Well, I think the story about getting the catalyst off of the tapes may be a fib. It could be a run-of-the-mill catalyst, nothing special. Who is ever going to prove him wrong about the tapes? Where are the tapes? What tapes? The ones that are so degraded now that they just can't be read anymore? The tape that was lost last year? the one the dog ate?

The best yarns are the ones that are impossible to disprove.

Look at Lubrizol's product line... they have lots of catalysts... and they may not be that hard to get ahold of. They are in the area too.

I agree with what you are saying, except that I am almost certain that the Michael jackson case was civil as well.

I don't know how the SEC operates being in Canada, but I would think that a "settlement" would involve JB being gone, and a considerable sum of money.

IMO unless JBI turns itself around immediately and starts making money, they are done.

Regardless of all of the arguments pro and con, they have repeatedly not fulfilled their promises to investors wrt the bottom line. Well, now they have to. Pure and simple. I could imagine them surviving if they did that, without JB.

This last PR is not helping. More BS. SOmeone has to ask JB a simple question; when will you start making money? simple. no hurdles, roadblocks, permits... all just BS. plan and execute.

Question: what if the catalyst does not exist? Fact is, if someone else took over and discovered that, yet more misprepresentation charges would arise, and they would be criminal. The only people that would know are JB and his chemist friend from Lubrizol (which happens to be in the catalyst business). From my reading of the SEC case, the DOJ is going to level criminal charges anyway.

I have heard stories of CEOs barricading themselves inside their offices, unwilling to leave until the very end... their defiance of the SEC seems to be taking the in that direction.

I can speak authoritatively with experience about this. I hate to keep on doing this, but it is tough when you actually do have useful experience in industry. Tough not to bring up hard reality.

In my last position (a record of which does not exist in any record electronically anywhere in this world) I worked for a large resource company on an operationally necessary logistics project. This company moves large amounts of product from one location to another for the next processing step. At a critical point on the journey (which is cross-country btw) there is a hub where the mode (rail, air, truck, etc) changes exactly as Rawnoc describes. I would prefer the use of the word "intermodal" transportation.

Just being realistic, no company would ever do this unless they had to. It is a huge cost factor because it requires an expertise that is very rare and would be built for a specific large custome rwith sufficient volume to make it worthwhile. In this case we had two modes (rail and truck). THe economics of them were about the same. The ONLY reason the analysis was done was that the geography dictated certain parameters. Rail has to be available at al locations. And coincidentally, the dust kicked up by trucks is a factor. It would become a problem for JBII in their yard. Once again... permitting on that. In fact, it was a problem for us and dictated rail-only at the receiving end.

In order to do it efficiently... it has to be thought about and is a cost factor. JBII would have to find an entity good at this, experienced, and able to handle the volume JBI has.

If JBI was going to go truck (which seems the first obvious choice) they would have had to think about dust levels and logistics in the yard. They do have a large yard. Rail avoids the dust.... but yes the tracks are not on-site, and it is NOT a small matter to the environmentatl regulators.

All of this is cost/ schedule factors that JBI should have thought about. If they didn't... well that is their problem.

Not to this poster. I have posted extensively that the permitting was a red herring intended to distract investors from reality.

It always made sense that whatever permits they needed would be for 3 processors. They should have planned for building all 3 at once or in a sequence that would allow for Lessons Learned to be apssed after the first one. In a coordinated sequence, with permitting as a detail.

The stated reason for the delay of #2 and #3 was always permitting. This was nothing but a red herring or simply bad planning from JBI.

well obviously thay are not selling ALOT Of fuel from the P2O facility then are they... no doubt they sold something to somebody... hooray.

Let's be careful about the use of the word "quote". A quote is a legal document. It implies that the company supplying the quote will supply product at the price specified for a certain length of time. It is a firm commitment. I worked on multi-year projects where as part of the design process we negotiated pricing with suppliers and obtained firm quotes. No supplier is going to waste their time and resources participating in that without a significant chance of business and, barring the unforeseen, they expect it. After a periuod of time, the quote becomes stale and needs renegotiation. Commodity prices may have changed, etc...

The use of the word "offer' means that perhapd JB had a telephone conversation with SOmerset where they gave him a number verbally. That is not a quote and is not a legal document. What it is is an off-th-cuff comment that does not mean anything. And JB goes telling investors about it like it is in-the-bank...

once again... reality.

This was what I said:

"All things taken into consideration, if this information was provided to investors it was setting an expectation that did not happen and was misleading. But, it could not be called an outright lie either..."

that statement is correct. At the end of the day, it is a false promise. He promised an operating profit of 600% (assuming a cost of $10). The fact is that Somerset was a unique situation. The promise was that he could sell product reliably to refineries for WTI-3. That is not true. If it was true, he would have sold to Marathon long ago, made handsome profits, and be profitable.

The reasons why it did not work out don't really matter. The match with Somerset seemd like a good one at first glance, but they both have problems.

So he got more than that by selling some product from the blending plant. The cost base is not the same, regardless if he got some kind of deal. Under standard costing rules the investment in the blending plant would not matter. Plus, when the blending plant was in operation they must have had some feedstock and paid for it, and I am sure it was more than $10/barrel. They went bankrupt, so they were selling fuel product for probably over $100/barrel and not doing that well at it.

If what you are saying was true, that blending plant would never have gone bankrupt. They would have been insanely profitable.

Where do you get this statement from:

"The cost to process plastic into spec fuel is far lower than the cost of converting crude oil to spec fuel especially when you factor in that just under half of all crude oil is bought by big oil at full crude prices and they make a very nice profit from refining it."

The first part about the costs is hard to believe. I wokred on a refining construction job and loearned that if the piping alignment is off by as little as 2% you may as well scrap the plant as you will never make money. There is obviously economies of scale at work here, so how can JBI comp[ete on cost with a large refinery?

And you state that half of all crude oil is bought at WTI? If that is what you are saying. I did some research on this and I think WTI applies only on the spot market. It is a hard area to research, but crude is usually sold by volume from various suppliers. It is driven by the customer like in automotive, which is a brutally price-competitive business. Suppliers get squezzed on price. ANyway, I would be interested in seeing any hard data on the average prioce at which crude is sold. WTI is the spot price, only applicable in small quantities.

And this is a good one:
"Selling fuel to blending facility takes profits off the table so in the long run the blending facility will earn the company money and opens up markets to them such as XTR."

What investor is interested in something that takes profits off the table? If that is the case, JBI should just sell to refineries and be done with it. The blending plant is a different business. Let it run on it's own.

Your post is generally incoherent.

And they signed a couple of supply deals with Green fuel companies... so what? DO you know how many suppliers they have, how they intend to contract out their needs? etc?? Those sompanies probably have plenty of suppliers.

My point is that both SOmset and JBI are weak players on their own, but perhaps together they made sense.

With a $22 Million investment in SOmerset having been made, it looked good on paper and it is unfortunate that JBI could not deliver the goods when Somerset needed it.

Moreover.. the figure of WTI - 3 is meaningloess because we have no idea what kind of price JBI would have fetched from a strong refinign player like the Marathon refinery, whch was Somerset's competition in the same state. Apparently lots of Semerset suppliers went over to them. If JBI's business was in supplying refineries with fuel, we have no idea how well they would have done because Somerset was a unique situation that may have been an opportunity iof JBI could have made it work.

The point is that that fuel was sold from the blending plant, not direct from the p2O process. The blending plant went bankrupt before, so we know that it has had some cost problems in the past, much like SOmerset did. Based on that, selling for that kind of money is not very impressive to me. We have no idea what the cost structure is, where the feedstock came from, and what the margin is on it.

depends on how you look at it. Actually SOmerset would have been a good fit for JBI as they were a small refinery. It would have been a great partnership, at least on paper.

SO why didn't it work??

One has to wonder. Somerset gave it up in 2010, which would have been enough time for JBI to step in if their claims were true and they were able to supply them .

THey were not. One has to wonder why.

I doubt (always have) that they can actually make fuel for $10/barrel. That fact alone makes the discussion of WTI-3 or $100/barrel irrelevant, because we really have to ask outselves if that claim is true. It is only JB's word, there is no empirical evidence.

Now, we are lookign at the cost of the blending plant PLUS the P2O plant as the invested capital, and at the tune of $25 Million.

THe Somerset refinery had $22 Million into it. That is one heck of a Cadillac. In my view it should have been a perfect fit.. it is an opportunity lost, now we will never know.

THe reality now is different. Investors do NOT know whether the fuel being sold from JBI is derived from the P2O process or not. THis should be viewed as a betrayal of investors, regardless of the price. Investors have no idea what the cost base is, or whether or not they wil lbe profitable, or even whether they need to make oil from plastic anymore.

"The death knell for SER was sounded when its largest supplier of crude stopped selling to the company at the beginning of 2010, and instead began shipping its products to Marathon.

"We simply weren't able to buy enough crude oil to process to keep our doors open," Phelps said at the time. "

There you go. SER was the outfit that purchased Somerset and tried to make a go of it after investing $20 Million. THey could not build their supply base. THis is contained in this reference here:

http://www.istockanalyst.com/business/news/5423555/somerset-refinery-is-sold

My impression is that they were an extremely small refinery that would have had trouble competing with the big boys in the first place, but could potentially made it as a vertically-integrated (they owned several gas stations) operation that undercut the competition. THe only other refinery in the state did much higher throughput at 226000 barrels/ day compared to SOmerset's paltry 5500 barrels/day. Truly a Mom and Pop operation.

THe same information is contained here:

http://www.istockanalyst.com/article/viewiStockNews/articleid/3852794

"The plan didn't work out because the company could not get a sufficient supply of crude oil from suppliers, said Eddie Phelps, a spokesman for Somerset Energy Refining, the current name of the refinery. "

Sounds like they had had financial problems for a long time leadin gup to the bankruptcy and one owner invested some money and gave them a shot, to no avail...

so.. OF COURSE they are going to make an offer to JBI. No matter what the margin is.

what would you do if you were a refinery that was going out of business because you could not get feedstock? Of course you would make an offer?

Contrarily... what would you do if you were a busy refinery that had all kinds of suppliers wanting to sell product?

Answer: take the lowest price based on negotiated suplly contracts with a variety of suppliers, only paying WTI on the spot market only when you are forced to.

... Reality.

your view is quite narrow. They may have sold some fuel, but that by no means means that they will be profitable.

I did a calculation once to show that in order to get a 20% return on a $2 Million investment, they had to make $800k for 3 years. That is the kind of criteria that companies use.

Now they may have gotten the blending plant for a song, but it had to be retrofitted. It is hard to way what it was worth anyway. May just hae been the value of the land it rested on. And, I know something about demolition. Sometimes it costs so much (with the added cost of environmental remediation and so on) that it may have been worth less than nothing. Anything to do with fuels and storage tanks, especialyl underground storage tanks, is very expensive to deal with. Lots of contaminants all over the place. I have worked on several demolition projects.

So, he sold some fuel for a higher price than the WTI-3. So what? What were his costs? I have never believed the $10/ barrel value. Whatever the number is, add in the capital (amortized over a period to get an aceptable rate of return) and operating costs of the blending plant. It was a blending plant before, as far as I know went bankrupt, so is operating in much the same way as it was before.

Furthermore, how much of the sale was derived from this so-called P2O fuel? I don't think that investors can authoritatively say.

SO what does that mean... not much.

All I am saying is that at some point JB has to make good on a promise. When I first started here it was that he had a viable profitable tape business that would provide th eneeded cash to develop P2O. That turned out to be malarky. Then I thought he could sell fuel to a refinery for what appeared to be a great profit margin. ... malarky... oh no... he can do better. SO over a year later he manages to make a sale from the blending plant.

Well, so what? He could have done that before by simply investing in the blending plant instead. They are two different investments and two different business cases... they are independent of each other..

I say based on this he will never be profitable.

From what I read about teh Somerset refinery affair, the fact was that Somerset was actually having trouble getting feedstock at that time. Therefore, i would believe that they would have provided that quote. They were desperate for feedstock froim anywhere.

THe is a bit of a grey issue. In reality, I believe an operating profitable refinery would receive feedstock from a number of sources at the best price they would get. The highest price they would pay would be for small quantities on the spot market, where they may pay WTI - 3.

All things takern into consideration, if this information was provided to investors it was setting an expectation that did not happen and was misleading. But, it could not be called an outright lie either...

Nor sure exactly what your post means, but they have not sold any machines to anybody. Yoru use of the words "intends" is accurate. Heck, every company "intends". I intend every day.

THe RKT deal calls for JBII to erect their machines at their cost (JBI's cost) on RKT's property. Great deal for RKT, no risk. Nothing down...

how?

they haven't sold any machines to anybody, so how do you know that? That is nothing but JB's guess. Likewise the profitability. They have sold precious little fuel as well.

you are saying that without providing any logic behind it. I will give you my logic.

Companies only have so much money to spend. If they don't make an effort to spend it on shareholder return in the most efficient way, it will just get spent.

I don't know if the P2O facility is making fuel or not. Or if it is ready ewven to make fuel. I know that processor's #2 and 3 and not ready yet. Perhaps that is explainable, since they needed permitting in order to build all 3 at once. I would think that could be countered with proper planning, but again \i don't know.

Pak-It has been sold to raise funds. It was contributing to the bottom line wasn't it?

Therefore, was buying and refitting the blending plant the best way to spend shareholder's money? Almost assuredly not.

If they had not spent money on the blending plant, they could have had processors 1-3 up and running sooner and maybe could have kept Pak-it. and according to JB, could have been selling oil for $70/ barrel. Seems pretty reasonable.

All of this is just part of the regular capital budgeting process. I have spoent the last 5 years working in this area. A project starts as an idea and money starts being spent doing analysis, until the design is near complete and the ROI is known. Then a go/no go decision is made. The money to get to that point is maybe 2 or 5% of the final cost.

This has not been done, as is fairly obvious... that is my logic or malarky..

Yours??

yes it is a good thing. I googled XTR and they seem to be a retail distribution company with a green fuels mission statement. I don't kow whow that kidn of business would work. I can only guess that they have multiple suppliers and some agreement as to volumes, etc. After, they have to plan distribution fairly meticulously.

excellent research. I just find it irresponsible to assume that JBI alone is supplying these companies and then doing calculations for throuput based on that.

Bty that way... I would not have seen that statement about blending as a positive thing. Not at all. It means that the original P2O concept is secondary to fuel blending and distribution. But then, that was the plan all along.

Why is it that with these fuel contracts everybody is assuming that JBI is the sole provider or something? How do you know that these companies have not got multiple fuel contracts in place? I have worked in several engienering/ construction companies now and they all had multiple suppliers.. such assumptions are ridiculous. There is no point in looking at XTR's needs and assuming that that is what JBI's output needs to be. There was no detail on price... terms, etc in the PRs.

Actually Janice, I can corroborate. I was also told by local "sources" that he could not book the media credits as an asset, but that he did anyway.

These same "sources" told me that when he was doing the tape business he was told that he could not make the claim of being able to process 100% of the tapes. They could make no such guarantees, as it was on a "best efforts" basis.

He made that claim anyways as well.

I have some great "sources". After all, I am a local yokel.

Have you considered that JB can't step down because that would allow for far more damning evidence of fraud to come to light? Maybe he is in a desperate corner and can't get out.

For instance, what if the catalyst does not exist of if it simplyt came from another company and is fairly run-of-the-mill? If he were to step down, someone else would have to take over as CEO and this would come to light. As well, fraud concerning the tape business (or the lack thereof). He would be up on more charges.

Even if he settled with the SEC it would not help. If they did not pursue other claims, other litigants would and class action suits would fly like.... pigs!!

Not stepping down and attempting to take on the government has more than a hint of desperation....

I think he is porked!!!!!!!!!!

Further, IMO the claim negotiation will work in the following way: there is always lots of extra stuff thrown in for good measure that are in fact bargaining chips. The tactic is to put it in purposefully in order to throw it away to get a reasonable settlement.

I think the accounting fraud is a lock. That is why they have used so much ink documenting it in the Statement of claim.

Th other stuff
- there is a hint at misrepresentation of the tape business' revenues.
- there is hint (use of the word "purportedly") that the claim of a secret catalyst is fraudulent.
- there is language about the use of the "mails". This could be referring to several things. use of pamphlets? Use of the internet?
- there is a hint that there was impropriety in the creation of JBI Inc. from 310 Holdings, that it was not arms-length.



is potentially more serious but much more difficult to prove. Imagine if they had writtne that up... also, it could expand the investoigation and open up so mamny cans of worms they will have to have a fishing derby.

So, they will make a settlement based on the accounting fraud.. I would like to know how much of a misstatement the media credits really were... certainly not inflating the size of assets 1000%.

There is an important inconsistency in the claim. I just read the whole thing in it's entirety. In my opinion this is poor wording, but it is important.

Summary para 1:

"Specifically, the Defendants misrepresented and overstated the actual value of JBI’s assets and, hence, of the company itself by almost 1,000%."

para 3-4:

"Specifically, in its financials JBI listed media credits purchased by the company for $1,000,000 in common stock as having a value of $9,997,134, which made the media credits the single largest asset on JBI’s balance sheet.
3. The almost 1,000 % overvaluation of the media credits substantially misrepresented the actual value of JBI’s assets and, hence, of the company itself."

A different statement.

IMO this does make the suit any less threatening, but it is initially misleading. If the companies assets were indeed overvalued by 1000% that would be a problem indeed.

THe claim is very wordy and does capitalize on the media credits issue. It relies on it. However, there are various other claims made or hinted at which are more serious, but more difficult to prove:
- there is a hint at misrepresentation of the tape business' revenues.
- there is hint (use of the word "purportedly") that the claim of a secret catalyst is fraudulent.
- there is language about the use of the "mails". This could be referring to several things. use of pamphlets? Use of the internet?
- there is a hint that there was impropriety in the creation of JBI Inc. from 310 Holdings, that it was not arms-length.

In my view this suit could be expanded into all of these areas. It focuses on the financials because it is proveable. nPotentially it is much bigger.

I personally don't know how important the Media Credits were in the valuation of the company's assets. If someone points me to a financial statement I will look at it. I think it would impact the size of the settlement, Fraud is Fraud, lying is lying and it goes into great detail on the accouinting issues. If they went into the above, it would be a book.

In my view that is a bad investment decision... poor timing. As the JBII chart has shown since it's high of over $7.00.

I disagree that any company would invest in somehting that is not their core business. having said that, I don't knoiw what Rock-\tenn's core business is.

Companies only have so much money and they watch it like a hawk. I am talkking about invesatment capital here, not working capital.

I have been in several Capital projet groups over the last few years and every expenditure has to pass through the proper hurdles of analysis.

There could be different types of projeccts, sucha s "Exspense|" projects vs capital projects, (excuse my typing, i am on my paltop keyboard), but under no circumstances can I imagine fronting capital to JBI that is intended to improve the operations of ROck Ten. Usually defined as a Growth or Sustaining investment.

isn't it obvious to everyone that they also don't really need to build out the capacity? The blending plant stood on it's own before as a business and investor's money has gone to refit the plant. It can go on operating as it did before without P2O. So, unless P2O gets a whole lot of money to build capacity, the blending plant can operate without it, and the initial primise to investors turns out to be a lie.

that is not what investors were told, although I agree with you instinctively. Investors were told that the fuel could be sold to refineries for WtR-$3, which is a 700% profit. After the acquisition of the blending plant, investors were told that they could now get over $100/barrel for the blended product.

THose statements taken together imply that the fuel sold from the blending station, and to XTR, would be 100% derived from plastic.

This is basic misrepresentation and is alot more serious that accounting errors in my view. Just much harder to prove. Like I initially posted, these charges are like Al Capone being taken down for tax evasion.

So you are saying that none of the longs really looked hard at the Financial Statements with a critical eye when buyign JBI stock? I actually agree with you. I think that investors get far too carried away with the business idea and choose to ignore financial problems or weakness.

I do the exact opposite. I set firm criteria and only buy stock that have great business ideas within the set criteria. Works great.

All I learned in Corporate Finance is that everything affects everything else. Because of that the relative sigfnificance or insignificance of the Media Credits is not really the issue. Overall financial condition is.

I set criteria of 3-year revenue growht over 10% and usually bypass companies with less than 0 eps.

Actually, the industrial gas plant is a Direct Cost item for the customer. Our plants produced either Oxygen, Nitrogen, or Argon, the key components of Air. Oxygen is the primary input to a furnace and is pure energy, so it is a basic input for heavy industry. Our clients were our business partners. We built on their sites. I believe it made it easier for permitting, etc.

My impression of the RKT deal is that Rockten wants some kind of return from these plants, hence the 20%. Also, they see the potential to handle their waste, which is an attraction for any business. It is unproven, so is exploratory for both sides. The 20% profit share (do I have the number right) is to compensate Rockten for the disruption to their business, not really to add to their profits. I can't see Rockten ever investing in a JBI either. Companies don't have money to invest in things that are not their core business, and would do a proper ROI analysis up front to ensire it will be profitable for them.

how do you know that JBI has buys for ALL of their fuel output? Have you seen any numbers? Please tell us...

WHat is an "unlimited sales agreement" and can you show us where thi sis stated?

\thanks.

IMO that is alot of space for a piece of equipment that ideally will sit on a customer's (Rock Tenn) premise and do it's business without getting in the way. That is going to have to be their approach. The only thing I can compare it too is condominium sizes in Toronto, a 1-bdrm being typically 700-800 sq ft. So this thing occupies 3 1-bdrm apartments or condos. And I don't know what "operating space" is. My guess is that the machine itself takes the 2000 sq ft, while the whole setup requires 3000 sq ft including walkways and physical space arouind the processor, and maybe other equipment.

So it takes up 3000 sq ft and is 24 ft high.

That is alot to propose to a customer. Space is a valuable commodity to anybody whose primary business is NOT making oil from plastic. The only way to counter it is to make space by sleaning up landfill etc... but what about sorting the feedstock?

I worked for an industrial gases company that located their plant on customer premise in exactly the same way that JBI wants to, and I know that footprint is an important issue for anything.

I would trust what is in the filings wrt this.

Oh. I thought that they were there to create a positive "customer experience" like the welcoming people in banks do. And my usual tactic is just to say "I didn't bring a pen with me". Usually works.

And I guess if they read iHub they must be very astute!!!

The guy I spoke with did not know much except that JBI was "looking for investors". That was several PIPE's ago.

Did you know that hiring rent-a cops is very expensive? They make $50/hour plus here in Toronto.

So that is why they are shareholders... JB gives them stock instead of paying them. His usual tactic.

Did you also know that I heard from some local channels here that the $4.00 PIPE crowd was the hotel crowd? Do you know anything about Niagara Falls? It really is two cities, the old Niagara Falls (kind of seedy and rundown) and the new Falls (tryign to compete with Las Vegas) replete with massive hotels and casinos and everything. Try Goggling Casino Niagara.

Who runs Las Vegas hotels? What kind of people?

Boy... I would not want to be in JB's shoes right now.

I think the only way they would get financing is on the strength of Fixed Assets. In other words, equipment or land they could sell. Sales contract? Fairly meaningless in the eyes of a bank.

classic... they havew been on the "verge" for 2 years now if you were judging from this board. it all started with the supposed riches from the tape business... LOL

Has it occurred to you guys that this is not the way that honorable men go about running a business? Since when does a guy go to market, get $3M or whatever, and promise the world. I coule believe maybe 20% or something. THat is the kind of figure companies use in terms of ROI to go forward.

BUt another 3 Million and everything is goign to work out? What about the salaries he has incurred since his last PIPE? How much cash did he have last time? What abotu all his other expoenses?

ANd where is a BELIEVABLE business case for a REASONABLE number in terms of return?

That has been the problem from the beginning. HOw much has he obtained from the markets... 30 Million now? Where has it gone? Where does it end? Just occurrin'

clearlt Brig this PIPE has been in the works for awhile... several months. The 2 events being days apart are not going to impact one another., just impactin'

Glad you agree. Thanks for the input. Thing is; they want Bordynuikl and the CFO gonbe as well. Hmmm, the CFO is already gone... but his career is over..

but, I guess that does not necessarily mean the company is destroyed.