Replies to post #169311 on Plastic2Oil Inc (PTOI)

[loanranger]

Snow,
From the complaint:
"The business consultant further explained his concern regarding the $10 million valuation of the media credits on JBI’s balance sheet by pointing out that the company one day prior to the transaction had no assets yet, on the very next day, appeared to have assets of nearly $10 million."

I haven't gone back to check the accuracy of that math, but the business consultant has far more experience in these things than either JB or I, so let's assume it's correct for this purpose. Extrapolating from that, WITHOUT the media credits the company had zero assets. If your memory is accurate, the company at the time had a market value of $200,000,000. I'm not a big fan of valuing early stage companies based on ratios, but it seems to me that even a developing stage manufacturing company should have some assets on their balance sheet, especially one that is valued at $200million. It strikes me as odd that you would say this:
"That is so small a percentage that it makes little sense to think that the media credits had any significant effect on the stock price."
I don't think the ratio of assets to market value is terribly meaningful, whether it be 10:200 or 0:200, but the SEC requires that the 10 in that ratio be a real value if it is to be presented to the public as such. There's no way to measure the effect that that deception might have had on the stock price or on investor's willingness to buy the stock. As you point out, a large number of people were perfectly happy to buy the stock when the company had no assets at all, the day before it bought the media credits.

[capital gain]

Snow.

He actually did two private placements, first one for $6.4 mil at $0.80 per share was started in Sep 2009, before the media credits was even listed on their quarterly report, granted they were mentioned in the prospectus, however there was also a big fat disclaimer in that prospectus, stating that the share price in the PP was purely arbitrary and not related to any company assets.

The second pipe was started in April 2010, in this one they raised approx $2 mil at $4 per share, and you are right that the media credits here represented less than 5% of the market cap at that point between Jan 2010 until end of April 2010, I haven't seen that prospectus, however I am pretty sure they had the same disclaimer in there as well.

I still cannot get my head around how the SEC could ever take this issue as far as they have, from where I am sitting, then this whole case is so thin, that IMO it is a complete waste of US tax payers money.

GLTA.

A.H