFERRED DIVIDENDS				-		(1,096,815)		-		(1,489,703)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS			$	(6,505,381)	$	(5,808,657)	$	(12,812,264)	$	(11,888,005)

BASIC AND DILUTED LOSS PER SHARE
		Continuing Operations	$	(0.07)	$	(0.07)	$	(0.13)	$	(0.16)
		Discontinued Operations		(0.00)		(0.00)		(0.01)		(0.00)
		Net Loss Per Share	$	(0.07)	$	(0.07)	$	(0.14)	$	(0.16)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING BASIC AND DILUTED				93,238,604		65,782,587		93,772,326		63,866,054

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

BLUE EARTH, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)


				For the Six Months Ended
				June 30,
				2015		2014
				(restated)		(restated)
OPERATING ACTIVITIES
	Net loss			$	(12,812,264)	$	(10,398,302)
	Adjustments to reconcile net loss to net cash
	used in operating activities:
		Stock options and stock warrants issued for services			2,152,498		2,010,037
		Loss on equity subsidiary			1,292,050		-
		Impairment of construction in progress			369,039		-
		Mark gas futures to market			174,555		-
		(Gain) on settlement of litigation			(1,978,660)		-
		(Gain) on sale of assets			(9,470)		(11,235)
		Stock issued for services			567,104		1,327,034
		Depreciation and amortization			2,156,725		2,282,386
		Amortization of debt discount			1,512,953		-
	Changes in operating assets and liabilities:
		Accounts receivable and billings in excess			1,240,336		(1,173,880)
		Inventory			(122,852)		40,037
		Restricted cash			612,075		-
		Construction in progress			(371,955)		(171,226)
		Prepaid expenses and deposits			(288,341)		328,657
		Accounts payable and accrued expenses			506,805		(1,227,546)
			Net Cash Used in Operating Activities		(4,753,575)		(6,994,038)
			Net Cash Provided by Discontinued Operating Activities		245,825		317,341
INVESTING ACTIVITIES
		Collection of other receivables			90,831		-
		Proceeds from sale of equipment			9,470		-
		Purchase of equity method investment			(400,000)		-
		Lending of other receivables			-		61,795
		Purchase of property and equipment			(8,730,449)		(2,688,446)
			Net Cash Used in Investing Activities		(9,030,148)		(2,626,651)
			Net Cash Used in Discontinued Investing Activities		278,591		(17,882)
FINANCING ACTIVITIES
		Proceeds from common stock warrants and options exercised			-		5,568,957
		Cash received on stock subscriptions			-		1,145,880
		Proceeds from line of credit			2,911,700		-
		Proceeds from notes payable			9,953,068		183,622
		Repayment of notes payable and line of credit			(228,941)		(1,398,039)
		Repayment of related party loans			-		(4,004)
			Net Cash Provided by Financing Activities		12,635,827		5,496,416
			Net Cash (Used in) Discontinued Financing Activities		(107,368)		(127,785)
NET INCREASE (DECREASE) IN CASH					(878,291)		(3,952,599)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD					2,883,621		8,373,380
CASH AND CASH EQUIVALENTS AT END OF PERIOD				$	2,005,330	$	4,420,781

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

BLUE EARTH, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

(unaudited)


			For the Six Months Ended
			June 30,
			2015		2014

SUPPLEMENTAL DISCLOSURES OF
	CASH FLOW INFORMATION

	CASH PAID FOR:
		Interest	$	96,438	$	136,447
		Income taxes	$	-	$	-

	NON CASH FINANCING ACTIVITIES:
		Common stock issued upon conversion of preferred stock	$	-	$	1,884,095
		Common stock cancelled for settlement of litigation	$	(2,028,658)	$	-
		Common stock issued for acquisition of subsidiaries	$	-	$	4,602,500
		Preferred stock issued as collateral for loan	$	400	$	-
		Debt discount and conversion feature	$	2,152,498	$	-
		Debt issued for equipment	$	-	$	137,693
		Debt issuance costs paid by stock	$	226,000	$	-
		Common stock issued for subscription receivable	$	2,000,000	$	-

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

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2015 and 2014, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2014 audited financial statements, as amended. The results of operations for the periods ended June 30, 2015 and 2014 are not necessarily indicative of the operating results for the full year.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Inventory

Inventory is recorded at the lower of cost or market (net realizable value) using the average cost method. The inventory on hand as of June 30, 2015 consists of battery and battery components of $475,714. The inventory is valued net of an allowance of $6,188 as of June 30, 2015. The Company does not have any work in progress.

Use of Estimates

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

Revenue Recognition

Construction Revenues: Revenue from certain long-term, integrated project management contracts to provide solar and CHP construction and completion services is reported on the percentage-of-completion method of accounting. Progress is generally based upon physical progress related to contractually defined units of work. At the outset of each contract, we prepare a detailed analysis of our estimated cost to complete the project. Risks related to service delivery, usage, productivity, and other factors are considered in the estimation process. The recording of profits and losses on long-term contracts requires an estimate of the total profit or loss over the life of each contract. This estimate requires consideration of total contract value, change orders, and claims, less costs incurred and estimated costs to complete. Anticipated losses on contracts are recorded in full in the period in which they become evident. Profits are recorded based upon the total estimated contract profit times the current percentage completed for the contract.

Service Contracts: Revenue from service contracts is recognized once the Company has established that (i) there is evidence of an arrangement, (ii) delivery has occurred and the performance obligation is substantially complete; (iii) the fee is fixed or determinable and (iv) collection is probable.

Product Sales: Product sales revenues are recognized revenues when: (i) persuasive evidence of a sales arrangement exists, (ii) the sales terms are fixed and determinable, (iii) title and risk of loss have transferred, and (iv) collectability is reasonably assured . Generally customers are invoiced upon delivery, installation and acceptance of the product by the customer.

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued)

Recent Accounting Pronouncements

The Company has evaluated recent accounting pronouncements and their adoption has not had, nor is expected to have a material impact on the Company’s financial position, or statements.

Capitalization of Construction Period Interest

The Company capitalizes construction period interest as required under ASC 835-20. Both directly attributable borrowing costs and borrowing costs from a general fund are required to be capitalized. Until March 2015, the Company had no material interest expense. During March 2015, the Company borrowed $13,000,000 in part to fund the construction of its CHP projects. The convertible note payable and the credit line payable accrue interest at 12% per annum. The Company will capitalize the appropriate interest cost in accordance with ASC 835-20-25-8 through the completion of the construction of each project. The Company capitalized interest of $1,420,890 during the six months ended June 30, 2015.

NOTE 3 - SIGNIFICANT EVENTS

Settlement of Litigation and Disputes

During the six month period ended June 30, 2015, the Company received 2,190,484 shares of its common stock in settlement of two separate litigations and disputes valued at $0.926 per share resulting in a net gain on settlement of litigation of $1,978,658. On August 8, 2015, the Company and two consultants received the award from the arbitrator in the Company's arbitration with two of its consultants/former employees, who had voluntarily resigned. The arbitrator awarded the two consultants damages of $1,270,000; $101,243 for breach of contract; certain declaratory relief upholding the validity of the consulting agreement; and reimbursement of the consultants' attorney's fees and costs incurred in the arbitration of $341,375.

Common Stock Transactions

During the six months ended June 30, 2015, the Company issued 596,565 common shares for services valued at $567,104. The Company also issued 200,000 common shares for debt issuance costs valued at $226,000. The Company cancelled the 2,190,484 shares of its common stock it received in settlement of litigation. The Company issued a stock subscription of $2,000,000 for 1,666,667 shares of its common stock and for warrants to purchase an additional 833,334 shares of common stock for $1.60 per share. The warrants are exercisable beginning six months from the issuance date and ending 5 years after they become exercisable.

Credit Line Payable

During the six months ended June 30, 2015, the Company borrowed $3,000,000 on the line of credit. The line of credit is for up to $4,000,000 subject to approval of the use of proceeds by the lender. The line of credit accrues interest at 12% per annum and is secured by the Sumter Heat and Power CHP plant and the Melga Solar Project. The Company received net proceeds of $2,911,700 after closing costs. The Company has issued 400,000 shares of Class D convertible preferred stock as tertiary collateral for the line of credit. The $88,300 of fees withheld from the proceeds of the line of credit are included in prepaid expenses and are being amortized over the term of the line of credit.

CHP Plant Energized

On March 30, 2015 the Company energized its initial combined heat and power (“CHP”) energy plant at a poultry processing facility in Sumter, South Carolina. The Company owns and operates the energy plant which provides combined heat and power (CHP) solutions. Electricity is generated and the thermal heat from the generator is captured and utilized for processes in the poultry facility, lowering energy costs, reducing greenhouse gas emissions and improving energy efficiency. The Company realized the first revenues from CHP during June 2015.

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 3 - SIGNIFICANT EVENTS (continued)

Series D Preferred Stock

The Company has issued 400,000 shares of its $10.00 per share Series D preferred stock as tertiary collateral against the line of credit. The Series D preferred shares are issued, but not presently outstanding. The Series D preferred shares certificate is held by a third party and the lender does not have access to the certificate without the consent and cooperation of the Company. Solely in the event of a default by the Company of its payment obligations under the terms of the line of credit, a block of the Series D preferred shares would be released and converted into common shares in accordance the formula provided in the line of credit agreement. The sufficient common shares would be sold by the lender to cure the default. Upon the repayment of the line of credit the Series D preferred stock will be returned to the Company and cancelled. The Series D preferred shares are convertible into the Company’s common stock by dividing the amount of any payment under a monetary default by the average closing price of the Company’s common stock for 10 business days immediately prior to a conversion, but in no event to exceed 2,500,000 shares until first obtaining shareholder approval.

Related Party Notes Payable

The related party notes payable, totaling $1,333,147, are due on demand, accrue interest at 12% per annum and are unsecured.

Convertible Note Payable

During the six months ended June 30, 2015, the Company borrowed $10,000,000 on a convertible note payable. The note payable was convertible into shares of the Company’s common stock at $1.00 per share. However, on May 13, 2015, the convertible note payable was amended to increase the conversion price to $1.02 per share. The convertible note payable accrues interest at 12% per annum and is due on September 10, 2015. The convertible note payable is secured by all the assets of the Company except for the Sumter Heat and Power CHP plant and the Melga Solar Projectand is also guaranteed by each of the Company’s Subsidiaries, other than the two just mentioned. The Company received net proceeds of $9,953,068 after closing costs. The $46,932 in legal fees withheld from the loan proceeds are included in prepaid expenses and are being amortized over the 6 month term of the convertible note payable.

The lender received 200,000 shares of common stock valued at $226,000 as consideration for making the loan. The lender also received 2,000,000 warrants to purchase shares of the Company’s common stock at $1.02 per share (amended from $1.00 per share). The value of the warrants measured by the Company was $1,321,600. The value was computed using the Black-Scholes formula with a 5 year maturity, 1.62% risk free rate and a 94.46% volatility. The lender also received the right to purchase shares of the Company’s common stock at $1.02 per share (amended from $1.00 per share) upon the Company’s repayment of all or part of the convertible note payable. The value of the right to purchase common shares measured by the Company was $649,091. The value was computed using the Black-Scholes formula with a 1 year maturity, .25% risk free rate, a 87.06% volatility and a 5% probability of exercise. The total discount on the convertible note payable of $2,196,691 is being amortized over the 6 month term of the debt. The Company recorded $1,280,811 of capitalized interest expense from the amortization of the discount during the six months ended June 30, 2015.

The following is a summary of convertible note payable the period ended June 30, 2015:


Balance at December 31, 2014	$	--
Borrowing of convertible note payable		10,000,000
Discount on convertible note payable		(2,196,691)
Amortization of discount		1,280,811
Balance at June 30, 2015	$	9,084,120

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 4 - STOCK PURCHASE, WARRANTS AND OPTIONS

A summary of the Company’s warrant activity during the periods ended June 30, 2015 and December 31, 2014 is presented below:


				Weighted
		Weighted		Average
		Average		Remaining		Aggregate
	No. of	Exercise		Contractual		Intrinsic
	Warrants	Price		Term		Value
Balance Outstanding, December 31, 2013	22,660,668	$	1.90		6.52	$	43,055,269
Granted	200,000	$	0.00		10.00
Granted	100,000	$	1.00		10.00
Granted	8,521,654	$	6.00		3.00
Cancelled	(3,600,000)	$	(1.18)		--
Forfeited	(1,472,060)	$	(1.90)		--
Exercised	(9,778,344)	$	(1.60)		--
Balance Outstanding, December 31, 2014	16,631,918	$	3.80		5.29	$	53,353,862
Granted	2,000,000	$	1.00		5.00
Granted	300,000	$	1.08		5.00
Granted	833,334	$	1.60		5.00
Balance Outstanding, June 30, 2015	19,765,252	$	3.16		4.41	$	62,385,196
Exercisable, June 30, 2015	16,724,775	$	3.38		3.94	$	56,467,004

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 4 - STOCK PURCHASE, WARRANTS AND OPTIONS (continued)

A summary of the Company’s option activity during the periods ended June 30, 2015 and December 31, 2014 is presented below:


					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	No. of		Exercise		Contractual		Intrinsic
	Options		Price		Term		Value
Balance Outstanding, December 31, 2013		1,011,290	$	1.85		8.22	$	1,851,695
Granted		1,500,000	$	2.00		10
Granted		150,000	$	3.00		10
Granted		120,000	$	2.45		10
Granted		60,000	$	2.27		10
Granted		105,000	$	3.10		10
Granted		60,000	$	2.45		10
Granted		100,000	$	2.54		10
Granted		10,000	$	1.29		10
Granted		52,720	$	1.37		10
Granted		5,000	$	0.75		10
Forfeited		(492,119)	$	(3.37)		--
Exercised		(85,024)	$	(1.36)		--
Balance Outstanding, December 31, 2014		2,596,867	$	2.54		8.82		6,596,037
Granted		30,000	$	1.20		10
Granted		100,000	$	1.01		10
Granted		12,500	$	1.21		10
Granted		5,000	$	0.98		10
Granted		15,000	$	0.97		10
Granted		7,500	$	0.90		10
Granted		5,000	$	0.92		10
Granted		35,000	$	1.11		10
Granted		74,000	$	1.15		10
Forfeited		(68,513)	$	(2.24)		--
Balance Outstanding, June 30, 2015		2,812,354	$	2.42		8.41	$	6,804,139
Exercisable, June 30, 2015		1,379,194	$	1.96		8.01	$	2,697,170

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows the provisions of ASC 820 for fair value measurements of all nonfinancial assets and nonfinancial liabilities not recognized or disclosed at fair value in the financial statements on a recurring basis. The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting standard established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

There were no changes in the valuation techniques during the periods ended June 30, 2015 and December 31, 2014. The estimated fair value of certain financial instruments, including cash and cash equivalents and current liabilities, are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

Assets:

On December 15, 2014, the Company purchased 639.25 natural gas option contracts for $2,429,150, to mitigate its exposure to fluctuations in natural gas price in connection with its CHP facility in Alberta, Canada. The gas delivery dates range from January 1, 2016 to December 31, 2022. At each reporting date the Company revalues the options to the NYMEX-NG last trade value. The Company recorded a loss of $174,555 and $-0- for the six months ended June 30, 2015 and 2014, respectively, on the value of contracts.

Assets measured at fair value on a recurring and non-recurring basis consisted of the following at June 30, 2015:

Liabilities:

Total Carrying

Value at

June 30, 2015

(Level 1)

(Level 2)

(Level 3)

Natural gas futures

2,251,711

The following is a summary of activity of Level 1 assets for the periods ended June 30, 2015 and December 31, 2014:


Balance at December 31, 2013	$	--
Purchases of futures contracts		2,429,150
Change in fair value 2014		(2,884)
Balance at December 31, 2014		2,426,266
Purchases of futures contracts		--
Change in fair value 2015		(174,555)
Balance at June 30, 2015	$	2,251,711

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 6 - PROPERTY AND EQUIPMENT

The major classes of assets as of June 30, 2015 and December 31, 2014 are as follows:


	June 30, 2015			December 31, 2014
Office and computer equipment	$	350,609	$	327,023
Software		91,256		91,256
Manufacturing and installation equipment		455,150		442,450
Leasehold improvements		-		759,304
Cogeneration plants		65,334,429		56,022,580
Vehicles		-		-
Sub Total		66,231,444		57,642,613
Accumulated depreciation		(576,851)		(826,987)
Net	$	65,654,593	$	56,815,626

Depreciation expense was $58,634 and $66,316, for the six months ended June 30, 2015 and 2014, respectively. Approximately $65,908,133 of the Company’s property and equipment serves as security against its debt. Depreciation of the cogeneration plants commenced when the Sumter plant was placed in service during the second quarter of 2015. Depreciation on additional plants will commence when they are placed in service.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Arbitrations

During 2014, the Company and two consultants filed demands for arbitration with the American Arbitration Association. On August 8, 2015, the Company and two consultants received the award from the arbitrator in the Company's arbitration with two of its consultants/former employees, who had voluntarily resigned. The arbitrator awarded the two consultants damages of $1,270,000; $101,243 for breach of contract; certain declaratory relief upholding the validity of the consulting agreement; and reimbursement of the consultants' attorney's fees and costs incurred in the arbitration of $341,375. The award is a Type 1 subsequent event accordingly the Company’s financial statements are restated to reflect the award on a retroactive basis.

During 2014 the Company filed a demand for arbitration with the American Arbitration Association and National Energy Partners LLC (“NEP”) and its subsidiary, Hawaii Solar LLC (“HS”) counterclaimed. The Company subsequently initiated two actions in the First Circuit Court of the State of Hawaii, the first titled Xnergy and Blue Earth, Inc. vs. Hawaii Solar, LLC. National Energy Partners, LLC, et al., Civil No. M-1-1694-08 (JHC) (the “Xnergy Action’) and the second titled Blue Earth Solar, Inc. vs. State of Hawaii, Department of Education, et al. The parties agreed to attempt to resolve their dispute through arbitration administered by Dispute Prevention and Resolution (the “DOE Action”). On August 30, 2015, the parties to the above Xnergy Action, DOE Action and DPR Arbitration entered into a Settlement Agreement and Release and a Lock-Up/Leak-Out Agreement conditioned upon subsequent Board of Directors approval by the Company which was obtained on September 3, 2015. The Settlement Agreement provides for the Company to: (a) pay $500,000 to HS (a portion of which will be paid by the Company’s insurance carrier), and (b) issue shares valued at $325,000 at a price of $0.88 per share to be registered with the SEC within sixty (60) days of the issuance of the shares. Pursuant to the terms and conditions of the Lock-Up/Leak-Out Agreement, all shares will be restricted for six (6) months, unless registered sooner and upon registration or expiration of the six-month period, seller may sell up to 10,000 shares per day and 50,000 shares per week on a non-cumulative basis. The parties exchanged mutual releases and will dismiss all claims upon payment to HS. The settlement is a Type 1 subsequent event accordingly the Company’s financial statements are restated to reflect the award on a retroactive basis.

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 7 - COMMITMENTS AND CONTINGENCIES (continued)

Equipment Purchase Commitments

The Company has entered into equipment purchase agreements whereby it has committed to paying approximately $19,536,518 for electrical co-generation equipment. The Company has made deposits of approximately $16,183,490 (83% of the total commitment) toward the purchase of the equipment which is included in construction in progress-property and equipment. The balance of the purchase price will be due upon acceptance of the equipment by the Company in accordance with progress payments as set out in the purchase contracts.

Pending Litigation

On October 24, 2014, a purported class action lawsuit was filed against the Company, two executive officers, and one non-executive officer in the U.S. District Court for the Central District of California (Case No:2:14-cv-08263). On January 21, 2015, the court appointed a Lead Plaintiff and Lead Plaintiff’s Counsel. The Court also re-captioned the case In re Blue Earth, Inc. Securities Litigation, File No. CV 14-8263 DSF (JEMx). On March 13, 2105, plaintiff filed a First Amended Complaint (“FAC”). The FAC alleges claims under Sections 10(b) and 20(a) of the Exchange Act, and a purported class of purchasers of the Company’s stock during the period from October 7, 2013 through October 21, 2014. Defendants responded and filed a motion to dismiss FAC. Plaintiff’s opposition to the motion has been submitted and Defendants have submitted a reply to the opposition. Oral arguments regarding the motion to dismiss are scheduled for October 2015. The Company believes the claims contained in the complaint are without merit and is vigorously defending the matter.

On August 31, 2015, a derivative lawsuit was filed in Nevada state court, captioned Powell v. Cagan, et al., No. A-15-723839-C (8th Judicial District Court, Clark County, Nevada). It names as defendants Brett Woodard, Johnny R. Thomas, John C. Francis, and the entire Board of Directors. It also names the Company as a nominal defendant. The complaint brings claims for breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, from October 2013 to the present based on directors and management allegedly allowing the company to make false and misleading statements to the public, thereby resulting in a class action lawsuit and exposing the Company to damages. The defendants have not yet been served. The Company believes the claims contained in the complaint are without merit and will vigorously defend this matter.

NOTE 8 - DISCONTINUED OPERATIONS

During April 2015, the Company’s Board of Directors determined to focus the Company’s financial resources on its business units that are scalable. Accordingly the Board of Directors decided to discontinue the Blue Earth Energy Management Services, Inc. (BEEMS) subsidiary. The decision was to sell any parts of BEEMS for which a buyer could be found and to shut down those parts that were not salable. On May 22, 2015, the Company entered into an Asset Purchase Agreement (the Agreement) for the website component of BEEMS. Pursuant to the Agreement, the buyers purchased from the Company, the website, the related inventory and certain intangible assets for cash of $450,000 and $125,000 in the form of a promissory note. Accordingly, the Company’s financial statements have been retroactively restated for all periods presented to reflect the assets, liabilities and operations of BEEMS as discontinued. On July 31, 2015, the Company entered into an Asset Purchase Agreement (APA) for the service component of BEEMS. Pursuant to the APA, the buyers purchased the service vehicles, service assets and contracts and related inventory for cash of $216,711 plus a two-year earn-out agreement for up to an additional $250,000.

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 8 - DISCONTINUED OPERATIONS (continued)

The following is a summary of the transactions:


Sales Price	$	790,771
Inventory		(105,612)
Intangible assets		(245,825)
Commission paid		(40,250)
Vehicles net book value		(38,082)
Gain on sale of website and service and installation division		361,002
Impairment of net assets of BEEMS		(956,618)

Loss on Disposal of Discontinued Operations	$	(595,616)

Revenues of the discontinued operations were $3,227,539 and $3,026,437 during the six months ended June 30, 2015 and 2014, respectively.

NOTE 9 - OPERATING SEGMENTS

Operating segments are defined as components of an enterprise about which separate and discreet financial information is available and is evaluated regularly by the chief operating decision-maker in assessing performance and determining how to best allocate Company resources. The Company’s chief operating decision makers direct the allocation of resources to operating segments based on the business plan, budgets, profitability and cash flows of each respective segment.

The Company historically has had two principal operating segments: (1) technology and (2) construction of energy facilities owned by third parties. During the second quarter of 2015, a third segment was introduced when power and heat was produced from facilities built and owned by the Company. These operating segments were delineated based on the nature of the products and services offered.

The Company evaluates the financial performance of the respective segments based on several factors, of which the primary measure is business segment income before taxes. All significant intercompany transactions and balances have been eliminated. No restatement of prior period operating segments is necessary as a result of the new third segment. The following tables show the operations of the Company’s reportable segments for the six months ended June 30, 2015 and 2014:


						Heat and Power
		Technology		Construction		Production		Corporate		Consolidated
June 30, 2015
Revenues	$	248,270	$	7,078,545	$	1,599	$	-	$	7,328,414
Cost of Sales		232,591		6,398,620		-		-		6,631,211
Depreciation and amortization		449,315		937,210		549		769,651		2,156,725
General and administrative		1,268,165		3,479,360		13,893		5,534,825		10,296,244
Other income (expense)		(43,131)		8,870		(174,554)		64,143		(1,444,671)
Discontinued operations		-		-		-		(911,827)		(911,827)
Net income (loss)	$	(1,744,932)	$	(3,727,775)	$	(187,397)	$	(7,152,160)	$	(12,812,264)
Total assets	$	2,578,514	$	30,026,314	$	23,788,451	$	49,305,635	$	105,698,914

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 9 - OPERATING SEGMENTS (continued)


						Heat and Power
		Technology		Construction		Production		Corporate		Consolidated
June 30, 2014
Revenues	$	281,235	$	3,487,117	$	-	$	-	$	3,768,352
Cost of Sales		139,923		2,681,319		-		-		2,821,242
Depreciation and amortization		685,683		943,686		-		396,389		2,025,578
General and administrative		1,325,794		1,961,396		-		5,506,832		8,794,201
Other income (expense)		(26,800)		158,059		-		(440,396)		(309,137)
Discontinued operations		-		-		-		(216,496)		(216,496)
Net income (loss)	$	(1,896,965)	$	(1,941,225)	$	-	$	(6,560,112)	$	(10,398,302)
Total assets	$	1,496,514	$	7,619,491	$	-	$	79,072,866	$	88,188,871

NOTE 10 - INVESTMENT IN EQUITY SUBSIDIARY

On October 30, 2014, the Company closed on an agreement to acquire shares of PowerGenix common stock for $10 million payable through a combination of cash ($2 million) and Company restricted common shares (3,729,604) valued at $2.145 per share. The restricted shares are subject to a lock up/leak out agreement. Reciprocal equity ownership is designed to fund PowerGenix and maximize the working relationship between the two companies. The Company’s ownership constitutes 24.4% of the equity of PowerGenix.

The Company has been granted exclusive marketing rights to use the proprietary PowerGenix Nickel-Zinc (“NiZn”) batteries to produce intelligent digital NiZn energy storage systems using the Company’s proprietary intellectual property for a number of market verticals including: Stationary UPS Systems in the Data Center, Military, Telecom, Utility, Renewable Energy, Motor Start-Up, Frequency Regulation, Peak Shaving/Shifting and Demand Shifting market segments. The marketing rights are global for most market verticals.

During the six months ended June 30, 2015, PowerGenix realized a net loss of $5,622,397. Accordingly the Company recognized 24.4% of the net loss in the amount of $1,292,050. During the six months ended June 30, 2015, the Company completed its cash obligation by investing an additional $400,000 into PowerGenix.

Summarized financial information as of June 30, 2015 and for the six months then ended of PowerGenix is presented as follows:


Total Assets	$ 3,295,020
Total Liabilities	$ 4,337,921
Net Income (Loss)	$ (5,622,397)

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 11 - RESTATED FINANCIAL STATEMENTS

The Company has restated its financial statements to present on a retroactive basis the effect of several Type 1 subsequent events including the resolution of certain litigation and the discontinuance of a significant component of its operations. This restatement is prepared in accordance with Topic 13 of the Financial Reporting Manual of the Securities and Exchange Commission.

The restated financial statements reflect the accrual of $2,437,618 of losses associated with the settlement of litigation subsequent to December 31, 2014 on a retroactive basis as of and for the year ended December 31, 2014. The restated financial also reflect the reclassification of the assets, liabilities and operations of BEEMS to discontinued operations.

The following table presents a summarized comparison of the original consolidated balance sheets to the restated balance sheets:


BLUE EARTH, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
			June 30,		June 30,		December 31,		December 31,
			2015		2015		2014		2014
			(restated)		(original)		(restated)		(original)
			(unaudited)
CURRENT ASSETS			$	9,791,703	$	9,791,703	$	11,362,284	$	11,362,283
PROPERTY AND EQUIPMENT, net				65.654,594		65,654,593		56,815,626		56,815,626
DISCONTINUED OPERATIONS				995,583		1,591,200		1,221,631		1,817,247
OTHER ASSETS				29,257,035		29,257,035		32,744,205		32,744,205
		TOTAL ASSETS	$	105,698,914	$	106,294,531	$	102,143,746	$	102,739,361
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES			$	21,311,287	$	20,444,911	$	8,413,959	$	5,976,340
LIABILITIES OF DISCONTINUED OPERATIONS				937,134		937,134		354,665		354,664
		Total Liabilities		22,248,421		21,382,045		8,768,624		6,331,004
STOCKHOLDERS' EQUITY
	Preferred stock; 25,000,000 shares authorized
	at $0.001 par value, 400,000 and -0- shares issued
	and -0- and -0- shares outstanding, respectively			400		400		-		-
	Common stock; 500,000,000 shares authorized
	at $0.001 par value, 94,531,461 and 94,258,713
	shares issued and outstanding, respectively			94,532		94,532		94,259		94,259
	Additional paid-in capital			193,046,894		193,046,894		188,159,932		188,159,932
	Stock subscription receivable			(2,000,000)		(2,000,000)		-		-
	Accumulated deficit			(107,691,333)		(106,229,340)		(94,879,069)		(91,845,834)
		Total Stockholders' Equity		83,450,493		84,912,486		93,375,122		96,408,357
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	105,698,914	$	106,294,531	$	102,143,746	$	102,739,361

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 11 - RESTATED FINANCIAL STATEMENTS (continued)

The following table presents a summarized comparison of the original consolidated statements of operations to the restated statements of operations:


BLUE EARTH, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
		For the Six Months Ended
		June 30,
		2015		2015		2014		2014
		(restated)		(original)		(restated)		(original)
REVENUES		$	7,328,414	$	7,328,414	$	3,768,352	$	3,768,352
COST OF SALES			6,631,211		6,631,211		2,821,242		2,821,242
GROSS PROFIT			697,203		697,203		947,110		947,110
OPERATNG EXPENSES			12,452,969		12,452,968		10,819,779		10,819,779
LOSS FROM OPERATIONS			(11,755,766)		(11,755,765)		(9,872,669)		(9,872,669)
OTHER INCOME (EXPENSE)			(144,671)		(1,715,914)		(309,137)		(309,137)
LOSS BEFORE INCOME TAXES			(11,900,437)		(13,471,679)		(10,181,806)		(10,181,806)
INCOME TAX EXPENSE			-		-		-		-

LOSS FROM CONTINUING OPERATIONS			(11,900,437)		(13,471,679)		(10,181,806)		(10,181,806)

LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS, net of income taxes of $0			-		(207,473)		-		-
LOSS FROM DISCONTINUED OPERATIONS, net of income taxes of $0			(911,827)		(704,354)		(216,496)		(216,495)

NET LOSS			(12,812,264)		(14,383,506)		(10,398,302)		(10,398,301)

PREFERRED DIVIDENDS			-		-		(1,489,703)		(1,489,703)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS		$	(12,812,264)	$	(14,383,506)	$	(11,888,005)	$	(11,888,004)

BASIC AND DILUTED LOSS PER SHARE
	Continuing Operations	$	(0.13)	$	(0.14)	$	(0.16)	$	(0.16)
	Discontinued Operations		(0.01)		(0.01)		(0.00)		(0.00)

	Net Loss Per Share	$	(0.14)	$	(0.15)	$	(0.16)	$	(0.16)

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING BASIC AND DILUTED			93,772,326		93,772,326		63,866,054		63,866,054

BLUE EARTH, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated

Financial Statements

(Unaudited)

NOTE 12 - SUBSEQUENT EVENTS

On July 2, 2015, the Company collected the $2,000,000 stock subscription receivable. On July 13, 2015, the Company issued 13,158 shares of its common for consulting services. On July 17, 2015, the Company granted 250,000 common stock purchase warrants to consultants. The warrants have an exercise price of $1.02 per share and a term of 3 years. On July 27, 2015 the Company issued 12,500 shares of its common stock to a director for his services. On August 3, 2015, the Company granted 440,000 non-qualified stock option shares to an employee. The shares have an exercise price of $0.87 per share. 110,000 shares will vest immediately and 110,000 shares shall vest on first, second and third anniversary dates of employment.

On July 17, 2015 the Company’s shareholders approved an increase in the authorized shares of common stock under the 2009 Equity Incentive Plan from 4,542,000 to 8,542,000 shares. The current market value of such common stock was $1.51 per share, as of May 26, 2015. The 2009 Plan is intended to encourage stock ownership by the Company’s directors, officers, employees and consultants, and of its subsidiaries, and thereby enhance their proprietary interest in the Company. The Company amended its Registration Statement on Form S-8 to register the additional options and underlying common stock issuable under the 2009 Plan.

On July 31, 2015, the Company sold the majority of the remaining BEEMS business assets for cash of $216,771 and the assumption of the liabilities for the BEEMS service vehicles. The insignificant remainder of the BEEMS operations will be liquidated or absorbed into other segments of the Company’s operations.

In accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material subsequent events to report.

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

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. All statements other than statements of historical facts included in this report are forward-looking statements. These statements relate to future events or to the Company’s future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our 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. Readers should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond the Company’s control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Such risks, uncertainties and other factors, which could impact the Company and the forward-looking statements contained herein are included in the Company’s filings with the Securities and Exchange Commission. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

LITIGATION DISCLOSURE STATEMENT

False allegations have been made against the Company by an anonymous blogger that stated he has a short position in the Company’s common stock, which has resulted in a class action lawsuit. The Company has hired professionals to assist in communications and defense against the false allegations. Management has been advised by counsel to continue to announce significant developments and milestones as they occur. However, management has also been cautioned to avoid forecasts and detailed forward-looking statements for all of our solar, energy efficiency, technology and CHP business units. Our general policy will be to release information as appropriate when significant events occur that define the event in the context of our business model. Management continues to have confidence in our business model and in our ability to create shareholder value over time.

The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Company Overview

Blue Earth, Inc. and subsidiaries (the “Company”) is a comprehensive provider of alternative/renewable power generation solutions for small and medium sized commercial facilities and industrial facilities. The Company also owns, manages and operates independent power generation systems constructed in conjunction with these services.

The Company has expanded its comprehensive power generation solutions offerings through strategic acquisitions of companies that have been providing energy solutions to an established customer base or have developed a proprietary technology that can be utilized by our customers to improve equipment reliability, reduce maintenance costs and provide a better overall operating environment. The acquired companies’ operational activities are being conducted through the following five business units: Blue Earth Solar; Blue Earth CHP; Blue Earth PPS, Blue Earth Capital and Blue Earth EPS. Blue Earth EPS and Blue Earth PPS are part of the Technology operating segments. Blue Earth Solar and Blue Earth CHP are part of the Construction operating segments.

As heat and power sales come online from facilities owned and built by the Company’s Blue Earth CHP and Blue Earth Solar business units, a third operating segment has been introduced called Heat and Power Production. The primary strategic objective for the respective business units is to provide services which establish and build brand awareness about the comprehensive alternative/renewable power generation solutions provided by the Company to its existing and future customers.

The Blue Earth Solar unit of the Company has built and owned a 500,000 watt solar powered facility on the Island of Oahu, Hawaii, which it sold in 2014. It has also built, operates and manages seven solar powered facilities in California and is designing and permitting numerous other projects. Our turnkey power solutions enable our customers to reduce or stabilize their power related expenditures and lessen the impact of their power use on the environment. Our services offered include the development, engineering, construction, operation and periodic warranty maintenance and in certain cases, financing of small and medium scale renewable power plants primarily solar photovoltaic (PV). Although the Company has a limited operating history and limited revenues in comparison to the size of the projects it has undertaken, as a result of the Company’s acquisitions, it is staffed with experienced solar personnel.

The Blue Earth CHP unit builds, owns, operates and/or sells the power plants or builds them for the customer to own. As we continue to expand our core power generation business as an independent power producer (IPP), we intend to sell the electricity, hot water, heat and cooling generated by the power plants that we own under long-term energy purchase agreements to utilities and long-term take or pay contracts to our industrial customers. The Company also intends to finance alternative and renewable power projects through industry relationships. Our first power plant located in Sumter, SC was energized on March 30, 2015 establishing the Company as an independent power producer. Blue Earth CHP added personnel and facilities enabling it to develop, construct and maintain backup generators and cogeneration systems in the New York metropolitan area. It plans to grow the segment into other East Coast and Mid-West metropolitan markets. This broadens BE CHP’s offerings to include co-generation systems and back-up generators for large commercial buildings in addition to the large industrial manufacturing facilities already served by BE CHP.

Proprietary technologies owned by the Company are the PeakPower® System (Blue Earth PPS unit) and the UPStealth® System (Blue Earth EPS unit). The PeakPower® System is a patented demand response, cloud based technology, that allows remote, wireless monitoring of refrigeration units, lighting and heating, ventilation and air conditioning with a potential market of thousands of facilities, such as super markets and food processing, restaurants and C-stores, drug and discount stores. The technology enables the Company’s business unit, Blue Earth PPS, to provide energy monitoring and control solutions with real-time decision support to protect our customers’ assets by preventing costly equipment failures and food product losses. Our PeakPower® System also serves as a platform to enter into long-term services agreements that allow most types of refrigeration equipment failures to be predicted, thereby enabling preventive servicing based on need rather than periodic, unscheduled and costly service calls.

Management believes based on its knowledge of the industry, that the patent pending UPStealth® System is the only energy efficient, intelligent Nickel Zinc digital battery backup management system that was designed to power signalized traffic intersections during loss of utility power. This system has been tested, approved and installed in several cities and municipalities throughout the United States. The UPStealth® System is designed as an alternative to lead-acid battery backup systems, enabling the Company’s business unit, Blue Earth EPS, to provide its customers with an environmentally friendly product that is completely recyclable with no issues of hazardous out-gassing, corrosion, flammable or explosive characteristics. The innovative UPStealth® battery backup management system can be formed in various configurations that allow the intelligent battery to bend around corners and fit into spaces that cannot be accessed by traditional battery backup systems. Compared to lead-acid battery backup systems, the total cost of ownership for the UPStealth® is typically less, requires less maintenance, performs several years longer, and eliminates costly hazardous disposal issues. We also offer a finance program, which allows cities and municipalities to replace existing systems without capital expenditures.

There are several other market verticals where we believe both of our proprietary technologies can be applied, separately, or in combination, as a viable, cost effective solution. Examples include: back-up energy storage systems for data centers, oil and natural gas wells, remote cell towers, risk management services, and demand response systems to decrease energy usage during peak load pricing periods charged by utilities.

Actual Results of Operations

Our revenues are derived from professional service contracts to provide, the construction of energy facilities owned by third parties and the sale of our proprietary technologies. During the second quarter of 2015 we added the third revenue stream, Power Genereration, from heat and power sales generated from facilities built and owned by the Company. During the second quarter of 2015 we discontinued the Blue Earth Energy Management, Inc. (BEEMS) business unit as the Company is focusing its efforts and resources on its core energy generation business units. All of the operating results as presented below have been restated to reflect the operations of as discontinued.

Three Months Ended June 30, 2015 Compared with Three Months Ended June 30, 2014

Revenues

The Company recognized $3,576,400 of revenue for the three months ended June 30, 2015, as compared to $1,889,184 for the three months ended June 30, 2014, an increase of $1,687,216 or 89%. The current year’s revenues represent sales from the Company’s divisions Technology ($194,417), Construction ($3,380,384) and Power Generation ($1,599). During the second quarter of 2015, we added the third revenue stream, Power Generation, from heat and power sales generated from facilities built and owned by the Company. The prior year’s revenues represent sales from the Company’s divisions Technology ($228,378) and Construction ($1,660,808). Technology sales include the UPStealth® battery backup management systems. Construction sales are from installation of alternative energy systems and maintenance of CHP systems. Construction's revenues increased due to work on the solar generation project in Indiana.


	Three Months Ended June 30,				Change
	2015		2014		$		%
Technology	$	194,417	$	228,376		33,959		15
Construction
Solar construction		3,380,384		1,660,808		1,719,576		104
Power generation		1,599		-		1,599		100

Total revenue	$	3,576,400	$	1,889,184		1,687,216		89

Cost of Sales and Gross Profit

Costs of sales for the three months ended June 30, 2015 were $3,208,867 resulting in a gross profit of $367,533 or 10% of revenues. Technology had a gross profit of $5,586 or 3% compared to a profit of $360,348 or 11% for Construction. By comparison, during 2014 we had a cost of sales of $1,569,616 with a gross profit of $319,568 or 17%. Technology had a gross profit of $138,671 or 61% compared to $180,897 or 11% for Construction. Power Generation had a gross profit of $1,599 in 2015 compared to $-0- in 2014.

Operating Expenses

General and Administrative Expenses and Depreciation and Amortization Expense

Operating expenses were $6,295,010 for the three months ended June 30, 2015 as compared to $4,846,051 for the three months ended June 30, 2014, an increase of $1,448,959 or 30%. In 2015, approximately $707,006 (11%) of the operating expenses were from Technology, $2,440,018 (39%) were from Construction and $14,442 (0%) from Power Generation. The balance of $3,133,544 (50%) for 2015 was corporate administrative expense. Approximately $1,299,937 (21%) of the operating expenses was for payroll costs and $1,488,555 (24%) was for consulting and professional fees in 2015. The increase in operating expenses for 2015 was primarily due to an increase in professional fees as a result of the ongoing litigation and fees paid to employment agencies.

In 2014 approximately $1,589,222 (33%) of the operating expenses were from Technology and $1,463,502 (30%) were from Construction. The balance of $1,793,327 (37%) for 2014 was corporate administrative expense. Approximately $1,260,638 (26%) of the operating expenses was for payroll costs and $841,848 (17%) was for professional fees in 2014.

In 2015, operating expenses include stock compensation expense of $972,290 (15%) compared to $1,476,802 (30%) in 2014. We recorded depreciation and amortization expense of $1,075,146 in 2015 compared to $1,076,938 in 2014.

We expect our costs for personnel, consultants and other operating expenses to increase as we implement our business plan. Thus, our general and administrative expenses are likely to increase significantly in future reporting periods.

Other Income (Expense)

Total other income (expense) for the three months ended June 30, 2015 was $(328,204) compared to $(91,305) for the three months ended June 30, 2014. The increase was primarily attributable to interest expense of $247,993and a loss from the equity investment in Power Genix of $1,064,490 offset by a gain on settlement of litigation of $988,882 compared to $95,463, $-0- and $-0-, respectively, during 2014.

Net Loss Attributable to Common Shareholders

Net loss was $6,505,381 for the three months ended June 30, 2015 as compared with a net loss of $4,711,842 for the three months ended June 30, 2014, an increase of $1,793,539. Excluding the non cash expenses of common stock issued for services and from the amortization of intangible assets acquired for stock and stock options/warrants issued for services, the loss would have been $4,449,788 and $2,185,994 for 2015 and 2014, respectively. The increase in operating expenses for 2015 was primarily due to an increase in professional fees as a result of the ongoing litigation and fees paid to employment agencies.

The net loss attributed to common shareholders was $6,505,381 in 2015 compared to $5,808,657 in 2014 due to the dividends of $1,096,815 accrued on the Series C preferred stock and paid in common shares during 2014. The Series C preferred shares were all converted into common shares by June 30, 2014 so no additional dividends were incurred in the succeeding periods. The net loss translates to $0.07 per share in 2015 ($0.00 per share from discontinued operations) compared to $0.07 ($0.00 per share from discontinued operations) in 2014.

Six Months Ended June 30, 2015 Compared with Six Months Ended June 30, 2014

Revenues

The Company recognized $7,328,414 of revenue for the six months ended June 30, 2015, as compared to $3,768,352 for the six months ended June 30, 2014, an increase of $3,560,062 or 94%. The current year’s revenues represent sales from the Company’s divisions Technology ($248,270), Construction ($7,078,545) and Power Generation ($1,599). During the second quarter of 2015, we added the third revenue stream, Power Generation, from heat and power sales generated from facilities built and owned by the Company. The prior year’s revenues represent sales from the Company’s divisions Technology ($281,235) and Construction ($3,487,117). Technology sales include the UPStealth® battery backup management systems. Construction sales are from installation of alternative energy systems and maintenance of CHP systems. Construction's revenues increased due to work on the solar generation project in Indiana.


	Six Months Ended June 30,				Change
	2015		2014		$		%
Technology	$	248,270	$	281,235		(32,965)		(12)
Construction
Solar construction		7,078,545		3,487,117		3,591,428		103
Power generation		1,599		-		1,599		100

Total revenue	$	7,328,414	$	3,768,352		3,560,062		94

Cost of Sales and Gross Profit

Costs of sales for the six months ended June 30, 2015 were $6,631,211 resulting in a gross profit of $697,203 or 10% of revenues. Technology had a gross profit of $15,679 or 6% compared to a profit of $679,925 or 10% for Construction. By comparison, during 2014 we had a cost of sales of $2,821,242 with a gross profit of $947,110 or 25%. Technology had a gross profit of $141,312 or 50% compared to $805,798 or 23% for Construction. Power Generation had a gross profit of $1,599 in 2015 compared to $-0- in 2014.

Operating Expenses

General and Administrative Expenses and Depreciation and Amortization Expense

Operating expenses were $12,452,969 for the six months ended June 30, 2015 as compared to $10,819,779 for the six months ended June 30, 2014, an increase of $1,633,190 or 15%. In 2015, approximately $1,717,480 (14%) of the operating expenses were from Technology, $4,416,570 (35%) were from Construction and $14,442 (0%) from Power Generation. The balance of $6,304,477 (51%) for 2015 was corporate administrative expense. Approximately $2,837,394 (23%) of the operating expenses was for payroll costs and $2,432,647 (20%) was for consulting and professional fees in 2015. The increase in operating expenses for 2015 was primarily due to an increase in professional fees as a result of the ongoing litigation and fees paid to employment agencies.

In 2014 approximately $2,011,477 (18%) of the operating expenses were from Technology and $2,905,082 (27%) were from Construction. The balance of $5,903,220 (55%) for 2014 was corporate administrative expense. Approximately $2,642,105 (24%) of the operating expenses was for payroll costs and $2,381,345 (22%) was for professional fees in 2014.

In 2015, operating expenses include stock compensation expense of $2,678,281 (22%) compared to $3,337,071 (31%) in 2014. We recorded depreciation and amortization expense of $2,156,725 in 2015 compared to $2,025,758 in 2014.

Other Income (Expense)

Total other income (expense) for the six months ended June 30, 2015 was $(144,671) compared to $(309,137) for the six months ended June 30, 2014. The increase was primarily attributable to a gain of $1,978,660 from the settlement of threatened and actual litigation in the first half of 2015 compared to $-0- in the second quarter of 2014. The gain on the settlement of the litigation was offset by a loss from the equity investment in Power Genix of $1,292,050 in the first half of 2015.

Net Loss Attributable to Common Shareholders

Net loss was $12,812,264 for the six months ended June 30, 2015 as compared with a net loss of $10,398,302 for the six months ended June 30, 2014, an increase of $2,413,962. Excluding the non cash expenses of common stock issued for services and from the amortization of intangible assets acquired for stock and stock options/warrants issued for services, the loss would have been $8,257,216 and $6,105,878 for 2015 and 2014, respectively. The increase in operating expenses for 2015 was primarily due an increase in professional fees as a result of the ongoing litigation and fees paid to employment agencies.

The net loss attributed to common shareholders was $12,812,264 in 2015 compared to $11,888,005 in 2014 due to the dividends of $1,489,703 accrued on the Series C preferred stock and paid in common shares during the six months ended June 30, 2014. The Series C preferred shares were all converted into common shares by June 30, 2014 so no additional dividends were incurred in the succeeding periods. The net loss translates to $0.14 per share in 2015 ($0.01 per share from discontinued operations) compared to $0.16 ($0.00 per share from discontinued operations) in 2014.

Liquidity and Capital Resources as of June 30, 2015 compared with December 31, 2014

Net cash used in continuing operating activities during the six months ended June 30, 2015 totaled $4,753,575 and resulted primarily from the operating expenses associated with the activities of the parent company related to carrying out our business plan. In addition to a net loss of $12,812,264, we incurred an increase in construction in progress of $371,955 and prepaid expenses of $288,341 that was partially offset by common stock options and warrants granted for services expensed at $2,152,498, common stock issued for services valued at $567,104 and depreciation and amortization of $2,402,550. We also decreased our accounts receivable by $1,240,336, restricted cash by $612,075 and increased accounts payable by $506,805. We expect to continue with a negative cash flow from operations for the foreseeable future as we continue to build our business.

Net cash used in continuing operating activities during the six months ended June 30, 2014 totaled $6,994,038 and resulted primarily from the operating expenses associated with the activities of the parent company related to carrying out our business plan. In addition to a net loss of $10,398,302, we incurred an increase in accounts receivable and billings in excess of $1,173,880 and a decrease in accounts payable of $1,227,546. These outflows were partially offset by common stock warrants and options granted for services expensed at $2,010,037, common stock issued for services valued at $1,327,034, and depreciation and amortization of $2,282,386.

Net cash used in continuing investing activities during the six months ended June 30, 2015 totaled $9,030,148 which included $8,730,449 for purchases of equipment and $400,000 invested in an equity subsidiary. Net cash used in continuing investing activities during the six months ended June 30, 2014 totaled $2,626,651, of which $2,688,446 was used for purchases of equipment.

Net cash provided by continuing financing activities during the six months ended June 30, 2015 totaled $12,635,827 and resulted from $2,911,700 of proceeds from the line of credit and $9,953,068 of proceeds from the convertible note payable. The cash inflows were partially offset by principal payments on notes payable of $228,941. Net cash provided by financing activities during the six months ended June 30, 2014 totaled $5,496,416. These inflows primarily came from $5,568,957 from common stock subscriptions and $1,145,880 of gross proceeds from the exercise of options and warrants. The inflows were offset by payments on notes payable of $1,398,039 and notes payable to related parties of $4,004.

At June 30, 2015, we had a working capital deficit of $11,461,135 including $2,005,330 in cash and cash equivalents compared with working capital of $3,815,291 at December 31, 2014. We anticipate our revenue generating activities to continue and even increase as we execute on our alternative/renewable energy and energy efficiency initiatives as well as from future acquisitions. The decrease in working capital was the result of our investment in CHP projects.

Our ability to execute our business plan is subject to our ability to generate profits and/or obtain necessary funding from outside sources, including by the sale of our securities, or obtaining loans from lenders, where possible. Our continued net operating losses increase the difficulty of our meeting these goals. Nonetheless, the Company expects that it has sufficient cash and fund raising capacity to meet its working capital needs for at least the next 12 months. The Company’s project financing requirements are separate and apart from our working capital needs.

On February 22, 2013, we entered into a credit agreement with a $10 million line of credit of which $1,500,000 was funded and repaid during 2013 and $3,000,000 was funded and repaid in 2014. $4,000,000 is currently available upon our meeting the terms and conditions of the credit facility of which a draw of $3,000,000 was taken on February 24, 2015. Additional draws are subject to approval of the planned use of proceeds by the lender in order to borrow against the facility. The Company has elected to not draw down any additional funds at this time. The line of credit is secured by one CHP projects and by one solar project and accrues interest at 12% per annum.

On March 10, 2015, we issued a 6 month convertible note payable for $10,000,000. The note payable was convertible into shares of our common stock at $1.00 per share at the noteholder’s option. We granted 2,000,000 stock purchase warrants exercisable at $1.00 per share as consideration for the convertible note payable. On May 13, 2015, the convertible note payable and warrants were amended changing the conversion and exercise price to $1.02 per share at the direction of NASDAQ in order for the Company to maintain its listing. The convertible note payable is secured by all of our assets except one CHP project and one solar project and accrues interest at 12% per annum.

The $10 million Senior Convertible Note was paid on September 10, 2015. On September 10, 2015, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) pursuant to which a 15% senior secured note (the “September Note”) in the principal amount of $10,600,000 was issued, due February 29, 2016 to Jackson Investment Group, LLC (“Jackson”). The September Note was issued to repay and refinance in full the 12% senior secured convertible note due September 10, 2015 and issued on March 10, 2015 (the “March Note”), including $600,000 of accrued interest under the March Note. The September Note was issued solely as a result of unexpected construction delays outside of the parties’ control at the Brooks Heat & Power CHP facility being constructed and now collateralized by the September Note.

Neither the September Note, nor interest accrued thereon, is convertible into shares of the common stock of the Company. The 2,000,000 stock purchase warrants granted to Jackson by the Company on March 10, 2015 remain unchanged and are exercisable until March 10, 2020.

Historically, we have financed our working capital and capital expenditure requirements primarily from the sales of our equity securities. We intend to seek additional equity and/or debt financing in order to implement our business plan. We raised $22,710,411 from equity financing during the year ended December 31, 2014. We have a line of credit for $10,000,000 of which $4,000,000 is available and we are currently using $3,000,000 to meet our cash needs. Furthermore, any additional equity or convertible debt financing will be dilutive to existing shareholders and may involve preferential rights over common shareholders. Debt financing, with or without equity conversion features, may involve restrictive covenants.

Related Party Transactions

The Company had no significant related party transactions during the six months ended June 30, 2015. The Company owes $1,333,147 plus accrued interest to a director for funds borrowed in prior periods.

New Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements for a discussion of recently issued accounting pronouncements.

Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including, but not limited to valuation of accounts receivable and allowance for doubtful accounts, those related to the estimates of depreciable lives and valuation of property and equipment, valuation of derivatives, valuation of payroll tax contingencies, valuation of share-based payments, and the valuation allowance on deferred tax assets.

Off-Balance Sheet Arrangements

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow time decisions regarding required disclosure. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective in ensuring that material information we are required to disclose in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended June 30, 2015, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS.

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. There have been no substantive changes in any legal proceedings described in our Annual Report on Form 10-K for the year ended December 31, 2014; and we are not involved in any other material pending legal proceeding or litigation, except as set forth below, and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

On October 24, 2014, a purported class action lawsuit was filed against the Company, two executive officers, and one non-executive officer in the U.S. District Court for the Central District of California (Case No:2:14-cv-08263). On January 21, 2015, the court appointed a Lead Plaintiff and Lead Plaintiff’s Counsel. The Court also re-captioned the case In re Blue Earth, Inc. Securities Litigation , File No. CV 14-8263 DSF (JEMx). On March 13, 2105, plaintiff filed a First Amended Complaint (“FAC”). The FAC alleges claims under Sections 10(b) and 20(a) of the Exchange Act, and a purported class of purchasers of the Company’s stock during the period from October 7, 2013 through October 21, 2014. Defendants responded and filed a motion to dismiss FAC. Plaintiff’s opposition to the motion has been submitted and Defendants have submitted a reply to the opposition. Oral arguments regarding the motion to dismiss are scheduled for October 2015. The Company believes the claims contained in the complaint are without merit and is vigorously defending the matter.

On August 31, 2015, a derivative lawsuit was filed in Nevada state court, captioned Powell v. Cagan, et al., No. A-15-723839-C (8^th Judicial District Court, Clark County, Nevada). It names as defendants Brett Woodard, Johnny R. Thomas, John C. Francis, and the entire Board of Directors. It also names the Company as a nominal defendant. The complaint brings claims for breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, from October 2013 to the present based on directors and management allegedly allowing the company to make false and misleading statements to the public, thereby resulting in a class action lawsuit and exposing the Company to damages. The defendants have not yet been served. The Company believes the claims contained in the complaint are without merit and will vigorously defend this matter.

During 2014, the Company and two consultants filed demands for arbitration with the American Arbitration Association. On August 8, 2015, the Company and two consultants received the award from the arbitrator in the Company's arbitration with two of its consultants/former employees, who had voluntarily resigned. The arbitrator awarded the two consultants damages of $1,270,000; $101,243 for breach of contract; certain declaratory relief upholding the validity of the consulting agreement; and reimbursement of the consultants' attorney's fees and costs incurred in the arbitration of $341,375. The award is a Type 1 subsequent event; accordingly the Company’s financial statements are restated to reflect the award on a retroactive basis.

ITEM 1A. RISK FACTORS.

There have been no material changes from risk factors previously reported in the Company's Form 10-K for December 31, 2014, as amended.

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

On April 6, 2015, the Company issued 12,500 restricted shares to Alan Krusi, an independent director, pursuant to his Board of Directors Agreement. On April 28, 2015, the Company issued 168,700 restricted shares to CJ3, LLC, an assignee of a former owner of a subsidiary of the Company, pursuant to a Loan Termination and Mutual General Release Agreement dated April 20, 2015. On April 28, 2015, the Company issued 250,000 restricted shares to Liviakis Financial Communications, Inc. pursuant to an Amended Consulting Agreement dated April 22, 2015. On April 27, 2015, the Company issued 91,478 restricted shares to Donald R. Kendall, Jr., an officer of the Company, as payment of expenses pursuant to the terms of his employment agreement.

The above shares were issued in transactions that were exempt from the registration requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act based on the representations and warranties contained in their investment intent letter and/or subscription agreements. No commissions were paid and no underwriter or placement agent was involved in these transactions.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None

ITEM 4. MINE SAFETY DISCLOSURES

None

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.


Exhibit
Number		Description of Exhibit

	31.1	Section 302 Certification of Principal Executive Officer
	31.2	Section 302 Certification of Interim Principal Financial Officer
	32.1	Section 906 Certification of Principal Executive Officer and Interim Principal Financial Officer

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BLUE EARTH, INC.

Date: October 15, 2015	By:	/s/ G. Robert Powell
		G. Robert Powell
		Chief Executive Officer (Principal Executive Officer)


Date: October 15, 2015	By:	/s/ G. Robert Powell
		G. Robert Powell
		Interim Chief Financial Officer (Interim Principal Financial and Accounting Officer)

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