Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 20, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | BLUE SPHERE CORP. | |
Entity Central Index Key | 1,419,582 | |
Document Type | 10-Q | |
Trading Symbol | BLSP | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 3,725,980 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 1,947 | $ 416 |
Inventory | 2,215 | |
Trade account receivables | 459 | |
Related Parties | 83 | 1,408 |
Other current assets | 8,121 | 81 |
Total current assets | 12,825 | 1,905 |
PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation | 15,640 | 50 |
INVESTMENTS IN NON-CONSOLIDATED AFFILIATES | 10,822 | 10,137 |
INVESTMENTS IN NON-CONSOLIDATED SUBSIDIARIES | 3,176 | 4,429 |
OTHER LONG-TERM ASSETS | 3,308 | |
Total assets | 45,771 | 16,521 |
CURRENT LIABILITIES: | ||
Current maturities of Debentures and long-term bank loan | 5,784 | 2,988 |
Short Term Loans | 5,612 | 280 |
Accounts payables | 3,911 | 557 |
Other accounts payable and liabilities | 6,862 | 2,091 |
Deferred revenues from joint ventures | 5,658 | |
Total current liabilities | 22,169 | 11,574 |
ACCRUED SEVERANCE PAY | 17 | 11 |
LONG TERM BANK LOANS | 14,391 | 112 |
LONG TERM LOANS AND LIABILITIES | 6,489 | 5,003 |
WARRANTS LIABILITY | 523 | 2,045 |
STOCKHOLDERS' EQUITY: | ||
Common shares of $0.001 par value each: Authorized: 1,750,000,000 shares at September 30, 2017 and December 31, 2016. Issued and outstanding: 3,682,764 shares and 2,147,383 shares at September 30, 2017 and December 31, 2016, respectively | 4 | 2 |
Treasury shares | (28) | (28) |
Accumulated other comprehensive income (loss) | (135) | 33 |
Additional paid-in capital | 48,922 | 44,262 |
Accumulated deficit | (46,581) | (46,493) |
Total Stockholders' Equity (deficiency) | 2,182 | (2,224) |
Total Liabilities and Stockholders' Equity (deficiency) | $ 45,771 | $ 16,521 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheets | ||
Common shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common shares, shares authorized | 1,750,000,000 | 1,750,000,000 |
Common shares, shares issued | 3,682,764 | 2,147,383 |
Common shares, shares outstanding | 3,682,764 | 2,147,383 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |||
REVENUES | ||||||
Sale of electricity | $ 721 | $ 721 | ||||
Development fees | 563 | 563 | ||||
TOTAL REVENUES | 1,284 | 1,284 | ||||
COST OF REVENUES | 809 | 809 | ||||
GROSS PROFIT | 475 | 475 | ||||
OPERATING EXPENSES | ||||||
General and administrative expenses | 1,506 | $ 1,782 | 3,886 | $ 6,287 | ||
Loss from obtaining control in a former non-consilidated subsidiary | 2,109 | 2,109 | ||||
Other losses (income) | 5 | (97) | ||||
OPERATING LOSS | (3,140) | (1,787) | (5,520) | (6,190) | ||
FINANCIAL EXPENSES (INCOME), net | 884 | 428 | 2,535 | 609 | ||
LOSS FROM EXTINGUISHMENT OF DEBENTURE | (615) | |||||
LOSS (GAIN) FROM CHANGE IN FAIR VALUE OF WARRANTS LIABILITY | (203) | (1,396) | (1,921) | (432) | ||
NET LOSS BEFORE INCOME TAXES AND EQUITY EARNINGS (LOSSES) | (3,821) | (819) | (6,749) | (6,367) | ||
INCOME TAXES | (77) | (32) | ||||
NET LOSS BEFORE EQUITY INCOME (LOSSES) | (3,744) | (819) | (6,717) | (6,367) | ||
EQUITY INCOME (LOSS) IN NON-CONSOLIDATED AFFILIATES | (465) | 6,343 | ||||
EQUITY INCOME (LOSSES) IN NON-CONSOLIDATED SUBSIDIARIES | (24) | 90 | 236 | (1,055) | ||
NET INCOME (LOSS) FOR THE PERIOD | $ (4,233) | $ (729) | $ (138) | $ (7,422) | ||
Net loss per common share - basic and diluted (in dollars per share) | $ (1.15) | $ (0.38) | $ (0.05) | $ (4.26) | ||
Weighted average number of common shares outstanding during the period - basic and diluted (in shares) | 3,681,067 | 1,904,967 | [1] | 3,083,383 | 1,739,172 | [1] |
[1] | Retrospectively adjusted to reflect the 130 - for - 1 reverse stock split |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) | Mar. 24, 2017 | Sep. 30, 2016 |
Condensed Consolidated Statements Of Operations | ||
Reverse stock split ratio | 130 | 130 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
NET INCOME (LOSS) | $ (4,233) | $ (729) | $ (138) | $ (7,422) |
Other comprehensive income loss, net of tax: | ||||
Currency translation adjustments | (133) | 2 | (118) | 6 |
TOTAL COMPREHENSIVE LOSS | $ (4,366) | $ (727) | $ (256) | $ (7,416) |
STATEMENTS OF CHANGES IN SHAREH
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Common Stock [Member] | Proceeds on amount of Shares [Member] | Treasury Shares [Member] | Accumulated Other Comprehensive Income [Member] | Additional paid-in Capital [Member] | Accumulated deficit [Member] | Total | ||
Balance beginning at Dec. 31, 2015 | $ 1 | $ 165 | $ (28) | $ 41,068 | $ (44,692) | $ (3,486) | |||
Balance beginning (in shares) at Dec. 31, 2015 | 1,388,481 | ||||||||
Increase (Decrease) in Stockholders' Deficiency [Roll Forward] | |||||||||
Issuance of common stock, net of issuance costs | [1] | $ 1 | (20) | $ 630 | $ 611 | ||||
Issuance of common stock, net of issuance costs (in shares) | [1] | 427,553 | |||||||
Issuance of shares for services | [2] | ||||||||
Issuance of shares for services (in shares) | 35,062 | 641 | 641 | ||||||
Extinguish of liability upon shares issuance | [2] | ||||||||
Extinguish of liability upon shares issuance (in shares) | 57,719 | 660 | 660 | ||||||
Issuance of common stock in respect of issuance of convertible notes | [2] | $ (145) | $ 145 | ||||||
Issuance of common stock in respect of issuance of convertible notes (in shares) | 107,160 | ||||||||
Exercise of warrants | [2] | 41 | $ 41 | ||||||
Exercise of warrants (in shares) | 5,385 | ||||||||
Comprehensive loss | $ 6 | (7,422) | (7,416) | ||||||
Balance ending at Sep. 30, 2016 | $ 2 | (28) | 6 | 43,185 | (52,114) | (8,949) | |||
Balance ending (in shares) at Sep. 30, 2016 | 2,021,360 | ||||||||
Balance beginning at Dec. 31, 2016 | $ 2 | (28) | 33 | 44,262 | (46,493) | $ (2,224) | |||
Balance beginning (in shares) at Dec. 31, 2016 | 2,147,382 | [3] | 2,147,383 | ||||||
Increase (Decrease) in Stockholders' Deficiency [Roll Forward] | |||||||||
Issuance of common stock and warrants, net of issuance costs | [4] | $ 2 | 4,121 | $ 4,123 | |||||
Issuance of common stock and warrants, net of issuance costs (in shares) | [3],[4] | 1,440,000 | |||||||
Issuance of shares for services | 132 | 132 | |||||||
Issuance of shares for services (in shares) | [3] | 27,598 | |||||||
Extinguish of liability upon shares issuance | 47 | 47 | |||||||
Extinguish of liability upon shares issuance (in shares) | [3] | 7,406 | |||||||
Share based compensation | 360 | 360 | |||||||
Share based compensation (in shares) | [3] | 60,376 | |||||||
Comprehensive loss | (118) | (138) | (256) | ||||||
Balance ending at Sep. 30, 2017 | $ 4 | $ (28) | $ (85) | $ 48,922 | $ (46,631) | $ 2,182 | |||
Balance ending (in shares) at Sep. 30, 2017 | 3,682,762 | [3] | 3,682,764 | ||||||
[1] | Issuance cost during the period were of $264 | ||||||||
[2] | less than $1. | ||||||||
[3] | Retrospectively adjusted to reflect the 130 - for - 1 reverse stock split | ||||||||
[4] | Issuance cost during the period were of $377 |
STATEMENTS OF CHANGES IN SHARE8
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Reverse stock split ratio | 130 | |
Stock and warrant issuance costs | $ 377 | $ 264 |
Issuance of shares for services | 132 | |
Extinguish of liability upon shares issuance | $ 47 | |
Exercise of warrants | 41 | |
Maximum [Member] | ||
Issuance of shares for services | 1 | |
Extinguish of liability upon shares issuance | 1 | |
Issuance of common stock in respect of issuance of convertible notes | 1 | |
Exercise of warrants | $ 1 |
CONDENSED CONSOLIDATED STATEME9
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss for the period | $ (138) | $ (7,422) | |
Adjustments required to reconcile net loss to net cash used in operating activities: | |||
Share based payments | 360 | 371 | |
Extinguish of liability upon shares issuance | 47 | ||
Depreciation | 400 | 12 | |
Capital loss from disposal of property, plant and equipment | 5 | ||
Loss from obtaining control in a former non-consilidated subsidiary | 2,109 | ||
Equity income (loss) in non-consolidated affiliates | (236) | 1,055 | |
Equity income in non-consolidated subsidiaries | (6,343) | ||
Expense in respect of convertible notes and loans | 1,366 | 163 | |
Loss from extinguishment of debenture | 615 | ||
Changes in warrants liability | (1,921) | (432) | |
Expenses in respect of severance pay | 6 | ||
Issuance of shares for services | 132 | 641 | |
Increase in inventory | (2,201) | ||
Decrease (increase) in trade accounts receivables | 726 | ||
Increase in related parties and other current assets | (1,772) | (193) | |
Decrease (increase) in other long-term assets | 1,222 | (22) | |
Increase (decrease) in accounts payables | 1,152 | 499 | |
Increase in other account payables | 2,329 | 1,142 | |
Net cash used in operating activities | (2,147) | (4,181) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (290) | (60) | |
Investment in nonconsolidated subsidiary | (3,040) | ||
Consolidation of a former non-consolidated subsidiaries (see note a) | [1] | 872 | |
Net cash used in investing activities | (2,458) | (60) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from short term loans | 1,937 | 50 | |
Repayment of short term loans | (1,200) | ||
Repayment of loans | (274) | (364) | |
Proceeds from exercise of warrants | 41 | ||
Proceeds from long term loans | 1,557 | ||
Proceeds from issuance of shares and warrants, net of issuance cost | 4,123 | 3,001 | |
Net cash provided by financing activities | 6,143 | 2,728 | |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,538 | (1,513) | |
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH BALANCES IN FOREIGN CURRENCIES | (7) | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 416 | 1,888 | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 1,947 | 375 | |
NON-CASH TRANSACTION: | |||
Extinguish of debt upon shares issuance | 360 | 435 | |
Deferred net equity in joint ventures | 230 | 255 | |
Issuance expense paid through warrants issuance | 225 | 1,684 | |
Cash paid during the period for: | |||
Interest | $ 619 | $ 554 | |
[1] | (a) 2017 Consolidation of Non-Consolidated subsidiarie On July 1, 2017, the Company consolidated Agricerere S.r.l., Agrielektra S.r.l., Agrisorse S.r.l. and Gefa S.r.l. non-consolidated subsidiaries. The consolidation was recorded by allocating the cost of the acquisitions to the assets consolidated, including other intangible assets, based on their estimated fair values at the consolidation date. Based on the consolidation date valuations, the preliminary purchase price allocations for as the following: |
CONDENSED CONSOLIDATED STATEM10
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - Consolidated Entities [Member] $ in Thousands | Jul. 02, 2017USD ($) |
Accounts Receivable | $ (1,149) |
Prepaid expenses and other current assets | (4,493) |
Property, plant and equipment | (15,144) |
Other noncurrent assets | (4,382) |
Short term loans | 3,969 |
Accounts payable and accrued liabilities | 3,847 |
Bank loans | 15,244 |
Total net assets, net of cash consolidated | (2,108) |
Less: Capital loss from obtaining control in a former non-consilidated subsidiary | (2,109) |
Add: Investment in non-consolidated Subsidiaries | 5,089 |
Net cash consolidated: | $ 872 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
Basis Of Presentation | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and results of operations of Blue Sphere Corporation (the “Company”). These condensed consolidated financial statements and notes thereto are unaudited and should be read in conjunction with the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the U.S. Securities and Exchange Commission. The results of operations for the nine-months and three-months ended September 30, 2017 are not necessarily indicative of results that could be expected for the entire fiscal year. |
GENERAL
GENERAL | 9 Months Ended |
Sep. 30, 2017 | |
General | |
GENERAL | NOTE 2 – GENERAL Blue Sphere Corporation (the “Company”), together with its direct and indirect wholly-owned subsidiaries, Eastern Sphere Ltd. (“Eastern”), BinoSphere LLC (“Binosphere”), Bluesphere Pavia S.r.l (“Bluesphere Pavia”), Bluesphere Italy S.r.l., and Blue Sphere Brabant B.V. (“BSB”), is focused on project integration in the clean energy production and waste to energy markets. The Company was incorporated in the state of Nevada on July 17, 2007 and was originally in the business of developing and promoting automotive internet sites. On February 17, 2010, the Company conducted a reverse merger, name change and forward split of its common stock, and in March 2010 current management took over operations, at which point the Company changed its business focus to become a project integrator in the clean energy production and waste to energy markets. On May 12, 2015, the Company formed Bluesphere Pavia, a subsidiary of Eastern, in order to acquire certain biogas plants located in Italy (see note 5 below). On September 19, 2016, the Company formed BSB in order to commence operations in the Netherlands. On January 31, 2017, the Company dissolved Johnstonsphere LLC, which had no operations since inception. On April 30, 2017, the Company dissolved Sustainable Energy Ltd. Change in Operator in Blue Sphere Pavia’s facilities and Transfer of North Carolina and Rhode Island Project Agreements On July 18, 2017, the Company terminated its four Plant EBITDA Guarantee Agreements dated December 15, 2015 (collectively, the “Plant EBITDA Agreements”) with Austep S.p.A. an Italian corporation (“Austep”), the Company’s former operator in Italy that operated, maintained, and supervised the Company’s four facilities in Italy (the “SPV Facilities”) owned by the Company through its indirect, wholly-owned subsidiaries,Agricerere S.r.l., Agrielektra S.r.l., Agrisorse S.r.l. and Gefa S.r.l (each, an “SPV” and collectively, the “SPVs”). Also as fully described herein, we understand that the agreements relating to the development and operation of our facilities in North Carolina and Rhode Island will be transferred by Austep to its affiliated entity, Andion Italy S.r.l. (“Andion”). Presently, the agreements are validly in force and the parties continue to develop, operate, maintain, and supervise the facilities in North Carolina and Rhode Island. From the Official Records of the Companies’ Register (the “Official Records”), the Company learned that on June 20, 2017, Austep was put in voluntary liquidation by shareholders’ resolution pursuant to Article 2484 of the Italian Civil Code. Furthermore, the Official Records show that on June 30, 2017, Austep filed a petition in the Bankruptcy Court of Milan (the “Milan Court”) for a creditor’ settlement procedure pursuant to Article 161, paragraph 6 of the Italian Bankruptcy Law, seeking permission to submit a restructuring plan to the court contemplating a partial continuity of its operations, which will then need to be approved by a majority of Austep’s creditors and by the court. According to the Official Records, on June 29, 2017, Austep entered into a Business Unit Lease Agreement (“BULA”) with Andion, with the intent of assuring the regular operation of certain operations and agreements by Andion. Andion is wholly owned by Arcus Holdings Sa, a Luxembourg entity owned by White Cloud Capital II SCSp, which controls Austep Holdings S.p.A. Austep Holdings S.p.A. wholly-owns Austep and Austep USA, and Austep USA wholly-owns Auspark LLC and Austep Rhode Island LLC. Andion is not subject to the liquidation/restructuring of Austep. The BULA provides for, among other things, the transfer of Austep’s entire United States operations and, accordingly, the agreements relating to the delivery and operation of our North Carolina and Rhode Island facilities. The term of the BULA is three (3) months from the effective date of the BULA, and will automatically renew if not terminated by one of the parties with at least thirty (30) days’ written notice. The BULA will become effective upon execution by all parties, and is subject to finalization of negotiations with unions regarding all employees who will not be transferred with the BULA. Presently, the agreements relating to the delivery and operation of our North Carolina and Rhode Island facilities are validly in force, and the parties continue to develop, operate, maintain, and supervise the North Carolina and Rhode Island facilities in accordance with the terms of such agreements. If and when the BULA becomes effective, we anticipate that Andion will continue to operate, maintain, and supervise the North Carolina and Rhode Island facilities for the foreseeable future unless the Italian receiver will sell the Austep US operation to another operator. Through the process of Austep’s liquidation/restructuring, the Italian liquidator will compare competitive offers to acquire the operations and agreements that are the subject of the BULA; therefore, the acquirer of the agreements relating to the operation of the Company’s North Carolina Facility and Rhode Island Facility may be Andion, or potentially another purchaser. On July 12, 2017, Austep personnel shut down the engines at all of the SPV Facilities, and exited all four sites. The Company immediately notified Banca IMI S.p.A. (“Banca IMI”), the SPVs’ lender, and began coordinating with Banca IMA on its remedial action plan. On July 14, 2017, the Company notified Austep’s liquidator, in accordance with the Plant EBITDA Agreements, that because (i) Austep had neglected specified contractual obligations concerning maintenance of the SPV Facilities, which each SPV had notified Austep of on June 21, 2017, and (ii) Austep, without notice, abandoned the SPV Facilities, the Company had taken over direct management and supervision of the SPV Facilities to ensure their proper operation, safety and security. The Company reserved all rights to claim any and all damages arising as a consequence of Austep’s conduct, including costs incurred by the Company in its intervention. On the same date, the Company entered into a Biogas Plants’ Ordinary Management Proposal with Società Agricola Burnigaia Società Semplice d/b/a La Fenice (“La Fenice”), an Italian company experienced in the operation of biogas plants, pursuant to which La Fenice will immediately operate and supervise the SPV Facilities (the “Interim Operation Agreement”). The Interim Operation Agreement provides that we will pay La Fenice €10,000 per facility per month. The Interim Operation Agreement renews automatically each month, unless terminated by either party. The Company and La Fenice are operating pursuant to the Interim Operation Agreement, and are presently negotiating a definitive agreement. Pursuant to the Interim Operation Agreement, La Fenice personnel were on-site at the SPV Facilities on July 14, 2017 and began start-up of the engines at each facility. On July 17, 2017, the Company received a copy of the decree issued by the Milan Court dated July 6, 2017, whereby the Milan Court approved Austep’s petition for a creditors’ settlement procedure and declared that Austep shall, by November 3, 2017, submit (i) the final debt restructuring plan and a request for certification of the restructuring agreement’s debts. The Milan Court appointed a judicial commissioner to supervise Austep’s activities through November 3, 2017 and report to the Court every fact constituting a breach of Austep’s obligations under the relevant provisions of the Italian Bankruptcy Law. In addition, the Milan Court declared that Austep shall not, without the Milan Court’s authorization, (i) perform any extraordinary operation, (ii) repay any receivable accrued before the opening of the judicial procedure, or (iii) suspend any pending agreement or enter into any new loan agreement. On July 18, 2017, the SPVs delivered to Austep a notice of termination of the Plant EBITDA Agreements due to several breaches of Austep’s obligations, representations and warranties thereunder including without limitation those outlined in the notice provided to Austep’s liquidator on July 14, 2017. The Company further notified Austep that, as a consequence of early termination, (i) it is obligated to pay to a penalty of €85,000 to each SPV, and (ii) that Austep will be deemed liable to hold the SPVs harmless and indemnified for any direct and indirect losses (including loss of business), damages, costs of engaging replacement contractors and suppliers, costs relating to the supply of feedstock for years 2017 through 2018, insurance premium costs, costs incurred in connection with the financing facility agreement with Banca IMI, and any other expenses or other liabilities incurred or to be incurred by the SPVs as a consequence of or in connection with Austep’s breaches, actions and/or omissions under the Plant EBITDA Agreements. The notice was prepared in coordination with Banca IMI. On November 7, 2017, the Company entered with an operator into agreement for a full-service operation, maintenance, and supervision of the SPV Facilities, and supply feedstock to the SPV Facilities. The agreement is effective from October 1, 2017. Until June 30, 2017 the Company applied the equity method of accounting for those investments because the Framework EBITDA Guarantee Agreement between the Company and Austep whereas Austep operates, maintains and supervises each biogas plants prevents us from exercising a controlling influence over operating policies of the plants. Under this method, our equity investment is reflected as an investment in non-consolidated subsidiaries on our Condensed Consolidated Balance Sheets and the net earnings or losses of the investments is reflected as equity in net earnings of non-consolidated companies on our Consolidated Statements of Operations. However, since the Framework EBITDA Guarantee Agreement between the Company and Austep was terminated the Company did not apply the equity method of accounting for those investments from July 1. 2017 and consolidate the assets and liabilities of those investments in its Condensed Consolidated Balance Sheet and consolidate the results of operations of those subsidiaries in its Condensed Consolidated Statement of Operations. 2017 Consolidation of Non-Consolidated Subsidiaries On July 1, 2017, the Company consolidated Agricerere S.r.l., Agrielektra S.r.l., Agrisorse S.r.l. and Gefa S.r.l. non-consolidated subsidiaries. Commencing July 1, 2017, the Company does not apply the equity method of accounting for the investments in Agricerere S.r.l., Agrielektra S.r.l., Agrisorse S.r.l. and Gefa S.r.l. because the Company operates, maintains and supervises each biogas plant. Furthermore, the Company reigned influence over the operating policies of the plants. Prior to June 30, 2017, the Company applied the equity method because the Framework EBITDA Guarantee Agreement between the SPVs and Austep, whereby Austep operates, maintains and supervises each biogas plant, prevented us from exercising a controlling influence over operating policies of the plants. Under this method, the Company’s equity investment was reflected as an investment in non-consolidated subsidiaries on its Condensed Balance Sheets and the net earnings or losses of the investments was reflected as an equity in net earnings of non-consolidated companies on its Consolidated Statements of Operations. On July 18, 2017, the Company terminated its four Plant EBITDA Guarantee Agreements dated December 15, 2015 with Austep since on June 20, 2017 the Company learned from the Official Records of the Companies’ Register that Austep was put in voluntary liquidation and it filed a petition for a creditor’s settlement in the Bankruptcy Court of Milan. Further, On July 12, 2017, Austep personnel shut down the engines at all of the SPV Facilities, and exited all four sites. Therefore, on July 18, 2017 the Company terminated the Framework EBITDA Guarantee Agreement between the non-consolidated subsidiaries and Austep and regained a controlling influence over operating policies of the operating policies of the facilities and ceased applying the equity method.. The consolidation was recorded by allocating the cost of the acquisitions to the assets consolidated, including other intangible assets, based on their estimated fair values at the consolidation date. Based on the consolidation date valuations, the preliminary purchase price allocations for as the following: Cash and cash equivalents $ 872 Accounts Receivable 1,149 Prepaid expenses and other current assets 4,493 Property, plant and equipment 15,144 Other noncurrent assets 4,382 Short term loans (3,969 ) Accounts payable and accrued liabilities (3,847 ) Bank loans (15,244 ) Total net assets consolidated: $ 2,980 The fair values of property, plant and equipment associated with the acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach, if a secondhand market existed. Pro forma results The following unaudited pro forma financial information for the three 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. Nine Months Ended Three Months Ended September 30 September 30 2017 2016 2017 2016 Revenues $ 4,373 $ 4,556 $ 1,284 $ 1,850 Net (loss) income (138 ) (7,422 ) (4,233 ) (729 ) Net (loss) earnings per common share Basic and diluted $ (0.05 ) $ (4.26 ) $ (1.15 ) $ (0.38 ) The Udine, Italy Acquisition On June 29, 2017, the Company entered into a Share Purchase Agreement (the “Udine SPA”) with PRONTO VERDE A.G. (the “Seller”), relating to the purchase of one hundred percent (100%) of the share capital of FUTURIS PAPIA S.r.l., a limited liability company organized under the laws of Italy (the “Udine SPV”), which owns and operates a 0.995 Kw plant for the production of electricity from vegetal oil located in Udine, Italy. On September 4, 2017, the Company completed the acquisition of the Udine SPV. The total purchase price of the Udine SPV was approximately €2,706 (approximately $3,236), which included the initial purchase price in the amount of two million three hundred fifty-eight thousand euros (€2,358) (approximately $2,784), transaction costs and certain post-closing adjustments based on net financial position, net working capital, and certain net receivables as of the closing date. The Helios Mezzanine Loan Facility On August 30, 2017, the Company and Blue Sphere Italy entered into a Long Term Mezzanine Loan Agreement (the “Second Helios Loan Agreement”) with Helios 3 Italy Bio-Gas 2 L.P. (“Helios 3”), pursuant to which Helios 3 agreed to provide a mezzanine loan facility (the “Second Helios Loan”) of up to €1,600 (approximately $1,912) to finance (a) a portion of the total purchase price of the Udine SPV, (b) certain broker fees incurred in connection with the acquisition of the Udine SPV, and (c) taxes associated with registration of a pledge agreement. The Company’s liabilities and obligations under the Second Helios Loan Agreement are secured by a pledge of all of the Company’s shares of Blue Sphere Italy. In addition, any loan granted to Blue Sphere Italy by the Company shall rank subordinate to the Second Helios Loan. The Second Helios Loan accrues interest at a rate of fourteen and one-half percent (14.5%) per annum, paid quarterly, beginning six (6) months following the closing of the Second Helios Loan. In addition, Helios 3 is entitled to an annual operation fee, paid quarterly in the amount of one-half percent (1.5%) per annum of the outstanding balance of the Loan. The final payment for the Second Helios Loan will become due no later than the earlier of (i) seven (7) years from the date the funds were made available to Blue Sphere Italy or (ii) the date of expiration of certain licenses granted to the Udine SPV. The Second Helios Loan may not be prepaid by the Company, but after payment by the Company of eight (8) quarterly payments, Helios 3 is entitled to demand repayment of the amount of the Second Helios Loan outstanding, provided that the amount shall not exceed the maximum distributable proceeds of the Udine SPV, by providing notice at least twenty-one (21) days prior to such demand. At such time the Company shall be entitled to refinance and prepay the entire amount outstanding under the Second Helios Loan, including the expected interest and operation fee due for the remaining period of the Second Helios Loan, less fifteen percent (15%) of the aggregate sum of such amounts. If the Company intends to refinance the Second Helios Loan, Helios shall have a right of first refusal to make a loan on the same terms. Operations of the Udine SPV In accordance with a Guarantee Plant Operation Management Agreement, dated September 4, 2017 (the “GPOMA”), between Pronto Verde and the Udine SPV, Pronto Verde satisfied its guarantee to procure the services of CC Engineering S.r.l., a limited liability company duly incorporated and existing under the laws of Italy, to perform “all-inclusive” services for the operation and maintenance of the facilities, and ISG Sviluppo SA, a company duly incorporated and existing under the laws of Switzerland, to supply to the vegetal oil necessary for the regular functioning of the Udine SPV. In accordance with the GPOMA, Pronto Verde guaranteed a monthly EBITDA of €91 (approximately $110) from the for the completion of the acquisition. Applying the Equity method of account for this investment The Company applied the equity method of accounting for this investment because the GOMA between the Company and Pronto Verde whereas Pronto Verde operates, maintains and supervises each biogas plants prevents us from exercising a controlling influence over operating policies of the plants. Under this method, our equity investment is reflected as an investment in non-consolidated subsidiaries on our Condensed Balance Sheets and the net earnings or losses of the investments is reflected as equity in net earnings of non-consolidated companies on our Consolidated Statements of Operations. The Cantu, Italy Acquisition On June 29, 2017, the Company entered into a Share Purchase Agreement (the “Cantu SPA”) with the Seller, relating to the purchase of one hundred percent (100%) of the share capital of ENERGYECO S.r.l., a limited liability company organized under the laws of Italy (the “Cantu SPV”), which owns and operates a 0.990 Kw plant for the production of electricity from vegetal oil located in Cantù, Italy. The closing in relation to the Cantu SPV is subject to specified conditions precedent including, but not limited to, consummation of an acquisition of all the minority share capital of the Cantu SPV by the Seller from the minority shareholders of the Cantu SPV, delivery of audited closing financial statements of the Cantu SPV by Seller, and receipt of consent from the lenders and confirmation to accept repayment of certain of Cantu SPV’s Loans. The agreed purchase price of the Cantu SPV is two million two hundred thousand euros (€2,200) (approximately $2,490). The purchase price is subject to post-closing adjustment based on net financial position, net working capital, and certain net receivables, to be calculated on the basis of the Cantu SPV’s final closing audited financial statements. The purchase price will be paid to the Seller at closing, less (a) an amount of one hundred fifty thousand euros (€150) (approximately $179) to be paid on or before July 13, 2017 and held in escrow until closing; (b) one million ten thousand two hundred and eighty euros (€1,010) (approximately $1,145) to repay the balance of two loans payable of the Cantu SPV; (c) a brokerage fee payable by the Seller in the amount of sixty thousand euros (€60) (approximately $68); and (d) one hundred thousand euros (€100) (approximately $113) to be held in escrow. In connection with Company’s purchase of the Cantu SPV, on September 11, 2017, the Company entered into an agreement (the “Gain Agreement”) with Gain Solutions, S.R.O., a company incorporated under the laws of the Czech Republic (“Gain”), pursuant to which Gain will purchase thirty-eight and one-half percent (38.5%) of the capital stock of the Cantu SPV (the “Gain SPV Shares”) from the Company for a purchase price of €1,100 (approximately $1,320), which included a €200 (approximately $240) down payment paid by Gain (the “Gain Down Payment”). The Gain Agreement is subject to Gain’s completion of due diligence and entry into definitive agreements to consummate the purchase and sale of the Gain SPV Shares. The Gain Down Payment will be applied toward the Cantu Purchase Price, or in the event Gain does not proceed following due diligence, the parties do not enter into definitive agreements or the Company does not ultimately acquire the Cantu SPV, the Down Payment will become repayable by the Company with ten percent (10%) interest no later than December 13, 2017. Any amount of the Down Payment (including interest) that is not timely paid by December 24, 2017 and through March 13, 2018 shall be subject to penalty interest equal to twenty percent (20%) per annum, and any amounts (including penalty interest) not paid by March 13, 2018 shall be subject to penalty interest equal to twenty-five percent (25%) per annum. The Company provided to Gain an irrevocable guarantee to repay the Gain Down Payment and any interest or penalty interest that accrues thereon. Also in connection with the secured Gain Down Payment, the Company entered into a Security Agreement to register a lien and security interest equal to 15% of the Company’s equity ownership of the Cantu SPV and all products and proceeds thereof pertaining from the Company’s rights according to the closing of the Cantu SPA. The closing in relation to the Cantu SPV will probably occur sometime during the fourth quarter of 2017, and any such closing is subject to specified conditions precedent including, but not limited to, consummation of an acquisition of all share capital of the Cantu SPV by Pronto Verde from the owners of the Cantu SPV, delivery of audited closing financial statements of the Cantu SPV by Seller, and receipt of consent from the lenders and confirmation to accept repayment of the Cantu Loans. |
CONDENSED CONSOLIDATED FINANCIA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Condensed Consolidated Financial Statements | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | NOTE 3 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The accompanying unaudited condensed consolidated financial statements as of September 30, 2017 and for the nine-months and three-months then ended have been prepared in accordance with accounting principles generally accepted in the United States relating to the preparation of financial statements for interim periods. Accordingly, they do not include all the information and footnotes required for annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-months and three-months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The September 30, 2017 Condensed Balance Sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 4 – SIGNIFICANT ACCOUNTING POLICIES A. Unaudited Interim Financial Statements The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Operating results for the nine- months and three-months ended September 30, 2017, are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. B. Significant Accounting Policies The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements. C. Recent Accounting Standards In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This guidance narrows the definition of a business. This standard provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. The Company expects to adopt this guidance effective January 1, 2018. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations or cash flows. In January 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. The Company expects to adopt this guidance for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations or cash flows. In May 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-9, Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU limits the circumstances in which an entity applies modification accounting. When an award is modified, an entity does not apply the guidance in ASC 718-20-35-3 through 35-9 if it meets all of the following criteria: (i) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. (ii) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (iii) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU also removes the guidance in ASC 718 stating that modification accounting is not required when an entity adds an antidilution provision as long as that modification is not made in contemplation of an equity restructuring. In July 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral. The ASU applies to issuers of financial instruments with down-round features. It amends (1) the classification of such instruments as liabilities or equity by revising the guidance in ASC 815 on the evaluation of whether instruments or embedded features with down-round provisions must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of the value transferred upon the trigger of a down-round feature for equity-classified instruments by revising ASC 260. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. In August 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2017-12, or ASU, 2017-815, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU amends ASC 815 to “better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.” to (1) improve the transparency of information about an entity’s risk management activities and (2) simplify the application of hedge accounting. The ASU is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods therein. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early adoption is permitted. D. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 5 – FAIR VALUE MEASUREMENT The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows (in thousands): Balance as of September 30, 2017 Level 1 Level 2 Level 3 Total Liabilities: Obligation to issue shares of Common Stock $ 500 $ — $ — $ 500 Deferred payment due to the acquisition of the SPVs $ — $ — $ 3,105 $ 3,105 Warrants liability $ — $ — $ 523 $ 523 Total liabilities $ 500 $ — $ 3,628 $ 4,128 As of December 31, 2016, Level 1 Level 2 Level 3 Total Liabilities: Obligation to issue shares of Common Stock $ 187 $ — $ — $ 187 Deferred payment due to the acquisition of the SPVs $ — $ — $ 2,685 $ 2,685 Warrants Liability $ — $ — $ 2,045 $ 2,045 Total liabilities $ 187 $ — $ 4,730 $ 4,917 Per the Share Purchase Agreement (the “Italy Projects Agreement”) with Volteo Energie S.p.A., Agriholding S.r.l., and Overland S.r.l. (“the Sellers”) the Company agreed to pay the remaining balance of fifty percent (50%) of the purchase price along with annual interest rate of two percent (2%), less certain credits that is due to the sellers on the third anniversary of the closing date (the “Deferred Payment”). The Purchase Price is subject to certain adjustments and to an adjustment based on the actual EBITDA results in the 18 months following the Closing Date, per the following mechanism: (a) If the actual EBITDA in the 18 months following the Closing Date divided by 1.5 is greater than € 934, then the deferred payment shall be increased by the amount equal to fifty percent (50%) of the difference. (b) If the actual EBITDA in the 18 months following the Closing Date divided by 1.5 is lesser than € 934, then the deferred payment shall be reduced by the amount of the amount necessary to maintain a Purchase Price that yields an Equity IRR of twenty-five percent (25%), but not more than 35% of the remaining balance. On July 21, 2017, the Company notified the sellers its current deferred payment estimates pursuant to Article 3.03 of the Italy Projects Agreement regulating the “Deferred payment adjustment mechanism”. On July 28, 2017, the Sellers notified the Company that they do not agree with the Company’s estimate. The fair value measurement of the fair market value of the Deferred Payment is based on significant inputs not observed in the market and thus represents a Level 3 measurement, which reflects the Company’s own assumptions in measuring fair value. The Company estimated the fair value of the Deferred Payment using the discounted cash flow model. Key assumptions include the level and timing of the expected future payment and discount rate consistent with the level of risk and economy in general. The Deferred Payment due to the acquisition of the SPVs is included in long term loans and Liabilities in the consolidated Balance Sheets and the change in fair value of remaining balance is included in interest expenses in the consolidated statements of income. Deferred payment Balance at December 31, 2016 $ 2,685 Changes in fair value, interest expense and translation adjustments 420 Balance at September 30, 2017 $ 3,105 Warrant Liability - the estimated fair values of outstanding warrant liability were measured using Black-Scholes valuation models. These valuation models involved using such inputs as the estimated fair value of the underlying stock at the measurement date, risk-free interest rates, expected dividends on stock and expected volatility of the price of the underlying stock. Due to the nature of these inputs, the valuation of the warrants was considered a Level 3 measurement. As of September 30, 2017, and December 31, 2016, the Level 3 liabilities consisted of the Company’s warrant liability. Warrants Liability Balance at December 31, 2016 $ 2,045 Issuance of warrants 399 Changes in fair value (1,921 ) Balance at September 30, 2017 $ 523 |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2017 | |
Going Concern | |
GOING CONCERN | NOTE 6 – GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As of September 30, 2017, the Company had approximately $1,947 in cash and cash equivalents, approximately $9,344 in negative working capital, a stockholders’ equity of approximately $2,182 and an accumulated deficit of approximately $46,631. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. Management anticipates their business will require substantial additional investments that have not yet been secured. Management is continuing in the process of fund raising in the private equity and capital markets as the Company will need to finance future activities. Company’s ability to continue as a going concern is dependent upon raising capital from financing transactions and revenue from operations. These financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. |
NEWLY ISSUED ACCOUNTING PRONOUN
NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Changes and Error Corrections [Abstract] | |
NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 7 – NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS No new accounting standards have been adopted since the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 was filed. |
SHORT TERM LOAN AND DEBENTURES
SHORT TERM LOAN AND DEBENTURES | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
SHORT TERM LOAN AND DEBENTURES | NOTE 8 – SHORT TERM LOAN AND DEBENTURES On February 7, 2017, the Company entered into a 90-day Loan Agreement with Viskoben Limited to borrow $200 at a quarterly interest rate of ten percent (10.0%), or thirty percent (30.0%) if calculated annually (the “Viskoben Note”). On June 27, 2017, the Loan was fully paid by the Company. On February 14, 2017, the Company received an additional $250 under its private placement of securities closed on October 25, 2016 (the “October Financing”) and issued warrants to purchase up to 25,642 shares of its common stock at an exercise price equal to the lesser of (i) 80% of the per share price of the Company’s common stock in a public offering of up to $15 million of its securities (the “Public Offering”), (ii) $9.75 per share (the deemed aggregate exercise price), (iii) 80% of the unit price offering price in the Public Offering, or (iv) the exercise price of any warrants issued in the Public Offering, pursuant to the amendment of the October Financing. On March 14, 2017, the Company amended the terms of the October Financing, thereby agreeing to issue to the investor shares of the Company’s common stock, notes and warrants, in exchange for up to $1,500 (an increase of $500). On the same date, the Company received an additional $250 and issued warrants to purchase up to 25,642 shares of its common stock at an exercise price equal to the lesser of (i) 80% of the per share price of its common stock in the Public Offering, (ii) $9.75 per share (the deemed aggregate exercise price), (iii) 80% of the unit price offering price in the Public Offering, or (iv) the exercise price of any warrants issued in the Public Offering, pursuant to the amendment of the October Financing. On April 13, 2017 the Company received an additional $250 and issued warrants to purchase up to 25,642 shares of its common stock at an exercise price equal to the lesser of (i) 80% of the per share price of its common stock in the Public Offering, (ii) $9.75 per share (the deemed aggregate exercise price), (iii) 80% of the unit price offering price in the Public Offering, or (iv) the exercise price of any warrants issued in the Public Offering, pursuant to the amendment of the October Financing. On April 28, 2017, the Company extended the maturity date from the earlier of May 1, 2017 or the third business day after the closing of a public offering to the earlier of May 19, 2017 or the third business day after the closing of a public offering. On May 10, 2017, the Company amended the terms of the October Financing, thereby agreeing to issue to the investor shares of the Company’s common stock, notes and warrants, in exchange for up to $2,000 (an increase of $500). On May 11,2017 the Company received an additional $250 and issued warrants to purchase up to 25,642 shares of its common stock at an exercise price equal to the lesser of (i) 80% of the per share price of the Company’s common stock in the Public Offering, (ii) $9.75 per share (the deemed aggregate exercise price), (iii) 80% of the unit price offering price in the Public Offering, or (iv) the exercise price of any warrants issued in the Public Offering, pursuant to the amendment of the October Financing. On June 7, 2017, the Company received an additional $250 and issued warrants to purchase up to 25,642 shares of its common stock at an exercise price equal to the lesser of (i) 80% of the per share price of its common stock in the Public Offering, (ii) $9.75 per share (the deemed aggregate exercise price), (iii) 80% of the unit price offering price in the Public Offering, or (iv) the exercise price of any warrants issued in the Public Offering, pursuant to the amendment of the October Financing. On June 29, 2017, the Company extended the maturity date from the earlier of July 25, 2017 or the third business day after the closing of a public offering to the earlier of July 25, 2017 or the third business day after the closing of a public offering. On June 30, 2017, the Company repaid $1,000 of the outstanding balance of the October 2016 Note. On September 21, 2017, the Company extended the maturity date from the earlier of July 25, 2017 or the third business day after the closing of a public offering to the earlier of October 6, 2017 or the third business day after the closing of a public offering. As of September 30, 2017, the amortized outstanding balance is $1,065. On March 24, 2017, the Company and five of the six holders of the Debentures, representing an aggregate principal balance of $2,000, entered into a First Amendment to Senior Debenture (the “Debenture Amendment”), thereby amending the Debentures to provide that some or all of the principal balance, and accrued but unpaid interest thereon, is convertible into shares of the Company’s common stock at the holders’ election, with such right to convert beginning on the six (6) month anniversary of the Debenture Amendment and ending ten (10) days prior to the date the Debenture matures. The conversion price shall be (a) equal to 80% of the average reported closing price of the Company’s common stock on The NASDAQ Capital Market, calculated using the five (5) trading days immediately following the up-list to The NASDAQ Capital Market, or (b) if the up-list has not occurred, equal to 80% of the average reported closing price of the Company’s common stock on the OTCQB Venture Marketplace, calculated using the five (5) trading days immediately preceding the date of the conversion notice. On August 20, 2017, the Company entered into a 90-day Loan Agreement with a private investor to borrow $200 at a quarterly interest rate of ten percent (10.0%). As of September 30, 2017, this note was not paid. |
CONTINGENT
CONTINGENT | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENT | NOTE 9 – CONTINGENT From time to time the Company may be a party to commercial and litigation matters involving claims against the Company. None of the Company’s directors, officers, nonconsolidated affiliates, or any owner of record or beneficially of more than five percent of the Company’s Common Stock, is involved in a material proceeding adverse to the Company and its subsidiaries or has a material interest adverse to the Company or its subsidiaries. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. In management’s opinion, there are no current matters that would have a material effect on the Company’s financial position or results of operations and no contingent liabilities requiring accrual as of June 30, 2017. On October 22, 2016, the law firm of JS Barkats PLLC filed a complaint against the Company and its Chief Executive Officer, seeking allegedly unpaid legal fees for services rendered from June 9, 2011 through April 23, 2012 in the amount of $428 thousands, plus interest for a total of $652 thousands. This Litigation was filed as JS Barkats PLLC v. Blue Sphere Corporation and Shlomo Palas with the Supreme Court of the State of New York for the County of New York, Index No. 655600/2016. On October 26, 2016, without notice to the Company or its Chief Executive Officer or an opportunity to be heard, the New York Court issued a Temporary Restraining Order (the “TRO”) in favor JS Barkats PLLC, prohibiting the Company and Mr. Palas from transferring or dissipating any assets up to $652. On October 31, 2016, the Company removed the Barkats Litigation to federal court, filed as JS Barkats PLLC v. Blue Sphere Corporation and Shlomo Palas with the United Stated District Court, Southern District Court of New York, Docket No. 1:16-cv-08404, and on December 6, 2016, Mr. Barkats filed a motion to remand to the New York Court and request for oral argument. The Company terminated the services of JS Barkats LLC in 2012 and management believe the claims brought by JS Barkats PLLC are without merit, that the TRO was improvidently granted, and that JS Barkats PLLC misrepresented, mischaracterized and omitted material facts and the law in seeking the TRO. On July 10, 2017, the Federal Court granted JS Barkats PLLC’s motion to remand the action to the New York Court, but denied JS Barkats PLLC’s request for costs and fees in bringing its remand petition. The Federal Court did not rule upon whether plaintiff’s complaint should be dismissed and/or the matter compelled to arbitration and did not rule upon Plaintiff’s motion to hold the Company and Mr. Palas in contempt for allegedly violating the TRO. The Federal Court has since remanded the case back to the New York Court where it is currently pending. The Company terminated the services of JS Barkats LLC in 2012 and believe the claims brought by JS Barkats PLLC are without merit, that the TRO was improvidently granted, and that JS Barkats PLLC misrepresented, mischaracterized and omitted material facts and the law in seeking the TRO. The Company intend to vigorously defend against this Litigation, the TRO and any other attempts to attach the assets of the Company. On March 15, 2017, Prassas Capital, LLC, an Arizona limited liability company, filed a complaint against the Company alleging breach of contract and seeking (a) unpaid fees in the amount of $1,601 plus interest, (b) issuance of an order of prejudgment attachment and garnishment on the Company’s bank accounts, other property held by the Company and all payments owed to the Company from third parties, (c) an injunction restraining the Company from transferring funds or property outside of the court’s jurisdiction or alternatively that the court appoint a receiver to manage, operate, control and take possession of the Company’s assets, and (d) a declaration that Prassas Capital, LLC has been granted a contractual right to purchase 53,847 shares of the Company’s common stock at a price of $6.50 per share (after giving effect to the reverse stock split described below). This litigation was filed as Prassas Capital, LLC v. Blue Sphere Corporation with the United States District Court for the Western District of North Carolina, Civil Action No. 3:17-CV-00131. The Company disputes the allegations and claims, and intends to rigorously defend against this litigation. On April 10, 2017, the Company filed its answer in the Prassas Litigation, denying the underlying factual allegations contained in the complaint and denying the contention that Prassas is entitled to any relief. In addition to filing its answer, the Company (1) moved for the court to dismiss the Prassas Litigation, because of Prassas’ failure to plead one or more essential elements of its claims, and (2) brought against Prassas claims of fraud, breach of fiduciary duty, constructive fraud, negligence, unjust enrichment and punitive damages. The Company seeks reimbursement of amounts fraudulently or negligently billed by Prassas and paid by the Company of not less than $833, pre and post judgement interest, attorney’s fees and costs actually incurred in defending the Prassas Litigation. On May 10, 2017, Prassas filed its answer to the Company’s response, whereby Prassas moved for the court to dismiss the Company’s counterclaims alleging that, among other things, the Company did not plead one or more essential elements of its claims. On June 2, 2017, the Company responded by filing with the court its memorandum in opposition to Prassas’ motion dismiss the Company’s counterclaims, and further to motion for a partial judgement on the pleadings of the Company’s counterclaims in the amount of $833, plus pre-judgment and post-judgment interest. The Company intend to vigorously defend against this Litigation, the TRO and any other attempts to attach the assets of the Company. On August 22, 2017, the Company received a letter from the Division of Enforcement, U.S. Securities & Exchange Commission (the “SEC”). The letter requested that the Company voluntarily provide documents and other information relating to whether the unaudited interim financial statements included in the Company’s quarterly reports on Form 10-Q filed on February 22, 2016 and May 23, 2016 were reviewed by an independent public accounting firm in accordance with the Statement of Auditing Standards No. 100, as required by Rule 10-01(d) and 8-03 of SEC Regulation S-X. The Financial Statements were not reviewed, which was disclosed in detailed explanatory notes included with the Non-Reviewed Filings at the time of filing. The inability of the Company’s independent registered public accounting firm to complete a review of the Financial Statements was the result of obstacles to obtaining records from four facilities in Italy acquired by Bluesphere Pavia S.r.l., the Company wholly-owned Italian subsidiary, on December 14, 2015. The Company thereafter amended the Non-Reviewed Filings on May 23, 2016 and June 13, 2016, respectively, to file its interim financial statements following review by the Company’s independent auditors. |
COMMON SHARES
COMMON SHARES | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
COMMON SHARES | NOTE 10 – COMMON SHARES On March 24, 2017, the Company completed a reverse stock split of its common stock. As a result of the reverse stock split, the following changes have occurred (i) every one hundred and thirty shares of common stock have been combined into one share of common stock; (ii) the number of shares of common stock underlying each common stock option or common stock warrant have been proportionately decreased on a 130-for-1 basis, and the exercise price of each such outstanding stock option and common warrant has been proportionately increased on a 130-for-1 basis. Accordingly, all option numbers, share numbers, warrant numbers, share prices, warrant prices, exercise prices and losses per share have been adjusted within these consolidated financial statements, on a retroactive basis, to reflect this 130-for-1 reverse stock split. On January 31, 2017, the Company issued 3,109 shares of its common stock to the Former Chief Financial Officer (Israel) of the Company and 2,692 shares of its common stock to Former Chief Financial Officer (U.S.) of the Company under their departure settlement agreements with the Company. The fair market value of the shares at grant date was $41. On February 14, 2017 and March 14, 2017, the Company issued warrants in connection with two (2) separate installments of $250,000 each under the October Financing, with each such five-year warrant providing its holder with the right to purchase up to 25,642 shares of its common stock. (See Note 7). On February 21, 2017, the Company issued 19,576 shares of its common stock to four Directors of the Company and a former Director of the Company for services that were rendered in 2016 and pursuant to the Company’s Amended and Restated Non-Employee Directors Compensation Plan. The fair market value of the shares at grant date was $170. On March 2, 2017, the Company issued 17,949 shares of its common stock to a former consultant pursuant to a letter agreement dated August 8, 2014, whereby the Company had agreed to issue $350 of common stock, determined based on the closing price per share on the OTCQB Venture Marketplace on November 25, 2014, which was $19.50 per share. The letter agreement evidenced a bonus granted by the Company for investor relation and advisory services provided in 2014. In connection with the issuance, on March 1, 2017, the consultant provided to the Company a release and waiver of any and all claims. The fair market value of the shares at grant date was $87. On March 13, 2017, the Company issued 3,847 shares of its common stock to a consultant, pursuant to a consulting agreement dated September 1, 2016, in consideration for financial advisory and consulting services. The fair market value of the shares at grant date was $6. On March 31, 2017, the Company issued 7,406 shares of its common stock to several officers, directors, employees and/or consultants of the Company. All shares issued vested on March 31, 2017 pursuant to grants dated February 24, 2015 under the Company’s Global Share and Options Incentive Enhancement Plan (2014). The fair market value of the shares at grant date was $47. On April 17, 2017, the Company issued 7,840 shares of its common stock to four Directors of the Company for services that were rendered in the first quarter of 2017, pursuant to the Company’s Amended and Restated Non-Employee Directors Compensation Plan. The fair market value of the shares at grant date was $50. On June 22, 2017, the Company raised $4,500 in gross proceeds and $4,123 in net proceeds from the sale of 1,440,000 shares of its common stock together with warrants with one warrant entitling the holder thereof to purchase one share of Common Stock at a price equal to $3.30 per share in a self-underwritten “best efforts” offering to certain investors. The purchase price paid by the investors was $3.125 for one share of common stock and one warrant. The warrants are immediately exercisable and expire five years from the date of issuance. The shares of common stock and warrants were immediately separable and were issued separately. The shares of common stock and the shares of common stock underlying the warrants were registered by the Company with the U.S. Securities and Exchange Commission, and were offered and sold pursuant to a final prospectus, Registration No. 333-21869, filed on June 19, 2017, which became effective on the same date. On July 5, 2017, the Company issued 18,520 shares of its common stock to four Directors of the Company for services that were rendered in the first quarter of 2017, pursuant to the Company’s Amended and Restated Non-Employee Directors Compensation Plan. The fair market value of the shares at grant date was $50. On the same date, the Company issued 6,539 shares of its common stock to the its Chief Financial Officer under his service agreements with the Company. The fair market value of the shares at grant date was $21. On July 11, 2017, the Company issued 6,539 shares of its common stock to its Executive Vice President pursuant the Personal Employment Agreement between the Company and him, dated January 1, 2016, for services rendered to the Company thereunder. The fair market value of the shares at grant date was $17. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS On October 2, 2017, the Company issued 22,832 shares of its common stock to four Directors of the Company for services that were rendered in the first quarter of 2017, pursuant to the Company’s Amended and Restated Non-Employee Directors Compensation Plan. The fair market value of the shares at grant date was $50. On October 14, 2017, the Company issued 7,308 shares of its common stock to its Chief Executive Officer, 6,539 shares of its common stock to its Chairman of the Board of Directors and 6,539 shares of its common stock to its Executive Vice- President pursuant to their respective service agreements with the Company. The Company has estimated and recorded such shares as an expense of $61 which was recorded through the vesting periods. On November 7, 2017, the Company issued convertible promissory notes, dated October 30, 2017, to two investors for $228, in the aggregate, which are convertible into shares of the Company's common stock beginning on April 28, 2018 and ending on the date such November 2017 Notes have been repaid in full. The convertible notes bear interest at a rate of 12% per annum, mature on August 10, 2018 and become payable on maturity. All principal and any accrued but unpaid interest due under the convertible Notes will become convertible into shares of the Company’s common stock on April 28, 2018 and until the later of maturity or, in the case of a default, full repayment of the convertible note and all default interest due. The convertible notes will be convertible at a price that is sixty-five percent (65%) of the market price as defined in those notes. |
SIGNIFICANT ACCOUNTING POLICI22
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Recent Accounting Standards | C. Recent Accounting Standards In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This guidance narrows the definition of a business. This standard provides guidance to assist entities with evaluating when a set of transferred assets and activities is a business. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, and early adoption is permitted. This guidance must be applied prospectively to transactions occurring within the period of adoption. The Company expects to adopt this guidance effective January 1, 2018. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations or cash flows. In January 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. This guidance is effective for interim and annual goodwill impairment tests in fiscal years beginning after December 15, 2019, and early adoption is permitted. This guidance must be applied on a prospective basis. The Company expects to adopt this guidance for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of this guidance to have a material impact on its financial position, results of operations or cash flows. In May 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-9, Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU limits the circumstances in which an entity applies modification accounting. When an award is modified, an entity does not apply the guidance in ASC 718-20-35-3 through 35-9 if it meets all of the following criteria: (i) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. (ii) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (iii) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The ASU also removes the guidance in ASC 718 stating that modification accounting is not required when an entity adds an antidilution provision as long as that modification is not made in contemplation of an equity restructuring. In July 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral. The ASU applies to issuers of financial instruments with down-round features. It amends (1) the classification of such instruments as liabilities or equity by revising the guidance in ASC 815 on the evaluation of whether instruments or embedded features with down-round provisions must be accounted for as derivative instruments and (2) the guidance on recognition and measurement of the value transferred upon the trigger of a down-round feature for equity-classified instruments by revising ASC 260. The ASU is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other organizations, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted. In August 2017, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update 2017-12, or ASU, 2017-815, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU amends ASC 815 to “better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.” to (1) improve the transparency of information about an entity’s risk management activities and (2) simplify the application of hedge accounting. The ASU is effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods therein. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. Early adoption is permitted. |
Use of Estimates | D. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
GENERAL (Tables)
GENERAL (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
General Tables | |
Schedule of the preliminary purchase price allocations | The consolidation was recorded by allocating the cost of the acquisitions to the assets consolidated, including other intangible assets, based on their estimated fair values at the consolidation date. Based on the consolidation date valuations, the preliminary purchase price allocations for as the following: Cash and cash equivalents $ 872 Accounts Receivable 1,149 Prepaid expenses and other current assets 4,493 Property, plant and equipment 15,144 Other noncurrent assets 4,382 Short term loans (3,969 ) Accounts payable and accrued liabilities (3,847 ) Bank loans (15,244 ) Total net assets consolidated: $ 2,980 |
Schedule of pro-forma results | 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. Nine Months Ended Three Months Ended September 30 September 30 2017 2016 2017 2016 Revenues $ 4,373 $ 4,556 $ 1,284 $ 1,850 Net (loss) income (138 ) (7,422 ) (4,233 ) (729 ) Net (loss) earnings per common share Basic and diluted $ (0.05 ) $ (4.26 ) $ (1.15 ) $ (0.38 ) |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of financial assets and liabilities that measured at fair value on a recurring basis by level | The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows (in thousands): Balance as of September 30, 2017 Level 1 Level 2 Level 3 Total Liabilities: Obligation to issue shares of Common Stock $ 500 $ — $ — $ 500 Deferred payment due to the acquisition of the SPVs $ — $ — $ 3,105 $ 3,105 Warrants liability $ — $ — $ 523 $ 523 Total liabilities $ 500 $ — $ 3,628 $ 4,128 As of December 31, 2016, Level 1 Level 2 Level 3 Total Liabilities: Obligation to issue shares of Common Stock $ 187 $ — $ — $ 187 Deferred payment due to the acquisition of the SPVs $ — $ — $ 2,685 $ 2,685 Warrants Liability $ — $ — $ 2,045 $ 2,045 Total liabilities $ 187 $ — $ 4,730 $ 4,917 |
Schedule of deferred payment due to the acquisition of the SPVs | The fair value measurement of the fair market value of the Deferred Payment is based on significant inputs not observed in the market and thus represents a Level 3 measurement, which reflects the Company’s own assumptions in measuring fair value. The Company estimated the fair value of the Deferred Payment using the discounted cash flow model. Key assumptions include the level and timing of the expected future payment and discount rate consistent with the level of risk and economy in general. The Deferred Payment due to the acquisition of the SPVs is included in long term loans and Liabilities in the consolidated Balance Sheets and the change in fair value of remaining balance is included in interest expenses in the consolidated statements of income. Deferred payment Balance at December 31, 2016 $ 2,685 Changes in fair value, interest expense and translation adjustments 420 Balance at September 30, 2017 $ 3,105 |
Schedule of level 3 liabilities | As of September 30, 2017, and December 31, 2016, the Level 3 liabilities consisted of the Company’s warrant liability. Warrants Liability Balance at December 31, 2016 $ 2,045 Issuance of warrants 399 Changes in fair value (1,921 ) Balance at September 30, 2017 $ 523 |
GENERAL (Details Narrative)
GENERAL (Details Narrative) € in Thousands, $ in Thousands | Sep. 30, 2017USD ($) | Sep. 30, 2017EUR (€) | Sep. 11, 2017EUR (€) | Sep. 04, 2017USD ($) | Sep. 04, 2017EUR (€) | Sep. 11, 2017USD ($) | Sep. 11, 2017EUR (€) | Aug. 30, 2017USD ($) | Aug. 30, 2017EUR (€) | Jul. 14, 2017EUR (€) | Jun. 29, 2017USD ($) | Jun. 29, 2017EUR (€) |
Euro [Member] | ||||||||||||
Facility fee per month per facility | € 10 | |||||||||||
Penalty payment due to each SPV | € 85 | |||||||||||
Helios 3 Italy Bio-Gas 2 L.P. [Member] | ||||||||||||
Long term loan faciliy | $ | $ 1,912 | |||||||||||
Interest rate | 14.50% | 14.50% | ||||||||||
Annual operation fee (percent) | 1.50% | 1.50% | ||||||||||
Discount for refinancing loan | 15.00% | 15.00% | ||||||||||
Helios 3 Italy Bio-Gas 2 L.P. [Member] | Euro [Member] | ||||||||||||
Long term loan faciliy | € 1,600 | |||||||||||
Cantu SPA [Member] | ||||||||||||
Ownership interest acquired | 100.00% | 100.00% | ||||||||||
Purchase price of acquisition | $ | $ 2,490 | |||||||||||
Purchase price to be paid and held in escrow | $ | $ 179 | |||||||||||
Balance of loans to be paid by buyer | $ | 1,145 | |||||||||||
Brokerage fee payable by seller | $ | 68 | |||||||||||
Amount to be held in escrow | $ | $ 113 | |||||||||||
Cantu SPA [Member] | Euro [Member] | ||||||||||||
Purchase price of acquisition | € 2,200 | |||||||||||
Purchase price to be paid and held in escrow | € 150 | |||||||||||
Balance of loans to be paid by buyer | 1,010 | |||||||||||
Brokerage fee payable by seller | 60 | |||||||||||
Amount to be held in escrow | € 100 | |||||||||||
Udine SPA [Member] | ||||||||||||
Effective date of acqusition | Sep. 4, 2017 | Sep. 4, 2017 | ||||||||||
Ownership interest acquired | 100.00% | 100.00% | ||||||||||
Purchase price of acquisition, net | $ | $ 2,784 | |||||||||||
Purchase price of acquisition | $ | 3,236 | |||||||||||
Guaranteed monthly EBITDA | $ | $ 110 | |||||||||||
Udine SPA [Member] | Euro [Member] | ||||||||||||
Purchase price of acquisition, net | € 2,358 | |||||||||||
Purchase price of acquisition | 2,706 | |||||||||||
Guaranteed monthly EBITDA | € 91 | |||||||||||
Gain Solutions, S.R.O. [Member] | ||||||||||||
Interest rate | 10.00% | 10.00% | ||||||||||
Penalty Interest rate - payment before March 13, 2018 | 20.00% | 20.00% | ||||||||||
Penalty Interest rate - payment later March 13, 2018 | 25.00% | 25.00% | ||||||||||
Security interest of equity | 15.00% | 15.00% | ||||||||||
Ownership interest sold | 38.50% | 38.50% | ||||||||||
Purchase price of stock sale | € 1,320 | |||||||||||
Downpayment payable to purchaser | $ | $ 240 | |||||||||||
Gain Solutions, S.R.O. [Member] | Euro [Member] | ||||||||||||
Purchase price of stock sale | € 1,100 | |||||||||||
Downpayment payable to purchaser | € 200 |
GENERAL (Details)
GENERAL (Details) - Consolidated Entities [Member] $ in Thousands | Jul. 02, 2017USD ($) |
Cash and Cash equivalents | $ 872 |
Accounts Receivable | 1,149 |
Prepaid expenses and other current assets | 4,493 |
Property, plant and equipment | 15,144 |
Other noncurrent assets | 4,382 |
Short term loans | (3,969) |
Accounts payable and accrued liabilities | (3,847) |
Bank loans | (15,244) |
Total net assets, consolidated | $ 2,980 |
GENERAL (Details 1)
GENERAL (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
General Tables | ||||
Revenues | $ 1,284 | $ 1,850 | $ 4,373 | $ 4,556 |
Net (loss) Income | $ (4,233) | $ (729) | $ (138) | $ (7,422) |
Net (loss) earnings per common share | ||||
Basic and diluted | $ (1.15) | $ (0.38) | $ (0.05) | $ (4.26) |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities: | ||
Obligation to issue restricted shares of Common Stock | $ 500 | $ 187 |
Deferred payment due to the acquisition of the SPVs | 3,105 | 2,685 |
Warrants Liability | 523 | 2,045 |
Total liabilities | 4,128 | 4,917 |
Fair Value, Level 1 [Member] | ||
Liabilities: | ||
Obligation to issue restricted shares of Common Stock | 500 | 187 |
Total liabilities | 500 | 187 |
Fair Value, Level 3 [Member] | ||
Liabilities: | ||
Deferred payment due to the acquisition of the SPVs | 3,105 | 2,685 |
Warrants Liability | 523 | 2,045 |
Total liabilities | $ 3,628 | $ 4,730 |
FAIR VALUE MEASUREMENT (Detai29
FAIR VALUE MEASUREMENT (Details 1) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Balance at beginning | $ 2,045 |
Balance at end | 523 |
Deferred payment due to the acquisition of the SPVs [Member] | |
Balance at beginning | 2,685 |
Changes in fair value, interest expense and translation adjustments | 420 |
Balance at end | $ 3,105 |
FAIR VALUE MEASUREMENT (Detai30
FAIR VALUE MEASUREMENT (Details 2) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Unobservable Input Reconciliation | |
Balance at beginning | $ 2,045 |
Issuance of warrants | 399 |
Changes in fair value | (1,921) |
Balance at end | $ 523 |
FAIR VALUE MEASUREMENT (Detai31
FAIR VALUE MEASUREMENT (Details Narrative) - Italy Projects Agreement [Member] € in Thousands | 9 Months Ended |
Sep. 30, 2017EUR (€) | |
Interest rate | 2.00% |
Period of adjustments after closing date | 18 months |
Actual EBITDA divisor | 1.5 |
Percentage balance of acquisition adjustment added to deferred payment | 50.00% |
Equity IRR | 25.00% |
Percentage balance of acquisition adjustment deducted from deferred payment | 35.00% |
Minimum [Member] | Euro [Member] | |
Computed threshold of EBITDA | € 934 |
Maximum [Member] | Euro [Member] | |
Computed threshold of EBITDA | € 934 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Going Concern Details Narrative | ||||
Cash and cash equivalents | $ 1,947 | $ 416 | $ 375 | $ 1,888 |
Working capital | (9,338) | |||
Stockholders' deficit | 2,182 | (2,224) | $ (8,949) | $ (3,486) |
Accumulated deficit | $ (46,581) | $ (46,493) |
SHORT TERM LOAN AND DEBENTURES
SHORT TERM LOAN AND DEBENTURES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Aug. 22, 2017 | Jun. 30, 2017 | Jun. 07, 2017 | May 11, 2017 | May 10, 2017 | Apr. 13, 2017 | Mar. 24, 2017 | Mar. 14, 2017 | Feb. 14, 2017 | Feb. 07, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 22, 2017 | Dec. 31, 2016 |
Short Term Loans | $ 5,612 | $ 280 | ||||||||||||
Proceeds from short term loans | 1,937 | $ 50 | ||||||||||||
Warrant exercise price | $ 3.30 | |||||||||||||
First Amendment to Senior Debentures [Member] | ||||||||||||||
Principal balance | $ 2,000 | |||||||||||||
Percentage of average reported closing price | 80.00% | |||||||||||||
Number of trading days | 5 days | |||||||||||||
Start of conversion period of debentures | 6 months | |||||||||||||
End of conversion period of debentues | 10 days | |||||||||||||
Viskoben Loan Agreement [Member] | ||||||||||||||
Debt face amount | $ 200 | $ 200 | ||||||||||||
Interest rate - annual | 30.00% | 30.00% | ||||||||||||
Interest rate - quarterly | 10.00% | 10.00% | ||||||||||||
Debt term | 90 days | 90 days | ||||||||||||
October Financing [Member] | ||||||||||||||
Debt face amount | $ 2,000 | $ 1,500 | ||||||||||||
Short Term Loans | 1,065 | |||||||||||||
Principal balance | $ 0 | |||||||||||||
Increase in debt amount | $ 500 | 500 | ||||||||||||
Proceeds from short term loans | $ 250 | $ 250 | $ 250 | $ 250 | $ 250 | |||||||||
Number of shares called by warrants | 25,642 | 25,642 | 25,642 | 25,642 | 25,642 | |||||||||
Warrant exercise price | $ 9.75 | $ 9.75 | $ 9.75 | $ 9.75 | $ 9.75 | |||||||||
Percentage of per share price of common stock in public offering | 80.00% | 80.00% | 80.00% | 80.00% | 80.00% | |||||||||
Public offering amount | $ 15,000 | |||||||||||||
Repayment of note | $ 1,000 |
CONTINGENT (Details Narrative)
CONTINGENT (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Apr. 10, 2017 | Mar. 15, 2017 | Oct. 22, 2016 |
Barkats Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Date of complaint | Oct. 22, 2016 | ||
Name of complainant | JS Barkats PLLC | ||
Description of complaint | Allegedly unpaid legal fees for services rendered from June 9, 2011 through April 23, 2012 | ||
Domicile of litigation | Supreme Court of the State of New York for the County of New York | ||
Damages sought | $ 428 | ||
Damages sought with accrued interest | $ 652 | ||
Prassas Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Date of complaint | Mar. 15, 2017 | ||
Name of complainant | Prassas Capital, LLC | ||
Description of complaint | Alleging breach of contract | ||
Domicile of litigation | Western District of North Carolina | ||
Damages sought | $ 1,601 | ||
Damages sought shares of common stock | 53,847 | ||
Damages sought price per share | $ 6.50 | ||
Counterclaims sought | $ 833 |
COMMON SHARES (Details Narrativ
COMMON SHARES (Details Narrative) $ / shares in Units, $ in Thousands | Jul. 11, 2017USD ($)shares | Jul. 05, 2017USD ($)shares | Jun. 22, 2017USD ($)$ / sharesshares | Apr. 17, 2017USD ($)shares | Mar. 31, 2017USD ($)shares | Mar. 24, 2017 | Mar. 14, 2017USD ($)$ / sharesshares | Mar. 13, 2017USD ($)shares | Mar. 02, 2017USD ($)shares | Feb. 21, 2017USD ($)shares | Jan. 31, 2017USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($)shares | Jun. 07, 2017$ / sharesshares | May 11, 2017$ / sharesshares | Apr. 13, 2017$ / sharesshares | Feb. 14, 2017$ / sharesshares | Aug. 08, 2014USD ($)$ / shares |
Reverse stock split ratio | 130 | 130 | ||||||||||||||||
Issuance of shares for services (in shares) | 641 | |||||||||||||||||
Fair value of shares issued for services | $ | $ 41 | $ 132 | $ 641 | |||||||||||||||
Warrant exercise price | $ / shares | $ 3.30 | |||||||||||||||||
Proceeds from issuance of stock and warrants | $ | $ 4,500 | |||||||||||||||||
Proceeds from issuance of shares and warrants, net of issuance costs | $ | $ 4,123 | $ 4,123 | $ 3,001 | |||||||||||||||
Issuance of common stock, net of issuance costs (in shares) | 1,440,000 | |||||||||||||||||
Purchase share price paid | $ / shares | $ 3.125 | |||||||||||||||||
Warrant expiration term | 5 years | |||||||||||||||||
Number of common shares issued for warrant | 1 | |||||||||||||||||
Executive Vice President [Member] | ||||||||||||||||||
Share based compensation (in shares) | 6,539 | |||||||||||||||||
Fair value of shares issued as share based compensation | $ | $ 17 | |||||||||||||||||
Chief Financial Officer [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 6,539 | |||||||||||||||||
Fair value of shares issued for services | $ | $ 21 | |||||||||||||||||
Consultant One [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 17,949 | |||||||||||||||||
Fair value of shares issued for services | $ | $ 87 | |||||||||||||||||
Amount of shares to be issued, per letter agreement | $ | $ 350 | |||||||||||||||||
Price per share, per letter agreement | $ / shares | $ 19.50 | |||||||||||||||||
Consultant Two [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 3,847 | |||||||||||||||||
Fair value of shares issued for services | $ | $ 6 | |||||||||||||||||
Global Share and Options Incentive Enhancement Plan (2014) [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 7,406 | |||||||||||||||||
Fair value of shares issued for services | $ | $ 47 | |||||||||||||||||
Amemded and Restated Non-Employee Directors Compensation Plan [Member] | ||||||||||||||||||
Share based compensation (in shares) | 18,250 | 7,840 | ||||||||||||||||
Fair value of shares issued as share based compensation | $ | $ 50 | $ 50 | ||||||||||||||||
October Financing [Member] | ||||||||||||||||||
Proceeds from private placement | $ | $ 250 | |||||||||||||||||
Number of shares called by warrants | 25,642 | 25,642 | 25,642 | 25,642 | 25,642 | |||||||||||||
Warrant exercise price | $ / shares | $ 9.75 | $ 9.75 | $ 9.75 | $ 9.75 | $ 9.75 | |||||||||||||
October Financing [Member] | Warrant [Member] | ||||||||||||||||||
Number of shares called by warrants | 25,642 | |||||||||||||||||
Warrant expiration term | 5 years | |||||||||||||||||
Chief Financial Officer [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 3,109 | |||||||||||||||||
Former Chief Financial Officer [Member] | ||||||||||||||||||
Issuance of shares for services (in shares) | 2,692 | |||||||||||||||||
Directors [Member] | Global Share and Options Incentive Enhancement Plan (2014) [Member] | ||||||||||||||||||
Share based compensation (in shares) | 19,576 | |||||||||||||||||
Fair value of shares issued as share based compensation | $ | $ 170 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) $ in Thousands | Nov. 07, 2017 | Oct. 14, 2017 | Oct. 02, 2017 | Jul. 11, 2017 | Jul. 05, 2017 | Apr. 17, 2017 | Sep. 30, 2017 | Sep. 30, 2016 |
Sharebased compensation | $ 360 | $ 371 | ||||||
Executive Vice President [Member] | ||||||||
Share based compensation (in shares) | 6,539 | |||||||
Fair value of shares issued as share based compensation | $ 17 | |||||||
Amemded and Restated Non-Employee Directors Compensation Plan [Member] | ||||||||
Share based compensation (in shares) | 18,250 | 7,840 | ||||||
Fair value of shares issued as share based compensation | $ 50 | $ 50 | ||||||
Subsequent Event [Member] | ||||||||
Sharebased compensation | $ 61 | |||||||
Subsequent Event [Member] | Convertible Promissory Notes [Member] | ||||||||
Debt face amount | $ 228,000 | |||||||
Interest rate - annual | 12.00% | |||||||
Matuirty date of debt | Aug. 10, 2018 | |||||||
Conversion price discount | 65.00% | |||||||
Subsequent Event [Member] | Chief Executive Officer [Member] | ||||||||
Share based compensation (in shares) | 7,308 | |||||||
Subsequent Event [Member] | Board of Directors Chairman [Member] | ||||||||
Share based compensation (in shares) | 6,539 | |||||||
Subsequent Event [Member] | Executive Vice President [Member] | ||||||||
Share based compensation (in shares) | 6,539 | |||||||
Subsequent Event [Member] | Amemded and Restated Non-Employee Directors Compensation Plan [Member] | ||||||||
Share based compensation (in shares) | 22,832 | |||||||
Fair value of shares issued as share based compensation | $ 50 |