73. Since inception, the story of JBI as told by Bordynuik has been very inconsistent and often raised even more eventual questions. For example, in 2009 when Bordynuik put out press releases touting deals to build 45 P2O sites in Florida with Sousa Development, shipboard P2O sites with Heddle Marine, three other joint ventures to build P2O sites in Ohio and Florida, agreements to sell naphtha and an agreement to sell pyrolysis-derived fuels to Oxy Vinyls, each and every one of those deals vanished and were never heard from again. No excuse from Bordynuik was ever given why none ever came to fruition. Virtually every deal ever announced by Bordynuik fell apart, including Bordynuik’s previous quarterly habit of saying that he expected commercial production within one quarter since Q1 2010 and then resetting in every next quarter to say it’s still one quarter away. It seems probable that Bordynuik doesn’t have any reasonable basis for many of his statements to shareholders. Id.
74. The unexplained delays are also continuous. In April 2010, Bordynuik announced that the first P2O processor was ready for production. That was already almost a year after he ordered the off-the-shelf processor from a Chinese company named Donghe in mid 2009 which merely had to be assembled. That April, Bordynuik made it clear to shareholders that the only step left to commercial operations was getting a simple permit from the New York Department of Environmental Conservation (NYDEC) to allow him to burn the off-gasses produced as a byproduct of the P2O pyrolysis process. In June, 2010, during the conference call in response to a question, he reiterated, “As soon as we obtain the air permit we will begin running the processor in full commercial production.” Nine months later (no explanation for the lengthy time needed) he finally filled out the ten-page permit application, and the NYDEC approved it less than three weeks later. Bordynuik then put out a press release announcing that commercial operations had commenced. Id.
75. But commercial operations hadn’t commenced. Bordynuik gave every indication that it would be happening and gave no indication that he hadn’t actually started. It was only five months later when Bordynuik didn’t report the expected revenues in the first quarterly report that there was a potential clue that the promised full commercial production wasn’t happening. By that time Bordynuik released a few more press releases touting deals and that may have distracted shareholders from the glaring inconsistency in his story line. As of today, over a year after that announcement of commercial operations, there’s still no indication that the first processor has been put into productive service. Id.
76. Bordynuik does, however, list ‘P2O’ sales to a company called Coco Asphalt. However, in the filings, Bordynuik leaves it very ambiguous as to whether the P2O sales refers to products from his P2O process, or from the “P2O division.” JBI’s P2O division also houses a previously defunct “blending facility” purchased by JBI from a friend of Bordynuik’s family. Blending businesses routinely obtain third-party fuel, blend in additives and then deliver that fuel. It seems quite possible the “petroleum distillate” was purchased and resold without any ties to the P2O process itself. Bordynuik himself provides no clarification on this important and material subject. Id.
77. Looking at JBI’s last 10-Q which Bordynuik filed with the SEC in November, Bordynuik shows the P2O division as having a high gross margin as a percent of sales. However the P2O division cost of sales he reported for the nine-month period is also oddly less than what he reported for the total six month period in the prior quarter. There was no explanation given for this discrepancy. It’s clear that Bordynuik, at a minimum, changed the accounting for the cost of sales and those changes certainly made the income statement look more “juicy.” But it’s not altogether clear that the P2O costs of sales reported accurately reflect JBI’s P2O operations, especially since the total P2O cost of sales is even less than the lease of a recycling facility he leased just a year earlier and which is housed under the P2O division umbrella. Id.
78. In the past six months, Bordynuik also struck three new deals. One was with major paperboard company Rock-Tenn to build P2O sites on Rock-Tenn’s property in order to process Rock-Tenn’s plastic-containing waste. It was a no-risk, no obligation deal for Rock-Tenn but the press release Bordynuik put out shot JBI’s stock up by 50%. According to an analyst who claims he spoke with John Stakel at Rock-Tenn, who allegedly signed the agreement with Bordynuik, Stakel was asked if he knew how Bordynuik was progressing. The response from Mr. Stakel to the analyst indicated he didn’t know any John Bordynuik. Id.
79. To date it has been almost three years since Bordynuik purchased a controlling interest in the shell stock which he renamed John Bordynuik, Inc. In addition to the nearly three years, the reported accumulated deficit indicates Bordynuik burned through $29 million in his stated quest to build P2O processors costing only $80,000 to $200,000 each. So far, out of the 2,500 sites he said he planned to have built a “few years” out from 2009, he has built one, and that one currently doesn’t appear to be anywhere close to actually producing commercially. On January 6, 2012, Bordynuik filed with the SEC indicating that over the past week, he was able to sell additional stock and warrants for another $2.8 million. Bordynuik has given no guidance for how much additional investment he expects to need before he expects to put even one processor in operation. Id.
80. Meanwhile, the Board has consistently sat idly by, entranced by Bordynuik’s words, and silent in the face of a contradictory reality.
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