Blue Sphere Releases its Annual Letter to Shareholders

EVEN YEHUDA, Israel, December 20, 2012 /PRNewswire/ --

Blue Sphere Corp. (OTCBB: BLSP) (the "Company" or "Blue Sphere"), a company in the Cleantech sector as a waste-to-energy and clean energy project integrator, has released a letter to shareholders discussing the Company's results for calendar year 2012.

Dear Fellow Shareholders:

2012 Highlights

2012 has been a breakthrough year for our company.  

We started 2012 as an emissions reduction company focused on further developing and commencing implementation of our African and Chinese carbon credit projects under the Kyoto Protocol.

We are ending 2012 as a company implementing two large waste-to-energy projects in the United States and one landfill gas-to-energy project in Africa with an immediate pipeline of eight more waste-to-energy projects in the United States and four more signed landfill gas-to-energy projects in Africa.  

We started 2012 with many prospects, but no clear path to revenue.

We are ending 2012 with (i) an offer to purchase the tax credits to be generated by our US projects for over $11,000,000 to be received in Q1 2014 and signed definitive agreements for our US projects that are expected to commence significant revenue production to Bluesphere in Q1 2014 and (ii) a signed emissions reduction purchase agreement ("ERPA") with Vattenfall, one of Europe's largest producers of heat and energy, to purchase the carbon credits from up to nine landfill gas-to-energy projects in Africa through 2020, which can bring us millions of dollars of revenue over the next eight years.

2012 Projects Started

Prior to 2012, we focused solely on business development. In 2012, we commenced implementation of the following projects:

• Concord: a 5.2 MW organic food waste-to-energy project in North Carolina with (i) a signed 15-year power purchase agreement ("PPA") with Duke Energy, (ii) a signed feedstock letter of intent from Waste Connections Inc. to supply 250 tons per day of organic feedstock at a price of up to $30 per ton, (iii) a signed compost letter of intent to purchase each ton of compost to be produced for $20, (iv) a signed land purchase agreement, (v) a signed term sheet to purchase the federal and state tax credits to be generated by this project and (vi) an EPC offer from Biogas Nord AG
• Johnston: a 3.2 MW organic food waste-to-energy project in Rhode Island with (i) a signed 15-year PPA with the National Grid utility company with an option to extend for 6 years, (ii) a feedstock letter of intent under negotiation with a large, local organic waste hauler, (iii) a signed compost letter of intent to purchase each ton of compost to be produced for $20, (iv) a lease agreement on the land with an option to purchase under negotiation, (v) a signed term sheet to purchase the federal tax credits to be generated by this project and (vi) an EPC offer from Biogas Nord AG
• Oti: a 1 MW landfill gas-to-energy project in Kumasi, Ghana with (i) a signed carbon credit offtake agreement with Vattenfall (described in more detail below), (ii) a power purchase agreement with the Ghanaian electricity company under negotiation and (iii) an EPC and funding agreement with BPure Ltd., an Israeli operator of landfill gas-to-energy projects

Specific Accomplishments

The major milestones we achieved in 2012 include:

• Entry into ERPA with Vattenfall in respect of nine landfill gas-to-energy projects in Africa potentially resulting in millions of dollars of future revenue to the company from the sales of carbon credits
• Entry into binding term sheet with Orbit Energy Inc. in respect of our 5.2 MW and 3.2 MW waste-to-energy projects in North Carolina and Rhode Island (the "US Projects") and giving us an option to implement eight more waste-to-energy projects already earmarked by Orbit
• Entry into a joint-venture agreement with Biogas Nord AG, a German EPC company with over 400 anaerobic digestion ("AD") installations in operation worldwide to collaborate and jointly implement waste-to-energy projects in the United States and to train us to perform service and maintenance on AD projects
• Successful performance of due diligence on the US Projects
• Receipt of indicative term sheets from Caterpillar offering us debt financing for each of our US Projects (subject to entry into definitive debt finance agreements)
• Entry into two definitive agreements in respect of each of our US Projects transferring to us full ownership of each US Project (subject to certain payments to be made to our counterparty)
• Receipt of a binding term sheet (subject to entry into a definitive agreement and successful completion of due diligence) for the full amount of equity to be invested in the US Projects (estimated at approximately $12,000,000)
• Receipt of letter of intent to purchase the compost to be produced from both of our US Projects a price of up to $20 per ton of compost resulting in $438,000 in annual revenue from the North Carolina plant and $292,000 in annual revenue from the Rhode Island plant (or $730,000 in annual revenue for both US Projects)
• Receipt of a letter of intent to provide organic waste feedstock for our US project in North Carolina from Waste Connections, Inc. with a tipping fee of up to $30.00 per ton of waste or up to $2,700,000 in annual revenue for receipt of feedstock
• Entry into a binding agreement to purchase the land for our US Project in North Carolina
• Receipt of a term sheet to purchase the tax credits to be generated by our US projects for over $11,000,000 to be received in Q1 2014
• Receipt of all environmental permits required for the implementation of our landfill gas-to-energy project in Kumasi, Ghana and commitment from the validator of the project to submit the request to register this project with the United Nations by December 24, 2012

Future

We are working now and will continue to work in 2013 to finalize (i) the construction permits for both our US Projects, (ii) the land and feedstock agreements for our US Project in Rhode Island and (iii) financial closure with a view toward breaking ground in Q1 2013, which will leave us enough time to commission the US Projects before the end of 2013. We expect to receive our first revenue prior to commissioning when we test-run the US Projects to refine the interconnection and power delivery to the utility-buyers. Implementation of the US Projects is our first priority.

Once construction has started on the US Projects, we will resume our business development activities in the United States in respect of the eight sites for which we have options, as well as for additional sites, which we are in the initial stages of developing even now. We will also explore opportunities in Europe and elsewhere to implement similar waste-to-energy projects. We have already received offers for sites in Europe and elsewhere, which are in early stages of development.

We are ready to start implementation of our landfill gas-to-energy project in Kumasi, Ghana. We have the site, a project manager, a design for the system and a purchase order for the equipment ready to go. However, we are waiting for the publication of the feed-in-tariff ("FIT") for landfill gas-to-energy projects before we proceed. Publication of the FIT is expected in Q1 2013. We estimate that it will take us 6-9 months from this date to become operational. We estimate the receipt of first revenue immediately after commissioning from sales of power and annually from sales of carbon credits. Once construction starts in Kumasi, we will start preparing our other sites for implementation and seek new sites in Ghana and elsewhere in Africa.  

Our primary goal and first priority is to generate meaningful revenue in 2013. We are on track to accomplish this so long as there are no significant delays in starting construction in the United States and the announcement of the FIT in Ghana. We will devote the lion's share of our resources toward ensuring that no significant delays occur.

Closing

We realize that this has been a long and difficult road for many of our shareholders. Our management is working diligently every day to make Bluesphere a success. We come to work each day with the singular focus of making Bluesphere a leader in the waste-to-energy and clean energy space. We think 2013 will be the year that we turn our vision into reality and convert our hard work to-date into revenue. Going forward, we will endeavour to update you on a quarterly basis.

Holiday Season Greetings

We wish all of our shareholders a happy holiday season and wonderful new year full of blessings, health and happiness.

Thank you for your continued support.

Sincerely,

Shlomi Palas, CEO

About Blue Sphere Corp.

Blue Sphere Corp. is a company in the cleantech sector as a waste-to-energy project Integrator. Blue Sphere develops waste-to-energy and other renewable energy projects. The Company aspires to become a key player in the global waste-to-energy and renewable energy markets. For further information please visit the Company's website http://www.bluespherecorporate.com

Forward-Looking Statements  

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and as that term is defined in the Private Litigation Reform Act of 1995, which are subject to risks and uncertainties and may change at any time. Among these are: (i) uncertainties regarding our ability to obtain adequate financing on a timely basis including financing for the projects described in this release and other specific projects, (ii) uncertainties regarding the future of the Kyoto Protocol and binding greenhouse gas warming commitments of industrialised countries, (iii) uncertainties regarding the market for and value of carbon credits including carbon credits associated with industrial gases, as well as the duration and amount of estimated emissions from specific projects, (iv) political and governmental risks associated with the countries in which we operate, (v) unanticipated delays associated with project implementation including designing, constructing and equipping projects, as well as delays in obtaining required permits and approvals, (vi) the development stage of our business and (vii) our lack of operating history. As such, there is no assurance that the initiatives described in the press release will be successfully implemented or meet expectations.  Additionally, actual results and performance may differ materially from the results, levels of activities, performance or achievements, express or implied, by these forward-looking statements.

The Company assumes no obligation to update the information in this release.

For further information please contact Mark Radom at +972-52-888-0485 or [email protected].

SOURCE Blue Sphere Corp.