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Saturday, 01/22/2011 2:56:47 PM

Saturday, January 22, 2011 2:56:47 PM

Post# of 312016
I have had a chance to listen to the conference call. It was pretty good I must say. Lots of information well presented. I still have concerns and would not invest in JBI at this point.

These are my comments/ concerns:
- JB made a statement about the footprint and made reference to the processor. I suppose he was saying that the processor would be a key component in a future sale and the rest of the machine would be configured around it, but to me the machine still looks too big and sprawling. There is a note later in the presentation about the potential (JV?) partners having "excess plant floor capacity". This brings to light the issue of floor space. Most plants are fairly crowded and if he wants to get his machines on the properties of waste operators, this is going to be a concern. Again, I thought the Envion machine is much more constructable at this point.
- JB is making a big deal of the local Niagara market being some kind of proving ground and is quite vertically integrated. That would be of concern to me if i were an investor, because my concern would be preparations for expansion. the Niagara area is unique in having a group of firefighters willing to drive off-hours, as well as a lot of daredevils and hucksters selling all manner of goods. Point is, I would care more about a specific product aimed at a broad market, not a vertically-integrated enterprise aimed at a local market.
- There is a 2000lb/hour limit on input? What is the impact on throughput?
- It looks like he is planning to process clean plastics. I was actually impressed/ convinced somewhat with that part of the presentation. Quite good.
- I was somewhat concerned with the experimentation with loading systems (Ram feed vs, shredding). All of this after the conversation about other P2O attempts having failed so miserably and blaming continuous feed systems on that failure. Seems as of jBI is trying to figure out that one as well. After all, isn't Ram Feed pretty close to Extrusion??? I have seen extrusion in Steel, btw...
- was impressed with the discussion about the sensors. Seems as if he has simplified things somewhat, that is a good thing. He has figured it out as I said he should have.
- I still think the labor is more expensive than he is saying. For one thing, he is still talking about wages paid, not cost. Cost is about double. If wages paid are $30/hour, that employee costs the company $60/hour.
- As i said before, I don't like the vertical integration. It smells of avoidance in defining a clear strategy and target market and focusing on it. Frankly, the fact that shareholders are involved as drivers is a joke. If they are firefighters, well frankly I would not want there to be any further production delays... these are hard-working people.
- vertical integration will not work elsewhere when it comes to expansion/ commercialization... so why bother?
- the biggest problem by far with the vertical integration is that there is nothing on the SALES end. Where is the integration into Sales? In fact, there was no mention of Sales.
- I enjoyed the discussion about business plans and various business models, but the problem is it is a bit late to be discussing it. Shareholders were told that quick profits were possible by selling to refineries, so why the discussion now?
- It seems as if there is alot of talk about Secondary Markets. I am using that term, although I am not sure it is correct. eBay is a Secondary market. It seems to me that if they are going to sell Fuel Oil to a plant of some kind, they are not going to be able to get the same market rate that has been touted. Likewise if the blending plant was formerly able to get $100/barrel, I doubt that they could get anywhere near that to some Waste Plant for having a JBI processor on their turf. It would have to be proven to me.
- In the Waste Handler marketplace, although this is a great idea, the economics of it are not discussed. I can almost guarantee you that if they go to the Secondary Markets, they will not get full market rate and this is not discussed.
- the other path, JV, is completely undefined. In other words, the JV partner will have to find their own markets for the fuel. Not good. I also noted that the only JV partner they have is Al Sousa. There was a comment about the remainder of the partners in Florida having no interest.
- The hiring of Colin Robbins, in the absence of sales, would bother me. While he is a good guy and all, it seems as if the primary reason he was hired was to bring in sales... possibly because of who he "knows". Well, that should not be necessary and is contrary to what investors have been told. Also, it signals reliance on that blending plant, which is not good. What are future business partners going to do to sell?
- I personally thought that the bit about butane in fuel for cars was BS. It seems to me that that comment was targeted towards the Secondary Market. Gasoline put into gas tanks of cars is highly regulated and I doubt that the level of butane is controlled. I would guess that it is the same composition year in and year out. I actually know quite a bit about how cars work. I am what you might call a shadetree mechanic. How a car performs in winter is reliant on the fuel injection system functioning properly, not on the composition of the fuel. I know exactly how my 33-year old car is supposed to work. What i put in it is not that important. Now that is not typical... most people know nothing about cars, yet are anal about the quality of gasoline they put in it. At any rate, that part of the call was suspicious to me... Someone would have to prove to me that what Colin said was true.

In summary, it was a good CC. My impression is of a company that is still trying to perfect the process, and has a big challenge in figuring out how to approach the market. The fact that they are sorting that out now is the biggest red flag for investors. Plus, all the vertical integration leading to no sales at all.. that is a concern.

Biggest concern of all, however, they have no money. By my calculation at this point in time they have about 500k in the bank. They are burning 1m/quarter. How are they going to get the capital to build 2 more processors? That would take that 500k at least...

If i were an investor, if I heard anything at all about sales I would feel much better, but as each day passes... the financial concerns become overwhelming. I wonder if I was to go by the plant if those two big drums would still be in the front yard... maybe worth a visit.

I did note that their financial structure can absorb quite a bit of share issuance.... but it takes time. I just don't think this latest issue is enough for them to be successful.

Best of the Season from the Band...