Plastic2Oil Inc (PTOI)

[Rawnoc]

Here's my spin:

Cash burn went down from $1 million a month in Q3 to $750,000 in Q4, a 25% decline in one quarter. I expect the cash burn to continue to decline.

Average cost per gallon in 2012 of fuel: $2.09/gallon
Average sale price of diesel which is almost all they're making now: $2.64/gallon
Profit margin on diesel in 2012: 21%

Q4 was disappointing. I expected higher sales obviously. I'm happy to see they can make diesel at a profit and cash burn is coming down. I expect the cost per gallon of diesel to continually come down, and the sale price to continually go up. Obviously I expect more production as well.

So if they can get the cash burn down another $250,000 or more (having less legal expenses should help) and get profit margins and fuel production up at the same time, cash flow positive will be achieved. I expected at least $500k in Q4 so I'm not going to say I'm pleased with the quarter, but it's certainly nice to see a lot of details broken out. Diesel is clearly the way to go, and they're clearly able to sell it profitably. They just need to make a lot more of it.

"the costs to produce a gallon of our fuel do not vary based on the types of fuel, due to the homogeneous process that is required from plastic processing to fuel separation"

and, yeah, there was some temporary costs:

"we procured a significant amount of heat transfer fluid at a higher than typical price, which contributed to higher cost of goods sold in 2012. This procurement was necessary to ensure adequate quantities of heat transfer fluid to be processed with plastic during the trial period"