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Blue Sphere Reports Results for the Third Quarter and Provides Business Update

CHARLOTTE, NC / ACCESSWIRE / November 22, 2017 / Blue Sphere Corporation (BLSP) (the "Company", "Blue Sphere", "we", "our" or "us"), an international Independent Power Producer (IPP) in the clean energy and waste-to-energy markets, today reported financial results for the third quarter and nine months ended September 30, 2017.

Recent highlights:

  • Current project portfolio of 13.4 MW with definitive agreements in place for an additional 1 MW and a total of 16 projects under development representing over 60 MW
  • Signed offtake agreement for the flagship project in Holland valued at approximately €55 million (approximately USD $65.7 million) during the initial twelve-year term
  • Revenues for the nine-month period ended September 30, 2017 were $1.3 million, as compared to $0 for the nine-month period ended September 30, 2016.
  • Equity Earnings in Nonconsolidated Affiliates were approximately $6.3 million for the nine months ended September 30, 2017
  • Net loss was $0.1 million for the nine months ended September 30, 2017, compared to a net loss of $7.4 million for the nine-month period ended September 30, 2016
  • Cash and cash equivalents of approximately $1.9 million as of September 30, 2017
  • Stockholders' equity of approximately $2.2 million as of September 30, 2017

Shlomi Palas, Chief Executive Officer of Blue Sphere, commented, "We are very encouraged with the progress that Blue Sphere is making and going forward we will continue to focus on acquisitions and development of assets that we will own outright, which is best illustrated by the current portfolio of assets that we own in Italy. Collectively these facilities can generate approximately 5 MW of electric power. Included in this asset portfolio is our recently acquired cogeneration plant it Udine, Italy."

"Operationally, we continue to make steady progress proving out the scalability of our business model and accretive nature of our acquisitions. Just recently, we announced that we increased capacity at the Udine, Italy facility from just 20% of capacity in September 2017 at the time of acquisition, to approximately 90% of capacity in less than a month, which we continue to expect will increase to 95% of capacity by the end of this month."

"We are looking forward to completing another acquisition in Italy. As previously announced, on June 29, 2017, the Company entered into a Share Purchase Agreement Energyeco S.r.l, relating to the purchase of 100% of the share capital of ENERGYECO S.r.l, which owns and operates a 1 MW plant for the production of electricity from vegetable oil, located in Cantù, Italy."

"As previously disclosed, we signed an offtake agreement with GasTerra B.V., a major gas wholesaler based in the Netherlands, for our flagship project in Holland, currently the largest anaerobic digester under development in Europe. We anticipate the value of the off-take to be approximately €55 million (approximately USD $65.7 million) during the initial twelve-year term. This follows the award of a grant for the sale of up to 234,466.589 MWh per year, for a maximum total value equal to €151,934,350 (approximately USD $178.8 million) paid over twelve years from the date the Netherlands Facility begins production. We anticipate that the first phase of construction will begin at this site in December 2018. This project is an excellent illustration of our ability to acquire distressed assets, secure long-term offtake agreements, arrange project financing and effectively manage the development."

"Looking ahead we remain extremely encouraged by the outlook for the business and believe we have built a highly scalable business model that can deliver long-term revenue streams and cash flows. The waste-to-energy industry is projected to grow to $40 billion by 2023 from about $25 billion in 2013. Europe represents nearly half of the total market revenues and it is projected that global waste volumes will double by 2025 to over 6 million tons of waste per day. By 2100, global waste generation may hit 11 million tons per day as stated in a 2016 report by the World Energy Council. Blue Sphere strongly believes in the future of this industry and is currently developing sixteen projects around the world that we expect will generate a combined output of over 60MW of power."

Financial Results

Revenues for the nine-month period ended September 30, 2017, were $1.3 million, as compared to $0 for the nine-month period ended September 30, 2016. The increase is attributable to the consolidation of the four operating facilities in Italy (SPVs) by our wholly-owned subsidiary, Bluesphere Pavia and the development fee in the amount of $562,500, which was received during the third quarter of 2017 due to the commercial completion of the biogas facility Blue Sphere developed in Johnston, Rhode Island. Pro forma revenues (as defined below) were approximately $4.4 million for the nine months ended September 30, 2017, as compared to $4.6 million for the nine-month period ended September 30, 2016. The decrease is attributable to the decrease in revenue of the SPVs due to the decrease in the electricity production as a result of the termination of the O&M agreement with its former plant operator. The Company has since replaced its operator for the SPVs and expects these facilities to be operating at full capacity in the fourth quarter of 2017. The decrease in revenue in the SPVs was offset by an increase in revenue from development fees in the amount of $562,500, due to milestones being reached at the biogas facility Blue Sphere developed in Johnston, Rhode Island.

The unaudited pro forma financial information for the nine months ended September 30, 2017, and 2016 presents the condensed consolidated and combined statements of operations of the Company and the acquisitions described above as if the acquisitions had occurred as of January 1 of the year prior to the acquisitions. The unaudited pro forma financial information is not intended to represent or be indicative of the Company's condensed consolidated and combined statements of operations that would have been reported had these acquisitions been completed as of the beginning of the period presented and should not be taken as indicative of the Company's future condensed consolidated statements of operations.

General and administrative expenses for the nine-month period ended September 30, 2017, were $3.9 million as compared to $6.3 million for the nine-month period ended September 30, 2016. The decrease in general and administrative expenses is mainly attributable to decrease in share-based compensation, professional fees, and commissions.

Equity Earnings in Nonconsolidated Affiliates for the nine-month period ended September 30, 2017, was $6.3 million as compared to $0 for the nine-month period ended September 30, 2016. The increase is attributable to commencement of the commercial operation of the biogas facility Blue Sphere developed in North Carolina, which commenced its commercial operations and began providing output to Duke Energy pursuant to a power purchase agreement on November 18, 2016, and commencement of the commercial operation of the biogas facility Blue Sphere developed in Rhode Island, which commenced its commercial operations and began providing output to National Grid Energy pursuant to a power purchase agreement on June 23, 2017. Previously, we had recorded these earnings as deferred revenue in our current liabilities.

Equity Income in Nonconsolidated Subsidiaries for the nine-month period ended September 30, 2017, was $236,000, as compared to a loss of $1.1 million for the nine-month period ended September 30, 2016. Our income for the nine-month period ended September 30, 2017, is attributable to our share of the net loss generated by our Udine SPV since we have completed its acquisition and the income from the four facilities that we own near Pavia, Italy during the six-month period ended June 30, 2017. Commencing July 1, 2017, we do not apply the equity method of accounting for the investments these facilities because we operate, maintain and supervise each biogas plant. Furthermore, we reigned influence over the operating policies of the plants.

We stopped applying the equity method because on July 18, 2017, we terminated the Framework EBITDA Guarantee Agreement between the SPVs and the former operator of these facilities and we regained a controlling influence over operating policies of the operating policies of the facilities. On November 7, 2017, the Company and a new operator, Biogaservizi S.r.l., entered into O&M agreements for a full-service operation, maintenance, and supervision of the SPV Facilities, and supply of feedstock to the SPV Facilities, effective as of October 1, 2017. The SPV Facilities are presently transmitting electricity to the grid, and we anticipate that during the fourth quarter of 2017, all SPV Facilities will be generating at full capacity.

We incurred a net loss of $138,000 for the nine-month period ended September 30, 2017, as compared to a net loss of $7,422,000 for the nine-month period ended September 30, 2016. This is mainly attributable to decrease in General and Administrative Expenses, Gain from Change in Fair Value of Warrants Liability and increase in Equity Income in Nonconsolidated Subsidiaries and Affiliates.

About Blue Sphere Corporation

Blue Sphere Corporation is a diversified independent power producer that develops, owns, and operates clean-tech, biogas cogeneration and waste-to-energy facilities in the globally. The Company primarily converts organic waste into electricity but also has the ability to generate heat, natural gas, and organic byproducts through various technologies.

Blue Sphere facilities eliminate waste that would normally be disposed in landfills, reduce greenhouse gas emissions and protect water quality, helping to solve important global environmental issues. Blue Sphere is headquartered in Charlotte, North Carolina and has operations in the United States, Israel and Europe. For additional information about Blue Sphere Corporation, please visit the Company's website: www.bluespherecorporate.com.

Forward-Looking Statements

This press release contains certain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties and may change at any time. Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors including, without limitation, (i) uncertainties regarding general economic and market conditions, (ii) uncertainties regarding changes in the clean tech sector, (iii) uncertainties regarding implementation of the Company's business strategy, and (iv) other risk factors as outlined in the Company's periodic reports, as filed with the U.S. Securities and Exchange Commission. As such, there is no assurance that the initiatives described in this press release will be successfully implemented or meet expectations. Forward-looking statements in this document speak only as of the date on which such statements were made, and we undertake no obligation to update any such statements that may become untrue because of subsequent events.

Contact:

Crescendo Communications, LLC
Tel: 212-671-1021
Email: BLSP@crescendo-ir.com

SOURCE: Blue Sphere Corporation