UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the quarter period ended September 30, 2015
or
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
file number: 000-52444
PLASTIC2OIL,
INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
90-0822950 |
(State or other jurisdiction of |
|
(IRS Employer |
incorporation or organization) |
|
Identification No.) |
20 Iroquois Street |
Niagara
Falls, NY 14303 |
(Address
of Principal Executive Offices) (Zip Code) |
(716)-278-0015
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
name, former address and former fiscal year, if changed since last report)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s)),
and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer [ ] |
Accelerated filer [ ] |
|
Non-accelerated filer [ ] |
Smaller reporting company [X] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ]
No [X]
As
of November 12, 2015, there were 124,756,158 shares of the Registrant’s common stock, $0.001
par value, outstanding.
PLASTIC2OIL,
INC.
Table
of Contents
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
quarterly report on Form 10-Q (“Report”) contains “forward looking statements” within the meaning of applicable
securities laws. Such statements include, but are not limited to, statements with respect to management’s beliefs, plans,
strategies, objectives, goals and expectations, including expectations about the future financial or operating performance of
our Company and its projects, capital expenditures, capital needs, government regulation of the industry, environmental risks,
limitations of insurance coverage, and the timing and possible outcome of regulatory matters, including the granting of patents
and permits. Words such as “expect”, “anticipate”, “intend”, “attempt”, “may”,
“will”, “plan”, “believe”, “seek”, “estimate”, and variations of such
words and similar expressions are intended to identify such forward looking statements. These statements are not guarantees of
future performance and involve assumptions, risks and uncertainties that are difficult to predict.
These
statements are based on and were developed using a number of factors and assumptions including, but not limited to: stability
in the U.S. and other foreign economies; stability in the availability and pricing of raw materials, energy
and supplies; stability in the competitive environment; stability of oil prices; the continued ability of our Company to access
cost effective capital when needed; and no unexpected or unforeseen events occurring that would materially alter the Company’s
current plans. All of these assumptions have been derived from information currently available to the Company including information
obtained by our Company from third party sources. Although management believes that these assumptions are reasonable, these assumptions
may prove to be incorrect in whole or in part. As a result of these and other factors, actual results may differ materially from
those expressed, implied or forecasted in such forward looking information, which reflect our Company’s expectations only
as of the date hereof.
Factors
that could cause actual results or outcomes to differ materially from the results expressed, implied or forecasted by the forward-
looking statements include risks associated with general business, economic, competitive, political and social uncertainties;
risks associated with changes in project parameters as plans continue to be refined; risks associated with failure of plant, equipment
or processes to operate as anticipated; risks associated with accidents or labor disputes; risks associated in delays in obtaining
governmental approvals or financing, or in the completion of development or construction activities; risks associated with financial
leverage and the availability of capital; risks associated with the price of commodities and the inability of our Company to control
commodity prices; risks associated with the regulatory environment within which our Company operates; risks associated with litigation
including the availability of insurance; and risks posed by competition. These and other factors that could cause actual results
or outcomes to differ materially from the results expressed, implied or forecasted by the forward looking statements are discussed
in more detail in the section entitled “Risk Factors” Part I, Item 1A of the Company’s Annual Report 10-K for
the fiscal year ended December 31, 2014 as filed with the Securities and Exchange commission on March 31, 2015.
Our
Company does not intend to, and the Company disclaims any obligation to, update any forward-looking statements (including any
financial outlooks), whether written or oral, or whether as a result of new information, future events or otherwise, except as
required by law.
Unless
otherwise noted, references in this Report to “P2O” the “Company,” “we,” “our”
or “us” means Plastic2Oil, Inc., a Nevada corporation.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
PLASTIC2OIL,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
| |
September 30, 2015 | | |
December
31, 2014 | |
| |
(UNAUDITED) | | |
| |
| |
| | |
| |
ASSETS | |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash and cash equivalents | |
$ | 40,508 | | |
$ | 179,652 | |
Cash held in attorney trust (Note 2 ) | |
| 2,003 | | |
| 2,003 | |
Restricted cash (Note 2 ) | |
| 100,289 | | |
| 100,222 | |
Accounts receivable, net of allowance of $23,059 and $23,182, respectively. | |
| 3,280 | | |
| 4,436 | |
Inventories (Note 4) | |
| 86,053 | | |
| 86,053 | |
Prepaid expenses and other current assets | |
| 52,359 | | |
| 20,229 | |
TOTAL CURRENT ASSETS | |
| 284,492 | | |
| 392,595 | |
| |
| | | |
| | |
PROPERTY, PLANT AND EQUIPMENT, NET | |
| 4,610,833 | | |
| 5,112,506 | |
| |
| | | |
| | |
Deposits (Note 2) | |
| 1,483,987 | | |
| 1,483,987 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 6,379,312 | | |
$ | 6,989,088 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
Accounts payable | |
$ | 1,862,412 | | |
$ | 1,850,000 | |
Accrued expenses | |
| 1,869,685 | | |
| 1,928,361 | |
Accrued lease obligation – current (Note 8 and 15) | |
| 94,637 | | |
| 101,914 | |
Demand promissory note – related party (Note 6) | |
| 1,311,832 | | |
| 8,850 | |
Mortgages payable and capital leases – current
portion (Note 7 and 12) | |
| 288,851 | | |
| 326,763 | |
TOTAL CURRENT LIABILITIES | |
| 5,427,416 | | |
| 4,215,888 | |
| |
| | | |
| | |
LONG-TERM LIABILITIES | |
| | | |
| | |
Asset retirement obligations (Note 2) | |
| 31,917 | | |
| 31,215 | |
Accrued lease obligation (Note 8 and 15) | |
| 215,024 | | |
| 314,938 | |
Secured promissory notes – related party (Note 6) | |
| 4,300,304 | | |
| 3,753,956 | |
Mortgages payable and capital leases (Note 7 and 12) | |
| — | | |
| 45,000 | |
TOTAL LONG-TERM LIABILITIES | |
| 4,547,245 | | |
| 4,145,109 | |
| |
| | | |
| | |
TOTAL LIABILITIES | |
| 9,974,661 | | |
| 8,360,997 | |
| |
| | | |
| | |
Commitments and contingencies ( Note 8) | |
| | | |
| | |
| |
| | | |
| | |
STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Common stock, par $0.001; 250,000,000, 117,399,157 and 109,917,529 shares
issued and outstanding, respectively. | |
| 117,399 | | |
| 109,918 | |
Common stock to be issued, 6,847,001, and 8,097,001 as of September 30, 2015
and December 31, 2014, respectively. | |
| 6,847 | | |
| 8,097 | |
Additional paid in capital | |
| 66,894,864 | | |
| 66,371,906 | |
Accumulated other comprehensive income | |
| 249,458 | | |
| 57,956 | |
Accumulated deficit | |
| (70,863,917 | ) | |
| (67,919,786 | ) |
TOTAL STOCKHOLDERS’ DEFICIT | |
| (3,595,349 | ) | |
| (1,371,909 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
$ | 6,379,312 | | |
$ | 6,989,088 | |
The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
PLASTIC2OIL,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| |
For the Three Months Ended | | |
For the Nine Months Ended | |
| |
September 30, 2015 | | |
September 30, 2014 | | |
September 30, 2015 | | |
September 30, 2014 | |
| |
| | |
| | |
| | |
| |
Sales | |
| | | |
| | | |
| | | |
| | |
P2O | |
$ | — | | |
$ | 34,599 | | |
$ | — | | |
$ | 59,672 | |
Other | |
| — | | |
| 8,042 | | |
| 10,397 | | |
| 8,042 | |
Total sales | |
| | | |
| 42,641 | | |
| 10,397 | | |
| 67,714 | |
| |
| | | |
| | | |
| | | |
| | |
Cost of sales | |
| | | |
| | | |
| | | |
| | |
P2O | |
| — | | |
| 29,391 | | |
| — | | |
| 53,195 | |
Other | |
| — | | |
| 2,017 | | |
| 4,054 | | |
| 2,146 | |
Total cost of sales | |
| | | |
| 31,408 | | |
| 4,054 | | |
| 55,341 | |
| |
| | | |
| | | |
| | | |
| | |
Gross profit | |
| — | | |
| 11,233 | | |
| 6,343 | | |
| 12,373 | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Selling general and administrative expenses | |
| | | |
| | | |
| | | |
| | |
Selling general and administrative- Professional Fees | |
| 157,099 | | |
| 218,511 | | |
| 504,995 | | |
| 1,182,123 | |
Selling general and administrative- Compensation | |
| 197,696 | | |
| 617,594 | | |
| 639,111 | | |
| 1,062,324 | |
Selling general and administrative- Other | |
| 109,368 | | |
| 129,922 | | |
| 676,320 | | |
| 874,163 | |
Depreciation of property, plant and equipment and accretion of long-term
liability | |
| 212,968 | | |
| 256,749 | | |
| 645,442 | | |
| 787,674 | |
Research and development expenses | |
| — | | |
| 4,654 | | |
| 1,653 | | |
| 20,999 | |
Total operating expenses | |
| 677,131 | | |
| 1,227,430
| | |
| 2,467,521 | | |
| 3,927,283 | |
| |
| | | |
| | | |
| | | |
| | |
Loss from operations | |
| (677,131 | ) | |
| (1,216,167 | ) | |
| (2,461,178 | ) | |
| (3,914,910 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other expenses | |
| | | |
| | | |
| | | |
| | |
Gain (Loss) from disposal of assets | |
| — | | |
| 3,223 | | |
| — | | |
| (11,549 | ) |
Interest expense | |
| (154,376 | ) | |
| (104,447 | ) | |
| (447,669 | ) | |
| (306,107 | ) |
Other income (expense), net | |
| (413 | ) | |
| (10,966 | ) | |
| (871 | ) | |
| 10,988 | |
Total other expenses | |
| (154,789 | ) | |
| (112,190 | ) | |
| (448,540 | ) | |
| (328,644 | ) |
| |
| | | |
| | | |
| | | |
| | |
Loss before income taxes | |
| 831,919 | | |
| (1,328,297 | ) | |
| (2,909,718 | ) | |
| (4,243,554
| ) |
| |
| | | |
| | | |
| | | |
| | |
Current and future income tax expense | |
| — | | |
| — | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Net loss from continuing operations | |
| (831,919 | ) | |
| (1,328,297 | ) | |
| (2,909,718 | ) | |
| (4,243,554
| ) |
Net income (loss) from discontinued operations (Note 15) | |
| (16,999 | ) | |
| (82,040 | ) | |
| (34,413 | ) | |
| 61,469 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (849,918 | ) | |
| (1,410,427 | ) | |
| (2,944,131 | ) | |
| (4,182,085 | ) |
| |
| | | |
| | | |
| | | |
| | |
Deemed Dividends | |
| — | | |
| 861,291 | | |
| — | | |
| (1,713,117 | ) |
Net loss attributable to common shareholders | |
| | | |
| (2,271,718 | ) | |
| (2,944,131 | | |
| (5,895,200 | ) |
| |
| | | |
| | | |
| | | |
| | |
Earnings (loss) per share | |
| | | |
| | | |
| | | |
| | |
Basic and dilutive - from continuing operations | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.04 | ) |
Basic and dilutive - from discontinued operations | |
| ** | | |
| ** | | |
| ** | | |
| ** | |
Total basic and diluted net loss per share | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.04 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of shares outstanding | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Basic and dilutive (Note 2) | |
| 124,246,158 | | |
| 115,130,943 | | |
| 119,512,180 | | |
| 102,150,000 | |
**
Less than $.01
The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
PLASTIC2OIL,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
| |
For the Three Months Ended | | |
For the Nine Months Ended | |
| |
September 30, 2015 | | |
September 30, 2014 | | |
September 30, 2015 | | |
September 30, 2014 | |
| |
| | |
| | |
| | |
| |
NET LOSS | |
$ | (848,918 | ) | |
$ | (1,410,427 | ) | |
$ | (2,944,131 | ) | |
$ | (4,182,085 | ) |
| |
| | | |
| | | |
| | | |
| | |
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX | |
| | | |
| | | |
| | | |
| | |
Foreign currency items | |
| 80,095 | | |
| — | | |
| 191,502 | | |
| — | |
COMPREHENSIVE LOSS | |
$ | (768,823 | ) | |
$ | (1,410,427 | ) | |
$ | (2,752,629 | ) | |
$ | (4,182,085 | ) |
The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
PLASTIC2OIL,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
For the Nine Months Ended | |
| |
September 30, 2015 | | |
September 30, 2014 | |
| |
| | |
| |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
Net loss from continuing operations | |
$ | (2,909,718 | ) | |
$ | (4,243,544 | ) |
Net income (loss) from discontinued operations | |
| (34,413 | ) | |
| 61,469 | |
Items not affecting cash: | |
| | | |
| | |
Depreciation of property plant and equipment and accretion of long-term liability | |
| 503,077 | | |
| 650,252 | |
Amortization of debt discount | |
| 145,302 | | |
| 135,500 | |
Other income | |
| (702 | ) | |
| 1,392 | |
Accrued interest expense | |
| 414,278 | | |
| 268,647 | |
Non-cash stock based compensation and settlement | |
| 485,587 | | |
| 914,558 | |
Issuance of Shares in reduction of Accounts Payable | |
| 19,200 | | |
| — | |
Write-off of Property plant and equipment | |
| — | | |
| 63,610 | |
Working capital changes: | |
| | | |
| | |
Cash held in attorney trust | |
| — | | |
| 6,810 | |
Accounts receivable | |
| 1,156 | | |
| 14,673 | |
Inventories | |
| — | | |
| 36,327 | |
Prepaid expenses and other current assets | |
| (32,130 | ) | |
| 26,742 | |
Accounts payable | |
| 52,131 | | |
| 394,586 | |
Accrued expenses and other current liabilities | |
| (50,011 | ) | |
| 541,359 | |
| |
| | | |
| | |
NET CASH USED IN OPERATING ACTIVITIES | |
| (1,406,243 | ) | |
| (1,127,629 | ) |
| |
| | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
Property, plant and equipment additions | |
| — | | |
| (10,584 | ) |
Increase in restricted cash | |
| (67 | ) | |
| — | |
Proceeds from sale of property, plant and equipment
| |
| -
| | |
| 102,374
| |
Changes attributable to discontinued operations | |
| (38,081 | ) | |
| (64,125 | ) |
| |
| | | |
| | |
NET CASH USED IN INVESTING ACTIVITIES | |
| (38,148 | ) | |
| 27,655 | |
| |
| | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
Repayments of mortgages and capital leases | |
| (50,349 | ) | |
| (10,584 | ) |
Proceeds from short-term loans – related party | |
| 1,330,596 | | |
| 346,895 | |
Proceeds from exercise of warrants | |
| — | | |
| 40,000 | |
Proceeds from sale of common stock and warrants, net | |
| 25,000 | | |
| 540,095 | |
| |
| | | |
| | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | |
| 1,305,247 | | |
| 916,406 | |
| |
| | | |
| | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | |
| (139,144 | ) | |
| (183,558 | ) |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | |
| 179,652 | | |
| 203,949 | |
| |
| | | |
| | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | |
$ | 40,508 | | |
$ | 20,391 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information | |
| | | |
| | |
Cash paid for income taxes | |
$ | — | | |
$ | — | |
Cash paid for interest | |
$ | 16,001 | | |
$ | 13,979 | |
Accounts payable settled with stock | |
$ | 30,003 | | |
$ | 1,196
| |
Class action suit settlement with stock | |
$ | 240,000 | | |
$ | — | |
The
accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
PLASTI2OIL,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 - ORGANIZATION AND GOING CONCERN
Plastic2Oil,
Inc. (the “Company” or “P2O”) was originally incorporated as 310 Holdings, Inc. (“310”) in
the State of Nevada on April 20, 2006. 310 had no significant activity from inception through 2009. In April 2009, John Bordynuik,
founder and former chief of technology, purchased 63% of the issued and outstanding shares of 310. During 2009, the Company changed
its name to JBI, Inc. and began operations of its main business operation, transforming waste plastics to oil and other fuel products
(“P2O”). During 2014, the Company changed its name to Plastic2Oil, Inc. P2O is a combination of proprietary technologies
and processes developed by P2O which convert waste plastics into fuel. Our P2O business has begun the transition from research
and development to a commercial manufacturing and production business. These processors were idle for all of 2015. Management
estimates the processors will remain idle until the first quarter of 2016, other than pilot runs to support the processor sales.
There were no processor sales for all of 2015. We plan to grow mainly from sale of processors, secondarily from the sale of fuel
products.
On
August 24, 2009, the Company acquired Javaco, Inc. (“Javaco”), a distributor of electronic components, including home
theater and audio video products. In July 2012, the Company closed Javaco and sold substantially all of the inventory and fixed
assets of Javaco. The operations of Javaco have been classified as discontinued operations for the periods presented (Note 15).
On
September 30, 2009, the Company acquired Pak-It, LLC (“Pak-It”), and the operator of a bulk chemical processing, mixing,
and packaging facility. It also has developed and patented a delivery system that packages condensed cleaners in small water-soluble
packages. In February 2012, the Company sold substantially all of the assets of Pak-It and as a result, the operations of Pak-It
have been classified as discontinued operations for the periods presented (Note 15).
Going
Concern
These
unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“US GAAP”), which contemplates continuation of the Company as a going concern which
assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company
has experienced negative cash flows from operations since inception, has net losses from continuing operations of $2,909,718,
and $4,243,554, for the nine months ended September 30, 2015 and 2014, respectively, and has an accumulated deficit of $70,863,917
at September 30, 2015. These factors raise substantial doubt about the Company’s ability to continue as a going concern
and to operate in the normal course of business. The Company has funded its activities to date almost exclusively from equity
financings and related party loans.
The
Company will continue to require substantial funds to continue the expansion of its P2O business to achieve significant commercial
productions, and to significantly increase sales and marketing efforts. Management’s plans in order to meet its operating
cash flow requirements include financing activities such as private placements of its common stock, related party loans, issuances
of debt and convertible debt instruments.
While
the Company believes that it will be successful in obtaining the necessary financing to fund its operations, meet regulatory requirements
and achieve commercial production goals, there are no assurances that such additional funding will be achieved and that it will
succeed in its future operations. The unaudited condensed consolidated financial statements do not include any adjustments relating
to the recoverability and classification of recorded asset amounts or amounts of liabilities that might be necessary should we
be unable to continue in existence.
NOTE
2 - SUMMARY OF ACCOUNTING POLICIES
Interim
Financial Statements
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with US GAAP, as promulgated
by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and with
the rules and regulations of the U.S Securities and Exchange Commission (“SEC”) for interim financial information.
The unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which, in the opinion of management,
are considered necessary for a fair presentation of the results for the periods shown. The results of operations for the periods
presented are not necessarily indicative of the results expected for the full fiscal year or for any future period. The information
included in these unaudited condensed consolidated financial statements should be read in conjunction with Management’s
Discussion and Analysis and Results of Operations contained in this report and the audited consolidated financial statements and
accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
Basis
of Consolidation
The
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Plastic2Oil
of NY#1 Inc., Plastic2Oil (Canada) Inc., JBI Re #1 Inc., Plastic2Oil Re One Inc., JBI CDE Inc., Plastic2Oil Marine, Inc., Javaco,
and Pak-it. All intercompany transactions and balances have been eliminated on consolidation. Amounts in the unaudited condensed
consolidated financial statements are expressed in US dollars. Recycling Center, Pak-It and Javaco have also been consolidated;
however, as mentioned their operations are classified as discontinued operations (Note 15).
Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these
estimates. Significant estimates include amounts for impairment of long-lived assets, share based compensation, asset retirement
obligations, inventory obsolescence, accrued liabilities and accounts receivable exposures.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Restricted
Cash
At
September 30, 2015 and December 31, 2014, the Company had $100,289 and $100,222 respectively, of restricted cash, which is used
to secure a line of credit that secures a performance bond on behalf of the Company. The performance bond is required by the State
of New York for fuel distributors in perpetuity.
Cash
Held in Attorney Trust
The
amount held in trust represents retainer payments the Company has made to law firms which are being held on our behalf for the
payment of future services.
Accounts
Receivable
Accounts
receivable represent unsecured obligations due from customers under terms requesting payments upon receipt of invoices up to ninety
days, depending on the customer. Accounts receivable are non-interest bearing and are stated at the amounts billed to the customer
net of an allowance for uncollectible accounts. Customer balances with invoices over 90 days old are considered delinquent. Payments
of accounts receivable are applied to the specific invoices identified on the customer remittance, or if unspecified, are applied
to the earliest unpaid invoice.
The
allowance for uncollectible accounts reflects management’s best estimate of amounts that may not be collected based on an
analysis of the age of receivables and the credit standing of individual customers. The allowance for uncollectible accounts for
September 30, 2015 and December 31, 2014 was $23,059 and $23,182, respectively.
Inventories
Inventories,
which consist primarily of plastics, costs to process the plastic and processed fuel are stated at the lower of cost or market.
We use an average costing method in determining cost. Inventories are periodically reviewed for use and obsolescence, and adjusted
as necessary.
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives
of the various classes of assets, and capital leased assets are given useful lives coinciding with the asset classification in
which they are classified. These lives are as follows:
Leasehold improvements |
lesser of useful life or term of the lease |
Machinery and office equipment |
3-15 years |
Furniture and fixtures |
7 years |
Office and industrial buildings |
25-30 years |
Gains
and losses on depreciable assets retired or sold are recognized in the statements of operations in the year of disposal. Repairs
and maintenance expenditures are expensed as incurred and expenditures that increase the value or useful life of the asset are
capitalized.
Construction
in Process
The
Company capitalizes customized equipment built to be used in the future day to day operations at cost. Once complete and available
for use, the cost for accounting purposes is transferred to property, plant and equipment, where normal depreciation rates are
applied.
Impairment
of Long-Lived Assets
The Company reviews for impairment of long-lived
assets on an asset by asset basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows
for a property are less than its carrying amount at which time the property is written-down to fair value. Properties held for
sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. The sale or disposal of
a “component of an entity” is treated as discontinued operations. The operating properties sold by the Company typically
meet the definition of a component of an entity and as such the revenues and expenses associated with sold properties are reclassified
to discontinued operations for all periods presented (Note 15).
Asset
Retirement Obligations
The
fair value of the estimated asset retirement obligation is recognized in the consolidated balance sheets when identified and a
reasonable estimate of fair value can be made. The asset retirement cost, equal to the estimated fair value of the asset retirement
obligation, is capitalized as part of the cost of the related long-lived asset. The balance of the asset retirement obligation
is determined through an assessment made by the Company’s engineers, of the total costs expected to be incurred by the Company
when closing a facility. The total estimated cost is then discounted using the current market rates to determine the present value
of the asset as of the date of this valuation. As of the date of the creation of the asset retirement obligation in the amount
of $57,530, the Company determined the present value of the obligation using a discount rate equal to 2.96%. The present value
of the asset retirement obligation is then capitalized on the consolidated balance sheets and is depreciated over the asset’s
estimated useful life and is included in depreciation and accretion expense in the unaudited condensed consolidated statements
of operations. Increases in the asset retirement obligation resulting from the passage of time are recorded as accretion of asset
retirement obligations in the unaudited condensed consolidated statements of operations. Actual expenditures incurred are charged
against the accumulated obligation. As of September 30, 2015 and December 31, 2014, the carrying value of the asset retirement
obligations were $31,917 and $31,215, respectively. These costs include disposal of plastic and other non-hazardous waste, site
closing labor and testing and sampling of the site upon closure. This liability is shown as Asset Retirement Obligations on the
accompanying unaudited condensed consolidated balance sheet.
Environmental
Contingencies
The
Company records environmental liabilities at their undiscounted amounts on our balance sheets as other current or long-term liabilities
when environmental assessments indicate that remediation efforts are probable and the costs can be reasonably estimated. These
costs may be discounted to reflect the time value of money, if the timing of the cash payments is fixed or reliably determinable
and extends beyond a current period. Estimates of our liabilities are based on currently available facts, existing technology
and presently enacted laws and regulations, taking into consideration the likely effects of other societal and economic factors,
and include estimates of associated legal costs. These amounts also consider prior experience in remediating contaminated sites,
other companies’ clean-up experience and data released by the Environmental Protection Agency (EPA) or other organizations.
Our estimates are subject to revision in future periods based on actual costs or new circumstances. We capitalize costs that benefit
future periods and we recognize a current period charge in operation and maintenance expense when clean-up efforts do not benefit
future periods.
We
evaluate any amounts paid directly or reimbursed by government sponsored programs and potential recoveries or reimbursements of
remediation costs from third parties including insurance coverage separately from our liability. Recovery is evaluated based on
the creditworthiness or solvency of the third party, among other factors. When recovery is assured, we record and report an asset
separately from the associated liability on our balance sheets. No amounts for recovery have been accrued to date.
Deposits
Deposits
represent payments made to vendors for fabrication of key pieces of property, plant and equipment that have been made in accordance
with the Company’s agreements to purchase such equipment. Payments are made to these vendors as progress is made on the
fabrication of the equipment, with final payments made when the equipment is delivered. Until we have possession of the equipment,
all payments made to these vendors are classified as deposits on assets. As at September 30, 2015 and December 31, 2014, the carrying
value of the Deposits were $1,483,987.
Leases
The
Company has entered into various leases for buildings and equipment. At the inception of a lease, the Company evaluates whether
it is operating or capital in nature. Operating leases are recorded as expense in the appropriate periods of the lease. Capital
leases are classified as property, plant and equipment and the related depreciation is recorded on the assets. Also, the debt
related to the capital lease is included in the Company’s short- and long-term debt obligations, in accordance with the
lease agreement (Note 7).
Lease
inducements are recognized for periods of reduced rent or for larger than usual rent escalations over the term of the lease. The
benefit of a rent free period and the cost of future rent escalations are recognized on a straight-line basis over the term of
the lease.
Revenue
Recognition
The
Company recognizes revenue when it is realized or realizable and collection is reasonably assured. The Company considers revenue
realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists,
(ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable,
and (iv) collectability is reasonably assured.
P2O
processor sales are recognized when the customer takes possession of the processors, since title to the goods and the risk of
loss transfers from P2O to customer upon delivery. P2O fuel sales are recognized when the customers take possession of the fuel,
since at that stage the customer has completed all prior testing necessary for their acceptance of the fuel. At the time of possession
they have arranged for transportation to pick it up and the sales price has either been set in their purchase contract or negotiated
prior to the time of pick up, through the issuance of a purchase order. The Company negotiates the pricing of the fuel based on
the quality of the product and the type of fuel being sold (i.e. Naphtha, Fuel Oil No. 6 or Fuel Oil No. 2).
Shipping
and Handling Costs
The
Company’s shipping and handling costs of $147 and $16,475 for the nine months ended September 30, 2015 and 2014, respectively,
are included in cost of goods sold for the periods presented. Shipping and handling costs related to the purchase of inventory
items are capitalized to inventory and expensed to cost of sales when the related inventory is sold for the periods presented.
Advertising
costs
The
Company expenses advertising costs as incurred. Advertising costs were $1,868 and $490 for the nine months ended September 30,
2015 and 2014, respectively. These expenses are included in selling, general and administrative expenses in the unaudited condensed
consolidated statements of operations.
Research
and Development
The
Company is engaged in research and development activities. Research and development costs are charged as operating expense of
the Company as incurred. For the nine months ended September 30, 2015 and 2014, the Company expensed $1,653 and $20,999, respectively,
towards research and development costs. Components of the processors that are fabricated or purchased with research and development
plans and then used on the processor in production are capitalized into the cost of the processor and depreciated over the remaining
life of the processor.
Foreign
Currency Translation
The
unaudited condensed consolidated financial statements have been translated into U.S. dollars in accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830. All monetary items have
been translated using the exchange rates in effect at the balance sheet dates. All non-monetary items have been translated using
the historical exchange rates at the time of transactions. Income statement amounts have been translated using the average exchange
rate for the year. Resulting differences are reflected in accumulated other comprehensive income in the accompanying unaudited
condensed consolidated balance sheets. Foreign exchange gain of $6,425 and loss of $3,852 for monetary items are included as general
and administrative expenses in the unaudited condensed consolidated statements of operations for the nine months ended September
30, 2015 and 2014, respectively.
Income
Taxes
The
Company utilizes the asset and liability method to measure and record deferred income tax assets and liabilities. Deferred tax
assets and liabilities reflect the future income tax effects of temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax basis and are measured using enacted tax rates that apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.
The
Company adopted the accounting standards associated with uncertain tax positions as of January 1, 2007. The adoption of this standard
did not have a material impact on the Company’s unaudited condensed consolidated statements of operations or financial position.
Upon adoption, the Company had no unrecognized tax benefits. Furthermore, the Company had no unrecognized tax benefits at September
30, 2015 and December 31, 2014. The Company files tax returns in the U.S federal and state jurisdictions as well as a foreign
country. The years ended December 31, 2009 through December 31, 2014 are open tax years for IRS review.
Loss
Per Share
The
financial statements include basic and diluted per share information. Basic net loss per share is computed by dividing net loss
by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed
by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock
during each period. Common stock equivalents are excluded from the computation of diluted loss per share when their effect is
anti-dilutive. For the three and nine months ended September 30, 2015, potential dilutive common stock equivalents consisted of
14,350,000 shares underlying common stock warrants and 1,628,000 shares underlying stock options, which were not included in the
calculation of the diluted loss per share because they would be anti-dilutive.
For
the three and nine months ended September 30, 2014, potential dilutive common stock equivalents consisted of 11,850,000 shares
underlying common stock warrants, and 5,345,334 shares underlying stock options, which were not included in the calculation of
the diluted loss per share because they would be anti-dilutive.
Segment
Reporting
The
Company operates in two reportable segments. ASC 280-10, “Disclosures about Segments of an Enterprise and Related Information”,
establishes standards for the way that public business enterprises report information about operating segments in their annual
consolidated financial statements. Operating segments are components of an enterprise about which separate financial information
is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing
performance. Our operating segments include plastic to oil conversion (Plastic2Oil), which includes processor sales as well as
fuel sales and Data Recovery and Migration, our magnetic tape reading segment. Our Chief Operating Decision Maker is the Company’s
Chief Executive Officer.
Concentrations
and Credit Risk
Financial
instruments which potentially expose the Company to concentrations of credit risk consist principally of operating demand deposit
accounts and accounts receivable. The Company’s policy is to place our operating demand deposit accounts with high credit
quality financial institutions that are insured by the FDIC, however, account balances may at times exceed insured limits. The
Company extends limited credit to its customers based upon their creditworthiness and establishes an allowance for doubtful accounts
based upon the credit risk of specific customers, historical trends and other pertinent information.
Fair
Value of Financial Instruments
Fair
value is defined under FASB ASC Topic 820 as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or the most advantageous market for an asset or liability in an orderly transaction between participants
on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize
the use of unobservable inputs. The standard describes a fair value hierarchy based on the levels of inputs, of which the first
two are considered observable and the last unobservable, that may be used to measure fair value. The levels are as follows:
● |
Quoted prices in active markets for identical
assets or liabilities; |
|
|
● |
Inputs other than Level 1 that are
observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets
that are not active; or other inputs that are observable or corroborated by observable market data or substantially the full
term of the assets or liabilities; and |
|
|
● |
Unobservable inputs that are supported
by little or no market activity and that are significant to the value of the assets or liabilities |
The
carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, leases, promissory notes
and mortgage payable approximate fair value because of the short-term nature of these items.
NOTE
3 – RECENTLY ISSUED ACCOUNTING STANDARDS AND RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Recently
Issued Accounting Pronouncements
On
April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360). Reporting
Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). ASU 2014-08
limits the requirement to report discontinued operations to disposals of components of an entity that represents strategic shifts
that have (or will have) a major effect on an entity’s operations and financial results. The amendments also require expanded
disclosures concerning discontinued operations and disclosures of certain financial results attributable to a disposal of a significant
components of an entity that does not qualify for discontinued operations reporting. The amendments in this ASU are effective
prospectively for reporting periods beginning on or after December 15, 2014, with early adoption permitted. The impact on our
Financial Statements of adopting ASU 2014-08 was not significant.
On
May 28, 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”. The standard outlines
a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes
most current revenue recognition guidance. The accounting standard is effective for annual reporting periods (including interim
reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. The impact on our
Financial Statements of adopting ASU 2014-09 is being assessed by management.
Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying unaudited condensed consolidated financial statements.
NOTE
4 - INVENTORIES
Inventories
consist of the following:
| |
September 30, 2015 | | |
December 31, 2014 | |
| |
| | |
| |
Raw materials | |
$ | 410,540 | | |
$ | 410,540 | |
Finished goods | |
| 2,039 | | |
| 2,039 | |
Obsolescence reserve | |
| (326,526 | ) | |
| (326,526 | ) |
| |
| | | |
| | |
Total inventories | |
$ | 86,053 | | |
$ | 86,053 | |
NOTE
5 - PROPERTY, PLANT AND EQUIPMENT, NET
September 30, 2015 | |
Cost | | |
Accumulated
Depreciation | | |
Net Book
Value | |
| |
| | |
| | |
| |
Leasehold improvements | |
$ | 218,054 | | |
$ | (17,970 | ) | |
$ | 200,083 | |
Machinery and office equipment | |
| 4,236,809 | | |
| (2,341,946 | ) | |
| 1,894,863 | |
Furniture and fixtures | |
| 16,368 | | |
| (16,368 | ) | |
| — | |
Land | |
| 273,118 | | |
| — | | |
| 273,118 | |
Asset retirement obligation | |
| 27,745 | | |
| (5,271 | ) | |
| 22,474 | |
Office and industrial buildings | |
| 1,433,523 | | |
| (220,189 | ) | |
| 1,213,334 | |
Equipment under capital lease | |
| 108,317 | | |
| (59,647 | ) | |
| 48,670 | |
Construction in process | |
| 958,291 | | |
| — | | |
| 958,291 | |
Total | |
$ | 7,272,225 | | |
$ | (2,661,392 | ) | |
$ | 4,610,833 | |
December 31, 2014 | |
Cost | | |
Accumulated
Depreciation | | |
Net Book
Value | |
| |
| | |
| | |
| |
Leasehold improvements | |
$ | 218,054 | | |
$ | (12,519 | ) | |
$ | 205,535 | |
Machinery and office equipment | |
| 4,246,882 | | |
| (1,913,102 | ) | |
| 2,333,780 | |
Furniture and fixtures | |
| 16,368 | | |
| (14,782 | ) | |
| 1,586 | |
Land | |
| 273,118 | | |
| — | | |
| 273,118 | |
Asset retirement obligation | |
| 27,745 | | |
| (4,439 | ) | |
| 23,306 | |
Office and industrial buildings | |
| 1,433,523 | | |
| (176,909 | ) | |
| 1,256,614 | |
Equipment under capital lease | |
| 108,317 | | |
| (48,041 | ) | |
| 60,276 | |
Construction in process | |
| 958,291 | | |
| — | | |
| 958,291 | |
Total | |
$ | 7,282,298 | | |
$ | (2,169,792 | ) | |
$ | 5,112,506 | |
For
the nine months ended September 30, 2015 and 2014, the Company recognized $501,543, and $650,252, respectively, of depreciation
expense.
At
September 30, 2015 and December 31, 2014, machinery and equipment with a cost of $108,317, and accumulated amortization of $59,647
and $44,173, respectively, were under capital lease. During the nine months ended September 30, 2015 and 2014, the Company recognized
$11,606 of depreciation expense related to these assets under capital lease. During the three months ended September 30, 2015
and 2014, the Company recognized $3,869 of depreciation expense related to these assets under capital lease.
NOTE
6 - RELATED PARTY NOTES PAYABLE
| |
September 30, 2015 | | |
December 31, 2014 | |
Unsecured Demand Promissory Note (provided by a related party) bearing interest of
4% per annum; (2014 $8,850; 2015 $1,302,982) | |
$ | 1,311,832 | | |
$ | 8,850 | |
| |
| | | |
| | |
Secured Promissory Notes (provided by a related party) bearing interest
of 12% per annum compounded annually and payable upon maturity in 2019 and secured by a security interest in substantially
all of the assets of the Company and its subsidiaries. | |
| 1,065,750 | | |
| 959,736 | |
| |
| | | |
| | |
Secured Promissory Notes (provided by a related party) bearing interest
of 12% per annum compounded annually and payable upon maturity in 2018 and secured by a security interest in substantially
all of the assets of the Company and its subsidiaries. | |
| 3,234,554 | | |
| 2,794,220 | |
| |
| 5,612,136 | | |
| 3,762,806 | |
Less: current portion | |
| 1,311,832 | | |
| 8,850 | |
| |
$ | 4,300,304 | | |
$ | 3,753,956 | |
Continuity of Secured Promissory Notes – Related Party | |
September 30, 2015 | | |
December 31, 2014 | |
Face value of November 19, 2014 secured note payable | |
$ | 1,000,000 | | |
$ | 1,000,000 | |
Face value of August 29, 2013 secured note payable | |
| 1,000,000 | | |
| 1,000,000 | |
Face value of September 30, 2013 secured note payable | |
| 2,000,000 | | |
| 2,000,000 | |
Total face value of promissory notes payable | |
| 4,000,000 | | |
| 4,000,000 | |
Discount on November 19, 2014 secured notes payable | |
| (58,082 | ) | |
| (58,082 | ) |
Discount on August 29, 2013 secured note payable | |
| (310,200 | ) | |
| (310,200 | ) |
Discount on September 30, 2013 secured note payable | |
| (600,400 | ) | |
| (600,400 | ) |
Accretion of discount on secured notes payable | |
| 382,573 | | |
| 234,413 | |
Interest on secured notes payable | |
| 886,413 | | |
| 488,225 | |
Carrying value of Secured Promissory Notes | |
$ | 4,300,304 | | |
$ | 3,753,956 | |
The
following annual payments of principal and interest are required over the next five years in respect of these related party notes
payable:
Twelve months Ending September 30, | |
Annual Payments | |
2016 | |
$ | 1,311,832 | |
2017 | |
| — | |
2018 | |
| 3,775,764 | |
2019 | |
| 1,110,669 | |
2020 | |
| — | |
Total
repayments | |
$ | 6,198,265 | |
NOTE
7 - MORTGAGES PAYABLE AND CAPITAL LEASES
| |
September 30, 2015 | | |
December 31, 2014 | |
Mortgage in the amount of $280,000 Canadian dollars, bears simple interest at 7%
per annum, secured by the land and building, and matures on December 15, 2015. Principal and interest are due, in their entirety,
at maturity. The maturity was extended from June 15, 2015 to December 2015 by the Mortgage holder. | |
$ | 208,256 | | |
$ | 240,819 | |
| |
| | | |
| | |
Equipment capital lease bears interest at 5.0% per annum, secured by the equipment and matures
in April 2015, repayable in monthly installments of approximately $360. | |
| — | | |
| 1,424 | |
| |
| | | |
| | |
Equipment capital lease, bears interest at 5.85% per annum, secured by the equipment and matures
in November 2015, repayable in monthly installments of approximately $516. | |
| 1,026 | | |
| 5,514 | |
| |
| | | |
| | |
Equipment capital lease bears interest at 3.9% per annum, secured by the equipment and matures
on November 10, 2015, Principal and interest are due, in their entirety, at maturity | |
| 19,570 | | |
| 19,006 | |
| |
| | | |
| | |
Mortgage in the amount of $110,000, bears no interest, secured by the land and building, and
matures in November 2016. | |
| 60,000 | | |
| 105,000 | |
| |
| | | |
| | |
Total | |
| 288,851 | | |
| 371,763 | |
Less: current portion | |
| 288,851 | | |
| 326,763 | |
| |
$ | — | | |
$ | 45,000 | |
The
following annual payments of principal are required over the next two years in respect of these mortgages and capital leases:
Twelve months Ending September 30, | |
Annual Payments | |
2016 | |
$ | 288,851 | |
2017 | |
| — | |
Total
repayments | |
$ | 288,851 | |
NOTE
8 - COMMITMENTS AND CONTINGENCIES
Commitments
Plastic2Oil
Marine, Inc., one of the Company’s subsidiaries, which is currently not operating, entered into a consulting service contract
in 2010 with a company owned by Mr. Heddle, who later (in 2014) became the Company’s Chief Executive Officer. The contract
provides the related company with a share of the operating income earned from Plastic2Oil technology installed on marine vessels
which are owned by the related company. The contract provides a minimum future payment equal to fifty percent of the operating
income generated from the operations of two of the most profitable marine vessel processors and 10% from all other marine vessel
processors. At September 30, 2015, there were no currently installed marine vessel processors pursuant to the contract.
As
of September 30, 2015, the Company has committed to purchase certain pieces of key machinery from vendors related to the future
expansion of our operations. In addition to the payments made to these vendors, which are classified as deposits and included
in assets on our unaudited condensed consolidated balance sheets, the Company will be required to pay approximately $495,000 upon
the delivery of these assets which is expected to occur with the delivery of processor #4 and processor #5.
The
Company leases premises in Thorold, Ontario, Canada which was previously used in the operation of Plastic2Oil (Canada), Inc. and
doing business as Regional Recycling of Niagara (“RRON”). As at September 30, 2013, the remaining lease term was almost
17 years. During the third quarter of 2013, the Company determined that it would shut down the operations of RRON (Note 15). The
employees of RRON were given notice of the shut down in the first week of September, after which point the Company approached
the landlord about terminating the lease; however, there was no formal termination as an agreement to terminate the lease was
not reached. During September 2013, the Company was assessing its options with the facility, including potential sublease, but
determined that a sublease of the facility was not permitted by the lease and officially decided to cease use of the premises
as of September 30, 2013. Accordingly, the Company has applied September 30, 2013 as the cease-use-date in recognizing the liability
for the contract termination costs. In measuring the liability, the Company calculated all remaining contracted lease payments,
being $1,381,299 (CDN$1,749,000), and performed a present value calculation using a discount rate of 20%. The total accrued lease
liability expense was reduced by $68,818 of the deferred rent liability which was being amortized over the period of the lease.
At September 30, 2015, the present value calculation resulted in an accrued lease liability of $309,660, of which $94,636 is due
within the next 12 months and has been presented as a current liability. The total expense included in loss from discontinued
operations in the unaudited condensed consolidated statements of operations was $34,413 for the nine months ended September 30,
2015 (Note 15).
All
future payments required under the operating lease agreement is summarized below:
Year
ending December 31, 2015 | |
$ | 66,938 | |
2016 | |
| 75,865 | |
2017 | |
| 75,865 | |
2018 | |
| 80,327 | |
2019 | |
| 80,327 | |
Thereafter | |
| 950,539 | |
Total | |
$ | 1,329,861 | |
On
August 9, 2013, a purported shareholder derivative suit was filed in the United States District Court for the District of Massachusetts
against John Bordynuik, former Chief Executive Officer of the Company and a former member of the Company’s Board of Directors,
and Ronald C. Baldwin, former Chief Financial Officer of the Company. The Complaint was filed by Erwin Grampp, allegedly acting
on behalf of the Company, and it names the Company as a nominal defendant. This is the second purported shareholder derivative
suit that Mr. Grampp has filed in which the Company has been named as a nominal defendant. As previously reported, the first such
suit by Mr. Grampp was dismissed by the court. This recent Complaint (“Grampp II”) alleges, inter alia, that defendants
Bordynuik and Baldwin breached fiduciary duties owed to the Company by causing the Company to erroneously book certain media credits
in 2009. Grampp II alleges that this conduct resulted in two lawsuits against the Company, one an action brought by the Securities
and Exchange Commission (the “SEC Action”) and the other a purported class action by Ellisa Pancoe and Howard Howell
(the “Class Action”). Grampp II alleges that the Company has settled the SEC Action, and that the Company is in the
process of settling the Class Action, but that the Company has been damaged as a result of these two lawsuits. Grampp II seeks
to recover damages on behalf of the Company from defendants Bordynuik and Baldwin in an unspecified amount. It also seeks unspecified
equitable relief, and costs and attorneys’ fees incurred in the action. On October 11, 2013, defendants Bordynuik and Baldwin
filed a motion to dismiss this action. Thereafter, the Court granted plaintiff leave to amend his complaint, and defendants Bordynuik
and Baldwin have renewed their motion to dismiss. On September 22, 2015, the Court issued its Order denying that motion without
prejudice and ordering the parties to conduct limited discovery regarding the issue of whether plaintiff Grampp is an adequate
shareholder representative. The Court further ordered that upon completion of that discovery, the parties were to report to the
Court by December 10, 2015, whether they had reached an agreement to resolve the case, and if not, whether either party believes
it has a basis for filing a meritorious motion for summary judgment regarding whether plaintiff Grampp is an adequate shareholder
representative. The parties are in the process of complying with that order. Pursuant to the Company’s By-Laws, the Company
has an obligation to indemnify defendants Bordynuik and Baldwin to the fullest extent permitted by Nevada law.
On
August 14, 2013, John Bordynuik, Inc., a Company not affiliated with Mr. John Bordynuik, former Chief of Technology, brought suit
against the Company in the United States District Court for the District of Nevada, alleging damages for breach of contract, conversion,
fraud and fraud in the inducement in connection with an alleged 2009 Asset Purchase Agreement. In September 2013 and October 2013,
the Company brought motions to dismiss the complaint and for summary judgment. On January 13, 2015, the Court issued its Order
denying those motions, and on January 30, 2015, the Company filed its Answer to the Complaint, denying the material allegations
of the Complaint and raising a number of affirmative defenses. The Company cannot predict the outcome of this matter at this time.
As
of September 30, 2015, the Company is involved in litigation and claims in addition to the above mentioned legal claims, which
arise from time to time in the normal course of business. In the opinion of management, based upon the information and facts known
to them, any liability that may arise from such contingencies would not have a material adverse effect on the unaudited condensed
consolidated financial statements of the Company.
NOTE
9 - STOCKHOLDERS’ EQUITY (DEFICIENCY)
Common
Stock and Additional Paid in Capital
2015
On
February 18, 2015, the Company issued 250,000 shares of restricted common stock in satisfaction of $30,003, of unpaid fees owed
to two vendors.
On
March 6, 2014 the Company entered into a Subscription Agreement with one investor in connection with a private placement of shares
of the Company’s common stock and warrants to purchase shares of common stock. The Company agreed to sell and issue to the
Purchaser 250,000 shares of its common stock and Warrants to purchase up to an additional 250,000 shares of its common stock.
The purchase price per share was $0.10 and the gross proceeds to the Company were $25,000. The Warrants have a three year term,
and an exercise price of $0.15 per share of common stock. These shares were issued on January 21, 2015.
On
April 7, 2015, the Company issued 1, 000,000 shares of restricted common stock pursuant to the February 19, 2014 consulting agreement
to the respective Consulting firms. In conjunction with this transaction, the Company retired 250,000 shares of restricted common
stock issued in 2014 pursuant to the February 19, 2014 consulting agreement.
On
April 17, 2015, The Company issued 250,000 of restricted common stock pursuant to a March 6, 2015, Subscription Agreement with
one investor in connection with a private placement of shares of the Company’s common stock and warrants to purchase shares
of common stock. The Company agreed to sell and issue to the Purchaser 250,000 shares of its common stock and Warrants to purchase
up to an additional 250,000 shares of its common stock. The purchase price per share was $0.10 and the gross proceeds to the Company
were $25,000. The Warrants have a three year term, and an exercise price of $0.15 per share of common stock.
On
August 13, 2015, pursuant to the Final Judgment of the Class Action Lawsuit, the Company issued 3 million shares of its stock
to the Class through a Settlement Fund. This liability was previously valued at $0.08 per share or $240,000, which is based on
the trading price of our common stock on the settlement date.
Warrants
| |
| | |
Weighted | | |
Weighted | |
| |
Warrants | | |
Average | | |
Average | |
Details | |
Number | | |
Exercise
Price | | |
Remaining
Term | |
OUTSTANDING,
DECEMBER 31, 2014 | |
| 14,100,000 | | |
$ | 0.61 | | |
| 2.75 | |
Issued | |
| 250,000 | | |
| 0.15 | | |
| 2.68 | |
Expired | |
| — | | |
| — | | |
| — | |
Exercised | |
| — | | |
| — | | |
| — | |
OUTSTANDING,
September 30, 2015 | |
| 14,350,000 | | |
$ | 0.19 | | |
| 2.32 | |
NOTE
10 - STOCK-BASED COMPENSATION PLANS AND AWARDS
The
Company’s 2012 Long Term Incentive Plan (the “2012 Plan”) provides for the issuance of stock options, restricted
stock units and other stock-based awards to members of management and key employees. The 2012 Plan is administered by the compensation
committee of the Board of Directors of the Company, or in the absence of a committee, the full Board of Directors of the Company.
The Plan was enacted in July 2012, and prior to this time, no plan and consequently, no stock options or shares of restricted
stock were granted under an equity compensation plan.
Valuation
of Awards
Stock
Options
There
were no options granted during the three months and nine months ended September 30, 2015. For the nine months ended September
30, 2015 and 2014, the Company recorded stock-based compensation expense (included in selling, general and administrative expense)
of $959 and $168,237, respectively, related to stock options. As of September 30, 2015, 1,598,000 options are vested (1,040,000
at $1.50 per share, 508,000 at $0.38 per share, and 50,000 at $.005 per share). A summary of stock option activity for the nine
months ended September 30, 2015 is as follows:
| |
Options
Outstanding Stock Options | | |
Weighted-Average
Exercise Price | | |
Aggregate
Intrinsic Value | |
Balance as of December 31, 2014 | |
| 5,303,334 | | |
$ | 1.30 | | |
$ | — | |
Cancelled | |
| (3,675,334 | ) | |
| 0.74 | | |
| | |
Balance as of September 30, 2015 | |
| 1,628,000 | | |
$ | 1.04 | | |
$ | — | |
| |
| | | |
| | | |
| | |
Equity awards available for grant, net of restricted stock (811,576) at September 30, 2015 | |
| 7,560,424 | | |
| | | |
| | |
Restricted
Stock
The
fair value of the restricted stock granted as compensation is expensed ratably over the vesting period. During the nine months
ended September 30, 2015, 126,000 options and 634,626 shares of restricted stock vested and no
stock options were exercised. The expenses related to the 634,626 restricted shares were accrued at December 31, 2014.
NOTE
11 - RETIREMENT PLAN
The
Company adopted a defined contribution benefit plan (the “Defined Contribution Plan”) for our U.S. employees which
complies with section 401(k) of the Internal Revenue Code. The Company does not currently match any of the employee contributions.
NOTE
12 - RELATED PARTY TRANSACTIONS AND BALANCES
From
June 2014 to September 30, 2015, Mr. Heddle, the Company’s Chief Executive Officer, made several personal loans to the company
to provide working capital. As of September 30, 2015, the current aggregate outstanding balance including accrued interest at
4% per annum was $1,311,832. (See Note 7).
At
September 30, 2015, the company’s accounts payable included a $75,218 outstanding balance due to Heddle Marine Services,
a business controlled by Mr. Richard Heddle, the company’s Chief Executive Officer and member of the Company’s board
of directors. The amounts payable arose from payments made in 2014 by Heddle Marine on behalf of the company to a logistics company
to transport fuel from the Niagara Falls site to the blending tanks at our facility in Thorold, Ontario, as well as for labor
and material provided by Heddle Marine towards upkeep of our Canadian facilities.
Plastic2Oil
Marine, Inc., one of the Company’s subsidiaries, which is currently not operating, entered into a consulting service contract
in 2010 with a company owned by Mr. Heddle, who later (in 2014) became the Company’s Chief Executive Officer. The
contract provides the related company with a share of the operating income earned from Plastic2Oil technology installed on marine
vessels which are owned by the related company. The contract provides a minimum future payment equal to fifty percent of the operating
income generated from the operations of two of the most profitable marine vessel processors and 10% from all other marine vessel
processors. At September 30, 2015, there were no currently installed marine vessel processors pursuant to the contract.
NOTE
13 - SEGMENT REPORTING
The
Company has two principal operating segments, Plastic2Oil and the Data Business. These operating segments were determined based
on the nature of the products and services offered. Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how
to allocate resources and in assessing performance. The Company’s Chief Executive Officer has been identified as the chief
operating decision maker, and directs the allocation of resources to operating segments based on the profitability and cash flows
of each respective segment.
The
Company evaluates performance based on several factors, of which the primary financial measure is net income. The accounting policies
of the business segments are the same as those described in “Note 2 - Summary of Accounting Policies.” The following
tables show the operations of the Company’s reportable segments:
Nine Months Ended September
30, 2015
| |
Data Recovery & Migration | | |
P2O | | |
Corporate | | |
Total | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 10,397 | | |
$ | - | | |
$ | - | | |
$ | 10,397 | |
Cost of Sales | |
$ | 4,054 | | |
$ | - | | |
$ | - | | |
$ | 4,054 | |
Total Operating Expenses | |
$ | - | | |
$ | 1,107,352 | | |
$ | 1,360,169 | | |
$ | 2,467,521 | |
Income (Loss) from Operations | |
$ | 6,343 | | |
$ | (1,107,352 | ) | |
$ | (1,360,169 | ) | |
$ | (2,461,178 | ) |
Other Income (Expenses) | |
$ | - | | |
$ | (34,686 | ) | |
$ | (413,854 | ) | |
$ | (448,540 | ) |
Net(Loss) from Continuing Operations | |
$ | 6,343 | | |
$ | (1,142,038 | ) | |
$ | (1,774,023 | ) | |
$ | (2,909,718 | ) |
Net Income (Loss) from Discontinued Operations | |
$ | - | | |
$ | - | | |
$ | (34,413 | ) | |
$ | (34,413 | ) |
Net Loss | |
$ | 6,343 | | |
$ | (1,142,038 | ) | |
| (1,808,436 | ) | |
$ | (2,944,131 | ) |
Total Assets | |
$ | 3,345 | | |
$ | 5,266,667 | | |
$ | 1,109,300 | | |
$ | 6,379,312 | |
Accounts Receivable | |
$ | 3,345 | | |
$ | (65 | ) | |
$ | - | | |
$ | 3,280 | |
Inventories | |
$ | - | | |
$ | 86,053 | | |
$ | - | | |
$ | 86,053 | |
Nine Months Ended
September 30, 2014
| |
Data Recovery & Migration | | |
P2O | | |
Corporate | | |
Total | |
| |
| | | |
| | | |
| | | |
| | |
Sales | |
$ | 8,042 | | |
$ | 59,672 | | |
$ | - | | |
$ | 67,714 | |
Cost of Sales | |
$ | 2,146 | | |
$ | 53,195 | | |
$ | - | | |
$ | 55,341 | |
Total Operating Expenses | |
$ | - | | |
$ | 1,811,580 | | |
$ | 2,115,701 | | |
$ | 3,927,283 | |
Income (Loss) from Operations | |
$ | 5,896 | | |
$ | (1,775,103 | ) | |
$ | (2,145,703 | ) | |
$ | (3,914,910 | ) |
Other Income | |
$ | - | | |
$ | (35,228 | ) | |
$ | (293,416 | ) | |
$ | (328,644 | ) |
Net Income (Loss) from Continuing Operations | |
$ | 5,896 | | |
$ | (1,810,331 | ) | |
$ | (2,439,029 | ) | |
$ | (4,243,554 | ) |
Net(Loss) from Discontinued Operations | |
$ | - | | |
$ | - | | |
$ | 61,469 | | |
$ | 61,469 | |
Net Loss | |
$ | 5,896 | | |
$ | (1,810,331 | ) | |
| 2,377,650 | | |
$ | 573,215 | |
Total Assets | |
$ | - | | |
$ | 7,617,760 | | |
$ | 575,747 | | |
$ | 8,193,507 | |
Inventories | |
$ | - | | |
$ | 110,793 | | |
$ | - | | |
$ | 110,793 | |
Three
Months Ended September 30, 2015
| |
Data Recovery & Migration | | |
P2O | | |
Corporate | | |
Total | |
| |
| | | |
| | | |
| | | |
| | |
Sales | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Cost of Sales | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
Total Operating Expenses | |
$ | - | | |
$ | 383,059 | | |
$ | 294,072 | | |
$ | 677,131 | |
Gross Profit(Loss) | |
$ | - | | |
$ | (383,059 | ) | |
$ | (294,072 | ) | |
$ | (677,131 | ) |
Three
Months Ended September 30, 2014
| |
Data Recovery & Migration | | |
P2O | | |
Corporate | | |
Total | |
| |
| | |
| | |
| | |
| |
Sales | |
$ | 8,042 | | |
$ | 34,599 | | |
$ | - | | |
$ | 42,641 | |
Cost of Sales | |
$ | 2,017 | | |
$ | 29,391 | | |
$ | - | | |
$ | 31,408 | |
Total Operating Expenses | |
$ | - | | |
$ | 653,479 | | |
$ | 3,273,804 | | |
$ | 3,927,283 | |
Gross Profit(Loss) | |
$ | 6,025 | | |
$ | (648,271 | ) | |
$ | (3,273,804 | ) | |
$ | (3,916,050 | ) |
(1) | All
sales from the Data Business were recorded in the United States for the nine months ended
September 30, 2015. For the nine months ended September 30, 2015 and 2014, P2O sales
in the United States and Canada were $10,397 and $Nil, respectively. For the three months
ended September 30, 2015 and 2014, P2O sales in the United States and Canada were $Nil
and $8,042, respectively. |
(2) | As
of March 31, 2012, due to the management determination that the Company could not substantiate
when a significant amount of revenues would be earned from the Data Business, all property,
plant and equipment assets related to the Data Business were determined to be impaired
and written down to $Nil. All other amounts included in the measure of segment profit
or loss related to the Data business are not material. Other than as noted above, the
amounts shown for Operating Expenses and Other Income (Expense) items on the condensed
consolidated statements of operations related to the P2O segment. |
(3) | P2O
assets include the Company headquarters and various machinery and equipment used at the
aforementioned sites and at the Niagara Falls Facility. As at September 30, 2015, total
long-lived assets of $3,818,203 and $291,537 were located in the United States and Canada,
respectively. As of September 30, 2014, total long-lived assets of $5,511,201 and $353,714,
were located in the United States and Canada, respectively. The mortgage payable of $208,252
(CDN $280,000) and the equipment capital lease maturing on December10, 2015, both disclosed
in Note 7, relate to assets held in Canada. The mortgage payable of $60,000 as of September
30, 2015 disclosed in Note 7, relates to assets held in United States. |
NOTE
14 - RISK MANAGEMENT
Concentration
of Credit Risk
The
Company maintains cash balances, at times, with financial institutions in excess of amounts insured by the Canada Deposit Insurance
Corporation and the U.S. Federal Deposit Insurance Corporation. Management monitors the soundness of these institutions and has
not experienced any collection losses with these financial institutions.
During
the nine months ended September 30, 2015 and 2014, 100.0% of total net revenues were generated from a single, and four customers
respectively. As of September 30, 2015 and 2014, one and three customers, respectively, accounted for 100.0% of accounts receivable.
During
the nine months ended September 30, 2015 and 2014 five suppliers accounted for 30.9% and 50.8% of accounts payable, respectively.
NOTE
15 - DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
| |
Nine Months Ended September 30 | |
| |
2015 | | |
2014 | |
Pak-It - Recovery of Note Receivable | |
$ | — | | |
$ | 200,000 | |
Regional Recycling of Niagara – Net Loss | |
| (34,413 | ) | |
| (138,531 | ) |
Total (Loss) Income from discontinued operations | |
$ | (34,413 | ) | |
$ | 61,469 | |
Regional
Recycling of Niagara
During
the third quarter of 2013, the Company determined that due to the significant losses incurred by Regional Recycling of Niagara,
and the continuous need to fund its operations through the Company’s Plastic2Oil operations, it would shut down the operations
of the facility. The decision to do this was based on the following factors:
| ● | The
inventory processed over the prior months at Regional Recycling of Niagara was comingled
with contaminated materials that made the significant majority of their inventory worthless
without significant additional processing and labor; |
| ● | The
fixed assets utilized at the facility were old and beginning to become in need of significant
repairs, which would have been a significant cost to maintain; |
| ● | The
pre-processing cost of plastic at Regional Recycling of Niagara was significant and was
a hindrance to the Company becoming profitable on a cost per gallon of fuel basis; and |
| ● | The
Company leases the Recycling Facility in Thorold, Ontario, Canada with terms remaining
of up to 15 years. |
The
results of operations from Regional Recycling of Niagara for the nine months ended September 30, 2015 and 2014 have been classified
as discontinued operations and are as follows:
Condensed
Statements of Operations
| |
Nine Months Ended September 30, | |
| |
2015 | | |
2014 | |
Revenue | |
$ | 4,407 | | |
$ | — | |
Operating Expenses | |
| 38,820 | | |
| 138,531 | |
Loss from discontinued operations, net of tax | |
$ | (34,413 | ) | |
$ | (138,531 | ) |
Sale
of Pak-It
On
February 14, 2013, the Company completed the sale of substantially all of the assets of Pak-It, LLC and Dickler Chemical Company,
Inc. (collectively “Pak-It”).
The
Company sold Pak-It for $900,000, in exchange for $400,000 cash at the closing of the sale and entry into a note receivable for
$500,000 due on July 1, 2013. In the third quarter of 2013, the Company’s assessed the collectability of the note receivable
from the buyer of Pak-It. It was determined that due to the lack of a payment within forty days of the due date, that the collectability
was not assured and the Company reserved for the full amount of the note receivable. The company settled for $200,000 on February
10, 2014.
The
Company’s statements of operations from discontinued operations related to Pak-it for the nine months ended September 30,
2015 and 2014 are as follows:
Condensed
Statements of Operations of Pak-It
| |
2015 | | |
2014 | |
Operating income | |
| — | | |
| 200,000 | |
Income from discontinued operations, net of tax | |
$ | — | | |
$ | 200,000 | |
NOTE
16 - SUBSEQUENT EVENTS
The
Company has evaluated subsequent events occurring after the balance sheet date and has identified the following:
From
September 30, 2015 to November 10, 2015, Mr. Heddle, the Company’s Chief Executive Officer, made three additional personal
loans in the amount of $222,838 to the Company to provide working capital at a rate of 4% per annum.
On
October 1, 2015, the Company issued 510,000 shares of restricted common stock in satisfaction of unpaid fees owed to three consultants.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following management’s discussion and analysis (the”MD&A”) of the results of operations of the Company should
be read in conjunction with the consolidated financial statements of the Company, together with the accompanying notes, as well
as other financial information included elsewhere in this Report. This discussion contains forward-looking statements that involve
certain risks and uncertainties, and that reflect estimates and assumptions. See the section titled, “Cautionary Statement
Regarding Forward-Looking Statements” for more information on forward-looking statements. Our actual results may differ
materially from those indicated in forward- looking statements. Factors that could cause our actual results to differ materially
from our forward-looking statements are described in “Risk Factors” Part I Item 1A, and elsewhere in this Report.
Business
Overview
For
financial reporting purposes, we operate in two business segments, (i) our P2O® solution business, which manufactures and
sells the fuel produced through our two operating P2O processors and (ii) data storage and recovery (the “Data Business”).
Previously, we operated a recycling facility for waste paper fiber processing, a chemical processing and cleaning business, known
as Pak-It, and a retail and wholesale distribution business, known as Javaco, Inc. As of September 30, 2015, we had exited all
of these businesses and their results in all periods presented are classified as discontinued operations (Note 15).
Our
P2O business has begun the transition from research and development to a commercial manufacturing and production business. We
plan to grow mainly from sale of processors, and secondarily from the sale of fuel products.
We
anticipate that this segment will account for substantially all of our revenues in 2015 and beyond. Historically, however, our
revenues have been derived primarily from our other segments and products, including those noted above as discontinued operations.
The
following table highlights since inception the proceeds from financings, research and development expenditures, investment in
property, plant and equipment and fuel produced:
| |
FY 2009 | | |
FY 2010 | | |
FY 2011 | | |
FY 2012 | | |
FY 2013 | | |
FY 2014 | | |
Total | |
Cash raised | |
$ | - | | |
$ | 4,080,166 | | |
$ | 8,236,126 | | |
$ | 11,699,066 | | |
$ | 7,072,752 | | |
$ | 1,705,095 | | |
$ | 32,793,205 | |
R&D cost | |
$ | - | | |
$ | 492,290 | | |
$ | 1,048,652 | | |
$ | 445,947 | | |
$ | 465,671 | | |
$ | 20,999 | | |
$ | 2,473,559 | |
Investment in property, plant & Equipment | |
$ | 535,521 | | |
$ | 1,069,810 | | |
$ | 2,875,104 | | |
$ | 311,998 | | |
$ | 2,581,555 | | |
$ | 13,775 | | |
$ | 7,387,763 | |
Fuel produced in gallons | |
| - | | |
| - | | |
| - | | |
| 317,224 | | |
| 337,813 | | |
| 12,959 | | |
| 667,996 | |
Plastic2Oil
Business
Our
business focus is to sell processors. We will operate our processors to test potential customer’s feedstock. We manufacture
processors that produce fuel products mainly from unsorted, unwashed waste plastics for distribution across a number of markets.
We continue to execute on our business strategy with the goal of becoming a leading North American company that transforms waste
plastic into ultra- clean, ultra-low sulphur fuel.
Currently,
we provide environmentally-friendly solutions through our processors and technologies. Our primary offering is our Plastic2Oil®,
or P2O®, solution, which is our proprietary process that converts waste plastic into fuel through a series of chemical reactions
(our “P2O business”). We collect mainly mixed plastics from commercial and industrial enterprises that generate large
amounts of waste plastic for use in our process.
Generally,
this waste plastic would otherwise be sent to landfills and its disposal potentially can be quite costly for companies. We use
this waste plastic as feedstock to produce Fuel Oil No. 2, Naphtha, and Fuel Oil No. 6 for various uses by our customers. We own
our P2O processors and have the capability to produce and store the fuels at, and ship from, our facilities in Niagara Falls,
NY. We sell the fuels we produce to customers through two main distribution channels, fuel wholesalers and directly to commercial
and industrial end-users.
Our
P2O processors have evolved to be modular solutions with the completion of processor #3 in 2013. We use third party contract manufacturers
for the manufacture of many of the key modular components of our processors, including the kilns and distillation towers as well
as certain other key components that require specialized machining and fabrication.
Our
P2O business is a proprietary process that converts waste plastic into fuel through a series of chemical reactions. We began developing
this process in 2009 and began very limited production in late 2010 following our receipt of a consent order from the New York
State Department of Environmental Conservation (“NYSDEC”) allowing us to commercially operate our first large-scale
P2O processor located at our Niagara Falls, New York facility. Currently, as of the filing of this report, we have three processors
and two additional processors in the process of assembly. These processors were idle for all of 2015. Our processors are capable
of producing Naphtha, Fuel Oil No. 2 and Fuel Oil No. 6. Our P2O process also produces two by-products, a reusable off-gas similar
to natural gas and a petcoke carbon residue. We sell our fuel products to fuel wholesalers and directly to commercial and industrial
end-users. We primarily use our off-gas product in our processing operations to fuel the burners in our P2O processors. We have
years of significant operating data and have solved numerous challenges that have blocked competitor success. Since inception
we have produced a total of 667,996 gallons of fuel.
2015
update
On
November 6, 2015, the Company entered into a third amendment of the four related agreements with EcoNavigation, LLC (“EcoNavigation”).
The sole purpose of the Third Amendment was to extend the term of the pilot program from 300 days to 390 days through January
26, 2016. Two prior amendments extended the pilot program from 120 days to 300 days. This project has required significant attention
from the P2O, EcoNavigation, and O’Brien & Gere project opportunity team and the extension was necessary to allow the
team to complete its work.
On
January 2, 2015, P2O announced that P2O had contracted to sell up to six processors to EcoNavigation LLC upon the completion of
a pilot study. Shortly afterward, EcoNavigation presented P2O with several promising opportunities and currently P2O and EcoNavigation
are involved in multiple, complex negotiations for the potential sale and implementation of P2O processors.
We
and EcoNavigation began discussions with a firm in the southern U.S. regarding a development project that has the potential for
the deployment of more than 30 processors over the proposed project development period. However, this project is currently
on hold, as the firm and its lender have not come to agreement on the financial structure. We remain hopeful that work on this
project will resume, but there can be no assurance.
In
addition to the above, a third opportunity for a three processor site, located in one of the northern US states, is being worked
on by the above mentioned project opportunity team. EcoNavigation continues final negotiations and work on structuring and financing.
There
can be no assurance that our current negotiations will result in definitive agreements or successful sales.
We
intend to engage O’Brien & Gere (www.OBG.com), one of the leading EPC consulting firms, for these upcoming opportunities.
O’Brien & Gere’s Advanced Manufacturing business should provide P2O the capability to scale-up our technology
and integrate it into a fully operational manufacturing facility. In addition, its full-service engineering capabilities, project
management and control system integration round out our capabilities to deliver efficient and cost-effective solutions to our
customers.
Data
Recovery & Migration Business
The
Data Recovery & Migration Business is not as capital intensive as our P2O business, but is time consuming with regard to the
allocation of the time of John Bordynuik, our founder and currently a Consultant. His time is needed to interpret and read tape
data and make necessary adjustments to the programming of the tape-reading equipment in order to accurately read the data. Revenues
for this segment will vary based on our ability to read the tape data timely and the availability of Mr. Bordynuik to dedicate
portions of his time to reading and interpreting the data from our customers’ media in the event that certain updates or
changes to the programming are needed. During 2014 and 2015, we were able to complete certain orders for tape reading and recognize
revenue related to this service. Due to the aforementioned time constraints of the Data Business, we are unable to routinely complete
orders for tape reading services and recognize revenue for the work and revenue from this business will be limited and not predictable.
Listing
on the OTCQB
As
of September 30, 2015, we had 117,399,157 shares of common stock issued and outstanding. Our common stock is currently trading
on the OTCQB marketplace in the United States of America under the stock ticker symbol “PTOI.” On November 11, 2015,
the last trading day prior to the date of this filing, the closing price of the common stock on the OTCQB was $0.05.
Sources
of Revenues and Expenses
Revenues
We
currently plan to derive revenues from two defined business segments: (1) P2O, through the manufacture of processor and from the
sale of Fuel Oil No. 2, Naphtha and Fuel Oil No. 6; and (2) Data Business, through the reading and interpretation of magnetic
tape data. The Company has not derived any revenues from its Plastic2Oil business during the three and nine months ended September
30, 2015. The Company did not derive any revenues from the operations of Recycling Center, Javaco and Pak-It during the year;
because those operations were discontinued in prior years.
Cost
of Sales
Costs
of Sales for P2O consist of the following:
| ● | feedstock
procurement costs; |
| ● | overhead
incurred at our Niagara Falls Facility related to the operation of the processors; and |
| ● | freight
costs incurred in shipping of plastics and fuels. |
Costs
of sales for our Data Business mainly consist of direct labor costs incurred in reading and interpreting the tape data as well
as costs for transferring the tape data to storage media.
Operating
Expenses
Operating
expenses consist primarily of the following:
| ● | personnel-related
costs including employee payroll, payroll taxes, stock based compensation and insurance; |
| ● | plant
and processor related costs including repairs and maintenance, processing and welding
consumables, safety equipment and related costs; |
| ● | professional
fees including legal fees, accounting fees including audit and tax professional costs,
certain public company required fees, consulting fees and other professional and administrative
costs; |
| ● | insurance
costs consisting of pollution, workers compensation, general liability, and directors
and officers insurance policies; |
| ● | compliance
related costs including environmental consulting fees, stack test and other related testing
costs and permitting costs; |
| ● | depreciation
expense related to our property plant and equipment; and |
| ● | Impairment
expense related to our property, plant and equipment. |
Results
of Operations – Nine months ended September 30, 2015 compared to Nine months ended September 30, 2014
Revenue
Revenue
was derived from our P2O business through the sale of our fuels and processed waste paper fiber in 2014. As we only recently shifted
our business strategy to selling fuel processors, we did not derive any revenue from processor sales in 2015 or 2014. Additionally,
we supplement our operations with revenue from our Data Business through reading and interpreting magnetic tape media. The following
table shows a breakdown of our revenues from these sources.
Revenue | |
Nine Months ended
September 30, 2015 | | |
Nine Months ended
September 30, 2014 | | |
% Change | |
| |
| | |
| | |
| |
P2O Revenue | |
| | | |
| | | |
| | |
Fuels | |
$ | — | | |
$ | 59,672 | | |
| (100.0 | %) |
Total P2O Revenue | |
| — | | |
| 59,672 | | |
| (100.0 | %) |
| |
| | | |
| | | |
| | |
Data Business | |
| 10,397 | | |
| 8,042 | | |
| 29.28 | % |
TOTAL REVENUE | |
$ | 10,397 | | |
$ | 67,714 | | |
| (84.65 | %) |
There
was no production in the nine months ended September 30, 2015. Consequently, there was neither fuel shipment nor fuel revenue.
The decrease in fuel revenue for the nine months ended September 30, 2015 as compared to September 30, 2014, was mainly due to
management’s decision to shut down its production in the fourth quarter of 2013 due to the severe cold weather that caused
damage to condensers and other components of our processors. The damage requires substantial working capital for general repairs
and replacement of damaged condensers. These processors were idle for all of 2014 and are currently idle. Fuel shipment from inventory
stock accounts for the 2014 fuel revenue. Management estimates the processors will remain idle until the first quarter of 2016,
other than pilot runs to support processor sales.
Revenue | |
Three Months ended
September 30, 2015 | | |
Three Months ended
September 30, 2014 | | |
% Change | |
| |
| | |
| | |
| |
P2O Revenue | |
| | | |
| | | |
| | |
Fuels | |
$ | — | | |
$ | 34,599 | | |
| (100.0 | %) |
Total P2O Revenue | |
| — | | |
| 34,599 | | |
| (100.0 | %) |
| |
| | | |
| | | |
| | |
Data Business | |
| — | | |
| 8,042 | | |
| 100.0 | % |
TOTAL REVENUE | |
$ | — | | |
$ | 42,641 | | |
| (100.0 | %) |
There
was no production in the three months ended September 30, 2015. Consequently, there was neither fuel shipment nor fuel revenue.
The decrease in fuel revenue for the three months ended September 30, 2015 as compared to September 30, 2014 was mainly due to
management’s decision to shut down its production in the fourth quarter of 2013 due to the severe cold weather that caused
damage to condensers and other components of our processors as noted above. Fuel shipment from inventory stock accounts for the
2014 fuel revenue.
Revenues
from the Data Business were driven by the completion of open and outstanding purchase orders.
Cost
of Goods Sold
There
were no fuel shipments for the nine months ended September 30, 2015. The following tables are a breakdown of the costs of goods
sold:
Cost of Goods Sold | |
Nine Months ended September 30, 2015 | | |
Nine Months ended September 30, 2014 | | |
% Change | |
| |
| | |
| | |
| |
P2O COGS | |
| | | |
| | | |
| | |
Fuels | |
$ | — | | |
$ | 53,195 | | |
| (100.0 | %) |
Total P2O COGS | |
| — | | |
| 53,195 | | |
| (100.0 | %) |
| |
| | | |
| | | |
| | |
Data Business COGS | |
| 4,054 | | |
| 2,146 | | |
| 89.96 | % |
TOTAL COGS | |
$ | 4,054 | | |
$ | 55,341 | | |
| (92.67 | % |
Cost of Goods Sold | |
Three Months ended September 30, 2015 | | |
Three Months ended September 30, 2014 | | |
% Change | |
| |
| | |
| | |
| |
P2O COGS | |
| | | |
| | | |
| | |
Fuels | |
$ | — | | |
$ | 29,391 | | |
| (100.0 | %) |
Total P2O COGS | |
| — | | |
| 29,391 | | |
| (100.0 | %) |
| |
| | | |
| | | |
| | |
Data Business | |
| — | | |
| 2,017 | | |
| (100.0 | %) |
TOTAL COGS | |
$ | — | | |
$ | 31,408 | | |
| (100.0 | %) |
There
were no fuel shipments for the three months ended September 30, 2015 and September 30, 2014 as noted above. The cost of goods
sold related to the Data Business relate to the direct labor incurred in the reading and interpreting of the magnetic tape data.
Operating
Expenses
We
incurred operating expenses of $2,467,521 during the nine months ended September 30, 2015, compared to $3,927,283 for the nine
months ended September 30, 2014. This $1,459,762 decrease was driven by a $677,128 decrease in professional fees from elimination
of outside consultants in 2015, $423,312 decrease in compensation expenses, mostly amortization of the Company’s 2012 Long
Term Incentive Plan (LTIP) expenses and $198,354 net decrease in other operating expenses from tighter spending controls. The
September 2015 operating expenses include $366,120 of expenses related to the class action suit settlement (Note 8). A breakdown
of the components of operating expenses for the nine months ended September 30, 2015 and 2014, are as follows:
Operating Expenses | |
Nine Months ended
September 30, 2015 | | |
Nine Months ended
September 30, 2014 | |
Selling, General and Administrative expenses- Professional Fees | |
$ | 504,995 | | |
$ | 1,182,123 | |
Selling, General and Administrative expenses- Compensation | |
| 639,111 | | |
| 1,062,324 | |
Selling, General and Administrative expenses- Other | |
| 676,320 | | |
| 874,163 | |
Depreciation & Accretion | |
| 645,442 | | |
| 787,674 | |
Research & Development | |
| 1,653 | | |
| 20,999 | |
Total Operating Expenses | |
$ | 2,467,521 | | |
$ | 3,927,283 | |
We
incurred operating expenses of $677,131 during the three months ended September 30, 2015, compared to $1,227,430 for the three
months ended September 30, 2014. This $550,299 decrease was driven by a $61,412 decrease in professional fees from elimination
of outside consultants in 2015, $419,901 decrease in compensation expenses, mostly amortization of LTIP expense and $20,554 decrease
in other operating expenses. A breakdown of the components of operating expenses for the nine months ended September 30, 2015
and 2014, are as follows:
Operating Expenses | |
Three Months ended
September 30, 2015 | | |
Three Months ended
September 30, 2014 | |
Selling, General and Administrative expenses- Professional Fees | |
$ | 157,099 | | |
$ | 218,511 | |
Selling, General and Administrative expenses- Compensation | |
| 197,696 | | |
| 617,594 | |
Selling, General and Administrative expenses- Other | |
| 109,368 | | |
| 129,922 | |
Depreciation & Accretion | |
| 212,968 | | |
| 256,749 | |
Research & Development | |
| — | | |
| 4,654 | |
Total Operating Expenses | |
$ | 677,131 | | |
$ | 1,227,430 | |
Non-Operating
Expenses
Interest
Expenses
For
the nine months ended September 30, 2015, we incurred net interest expense of $447,669 as compared to $306,107 for the nine months
ended September 30, 2014, mainly from the interest payments on the mortgage on our facility in Canada, interest payments on our
capital leases, and interest accrued on our related party promissory notes.
Income
Tax Expenses
For
the nine months ended September 30, 2015, and 2014, we had no federal taxable income due to net losses and recorded a deferred
tax asset and a valuation allowance to the extent that those assets are attributable to net operating losses. We recognized the
valuation allowance because we are unsure as to the ability to use these assets in the near future due to continued operating
losses.
For
the nine months ended September 30, 2015 and 2014, we recorded no income tax expense or future income tax expenses from continuing
operations.
Net
Loss
We
incurred a net loss of $2,944,131 in the nine months ended September 30, 2015 as compared to a net loss of $4,182,085 in the nine
months ended September 30, 2014. These losses consisted of losses from continuing operations of $2,909,718 and $4,243,554 for
the nine months ended September 30, 2015 and 2014, respectively, and loss from discontinued operations of $34,413 for the nine
months ended September 30, 2015 and a gain of $61,469 for the nine months ended September 30, 2014. The decrease in net loss for
the nine months ended September 30, 2015 was driven mainly by the idle plant and reductions in operating expenses we realized
in the current year, as discussed previously.
Liquidity
and Capital Resources
At
September 30, 2015, we had a cash balance of $40,508. Our principal source of liquidity in 2015 was borrowing under a related
party short-term note. As discussed earlier in this MD&A, our processors are currently idle and, thus, we are not producing
fuel or generating fuel sales. Furthermore, we have shifted our business strategy to focus on processor sales, rather than fuel
sales. Our current cash levels are not sufficient to enable us to make the required repairs to our processors or to execute our
business strategy as described in this Report. As a result, we intend to seek significant additional capital through the sale
of our equity and debt securities and other financing methods to enable us to make the repairs, to meet ongoing operating costs
and reduce existing current liabilities. We also intend to seek cash advances or deposits under any new processor sale agreements
and/or related technology licenses. Management currently anticipates that the processors will remain idle until at least the first
quarter of 2016, other than running pilot runs for sale of processors. Due to the many factors and uncertainties involved in capital
markets transactions, there can be no assurance that we will raise sufficient capital to allow us to resume operations in 2015,
or at all. In the interim, we anticipate that our level of operations will continue to be nominal, although we plan to continue
to market our P2O processors with the intention of making P2O processor sales and technology licenses.
Our
limited capital resources and recurring losses from operations raise substantial doubt about our ability to continue as a going
concern and may adversely affect our ability to raise additional capital.. The financial statements do not include any adjustments
that might be necessary if we are unable to continue as a going concern.
The
following table provides a comparative summary of our cash flows for the nine months ended September 30, 2015 and 2014.
| |
2015 | | |
2014 | |
Net Loss from Continuing Operations | |
$ | (2,909,718 | ) | |
$ | (4,243,554 | ) |
Net Loss from Discontinued Operations | |
| (34,413 | ) | |
| 61,469 | |
Net Loss | |
| ((2,944,131 | ) | |
| (4,182,085 | ) |
Net Cash Used in Operating Activities | |
| (1,406,243 | ) | |
| (1,127,629 | ) |
Cash Flows from Investing Activities | |
| | | |
| | |
Net Cash (Used) Provided in Investing Activities | |
| (38,148 | ) | |
| 27,665 | |
Cash Flows from Financing Activities | |
| | | |
| | |
Net Cash Provided by Financing Activities | |
| 1,305,247 | | |
| 916,406 | |
| |
| | | |
| | |
Cash and Cash Equivalents at Beginning of Year | |
| 179,652 | | |
| 203,949 | |
Cash and Cash Equivalents at End of Year | |
$ | 40,508 | | |
$ | 20,391 | |
Cash
Flow from Operations
Cash
used in operations was $1,406,243 and $1,127,629 for the nine months ended September 30, 2015 and 2014, respectively. For the
nine months ended September 30, 2015 and 2014, cash was mainly used to pay down balance sheet obligations, and to continue funding
operating costs, including professional fees.
Cash
Flow from Investing Activities
Cash
used and provided in investing activities was $38,148 and $27,665, respectively, for the nine months ended September 30, 2015
and 2014. For the nine months ended September 30, 2105 and 2014, cash was mainly used to fund the Regional Recycling Center lease,
which is included in discontinued operations.
Cash
Flow from Financing Activities
Cash
flow from financing activities was $1,305,247 and $916,406, for the nine months ended September 30, 2015 and 2014, respectively.
For both nine months ended September 30, 2015 and 2014, these amounts represented proceeds received from the issuance of shares
common stock and funds provided under a related party short-term note agreement.
Off-Balance
Sheet Arrangements
We
had no off-balance sheet arrangements in the nine months ended September 30, 2015 and 2014, other than operating leases, as discussed
in Note 7.
Transactions
with Related Parties
At
September 30, 2015, the company’s accounts payable included a $75,218 outstanding balance to Heddle Marine Services, a business
controlled by Mr. Richard Heddle, the company’s Chief Executive Officer and member of the Company’s board of directors.
The amounts payable arose from payments made by Heddle Marine on behalf of our company to a logistics company to transport fuel
from the Niagara Falls site to the blending tanks at our facility in Thorold, Ontario, as well as for labor and material provided
by Heddle Marine towards upkeep of our Canadian facilities.
On
November 19, 2014, we entered into a Subscription Agreement with Heddle Marine Services, a business controlled by Mr. Richard
Heddle, the Company’s Chief Executive Officer and a member of the Company’s board of directors, pursuant
to which we issued to Heddle Marine a $1 million principal amount 12% Secured Promissory Note, together with a five-year warrant
to purchase up to one million shares of the Company’s common stock at an exercise price of $0.12 per share.
From
June 2014 to November 6, 2015, Mr. Heddle, the Company’s Chief Executive Officer, made several personal
loans to the company to provide working capital. As of November 10, 2015, the current aggregate outstanding balance was $1,462,000
Plastic2Oil
Marine, Inc., one of the Company’s subsidiaries, which is currently not operating, entered into a consulting service contract
in 2010 with a company owned by Mr. Heddle, who later (in 2014) became our CEO. The contract provides the related company with
a share of the operating income earned from Plastic2Oil technology installed on marine vessels which are owned by the related
company. The contract provides a minimum future payment equal to fifty percent of the operating income generated from the operations
of two of the most profitable marine vessel processors and 10% from all other marine vessel processors. At September 30, 2015,
there were no installed marine vessel processors as per the terms of the contract.
Critical
Accounting Policies
The
Company believes the following discussion addresses its most critical accounting policies, which are those that are most important
to the portrayal of the financial condition and results of operations and require management’s most difficult, subjective,
or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
The
Company has disclosed its accounting policies in “NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” in the
Notes to the Condensed Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2014. Additionally, Note 2 to the unaudited condensed consolidated financial statements included in the
report provides additional updates to our Significant Accounting Policies. The following accounting policies provide an update
to those included under the same captions in the Company’s Annual Report on Form 10-K.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Disclosures
About Market Risk
We
may be exposed to changes in financial market conditions in the normal course of business. Market risk generally represents the
risk that losses may occur as a result of movements in interest rates and equity prices. We currently do not use financial instruments
in the normal course of business that are subject to changes in financial market conditions.
Currency
Fluctuations and Foreign Currency Risk
We
mainly operate in the United States and Canada. Due to the relative stability of the Canadian Dollar in comparison to the U.S.
Dollar, we have not experienced foreign currency risk, however, should this stability change, we could be exposed to such risk.
Interest
Rate Risk
We
do not feel that we are subject to significant interest rate risk. We deposit surplus funds with banks earning daily interest
at fixed rates and we do not invest in any instruments for trading purposes. Additionally, all of our outstanding debt instruments
(our mortgage and capital leases) carry fixed rates of interest. We are exposed to opportunity risk should interest rates decrease.
The amount of interest bearing short- term related party debt outstanding as of September 30, 2015 and December 31, 2014 was $1,311,832
and $8,850, respectively.
Credit
Risk
Financial
instruments which potentially expose us to concentrations of credit risk consist principally of operating demand deposit accounts
and accounts receivable. Our policy is to place our operating demand deposit accounts with high credit quality financial institutions
that are insured by the FDIC, however, account balances may at times exceed insured limits. We extend limited credit to our customers
based upon their creditworthiness and establish an allowance for doubtful accounts based upon the credit risk of specific customers,
historical trends and other pertinent information.
We
maintain cash balances, at times, with financial institutions in excess of amounts insured by the Canada Deposit Insurance Corporation
and the U.S. Federal Deposit Insurance Corporation. Management monitors the soundness of these institutions and has not experienced
any collection losses with these financial institutions.
During
the nine months ended September 30, 2015 and 2014, 100.0% of total net revenues were generated from a single, and four customers
respectively. As of September 30, 2015 and 2014, one and three customers, respectively, accounted for 100.0% of accounts receivable.
During
the nine months ended September 30, 2015 and 2014 five suppliers accounted for 30.9% and 50.8% of accounts payable, respectively.
Inflation
Risk
Inflationary
factors such as increases in the cost of our product and overhead costs may adversely affect our operating results. Although we
do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate
of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling, general
and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase with these increased
costs.
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of disclosure controls and procedures
Disclosure
Controls and Procedures
Under
the supervision and with the participation of our management, including our chief executive officer (CEO) and chief financial
officer (CFO), we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e)
and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September
30, 2014. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures are ineffective to ensure
that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms,
and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO
and CFO, as appropriate, to allow timely decisions regarding required disclosure. The following matters were deemed to be material
weaknesses in the Company’s internal Controls:
| ● | The
Company does not have an independent audit committee that can review and approve significant
transactions and the reporting process and provide independent oversight of the Company. |
| ● | The
Company does not have effective policies and procedures in place to ensure that accounting
for and disclosure of financial and operational transactions is done in accordance with
U.S.GAAP, and in a timely manner to allow adequate decision making by management. |
Changes
in Internal Controls over Financial Reporting
There
were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph
(d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting. Management has reported to the Board of
Directors material weaknesses described under the heading Management’s Report on Internal Control over Financial Reporting”
in Section 9A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
ITEM
5. Other Information
On
November 6, 2015, we entered into a third amendment (the “Third Amendment”) of our four related agreements with EcoNavigation,
LLC, as described in the Company’s Current Report on Form 8-K dated January 2, 2015. The sole purpose of the Amendment was
to extend the term of the pilot program from 300 days to 390 days (until January 27, 2016).
The
foregoing description of the Third Amendment does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the full text of such agreements, copies of which are filed herewith as Exhibits 10.1, 10.2, 10.3 and 10.4 and
are incorporated by reference herein.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not
applicable.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
For
a discussion of legal proceedings affecting the Company, see the information in Footnote 8, “Commitments and Contingencies”,
to the financial statements, included in Part I of this Report.
Item
1A. Risk Factors
In
addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item
1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially
affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the
only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial
also may materially adversely affect our business, financial condition and operating results.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults upon Senior Securities
None.
Item
4. Mine Safety Disclosures
Not
Applicable.
Item
5. Other Information
None.
Item
6. Exhibits
The
exhibits required by this item are listed on the Exhibit Index attached hereto.
(a)
Exhibits
101.INS* |
|
XBRL Instance Document |
101.SCH* |
|
XBRL Taxonomy Schema Document |
101.CAL* |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB* |
|
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF* |
|
XBRL Taxonomy Extension Definition Linkbase Document |
10.1 |
|
Third Amendment, dated November 6, 2015, between Plastic2Oil, Inc.
and EcoNavigation, LLC Third Amendment to Sections 27.1 and 27.2 of Equipment Supply Contract |
10.2 |
|
Third Amendment, dated November 6, 2015, between Plastic2Oil, Inc.
and EcoNavigation, LLC Third Amendment to Sections 13.1 and 13.2 of Technology License and Referral Agreement |
10.3 |
|
Third Amendment, dated November 6, 2015, between Plastic2Oil, Inc.
and EcoNavigation, LLC Third Amendment to Sections 23.1 and 23.2 of Catalyst Supply Agreement |
10.4 |
|
Third Amendment, dated November 6, 2015, between Plastic2Oil, Inc.
and EcoNavigation, LLC Third Amendment to Sections 13.13.1 and 13.13.2 of Monitoring, Maintenance, Repair and Upgrade Agreement |
31.1 |
|
Certification of Principal Executive Officer Pursuant to Section
302 of Sarbanes-Oxley Act of 2002. |
31.2 |
|
Certification of Principal Financial Officer Pursuant to Section
302 of Sarbanes-Oxley Act of 2002. |
32.1 |
|
Certification of Principal Executive Officer Pursuant to Section
906 of Sarbanes-Oxley Act of 2002. |
32.2 |
|
Certification of Principal Financial Officer Pursuant to Section
906 of Sarbanes-Oxley Act of 2002. |
Signatures
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
has been signed on its behalf by the undersigned, thereunto duly authorized.
|
PLASTIC2OIL,
INC. |
|
|
|
Date: November 12, 2015 |
By: |
/s/ Richard Heddle |
|
Name: |
Richard Heddle |
|
Title: |
President and Chief Executive Officer (Principal Executive Officer) |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Richard Heddle |
|
President,
Chief Executive Officer |
|
November
12, 2015 |
Richard Heddle |
|
(Principal Executive Officer) and Chairman of the Board of Directors |
|
|
|
|
|
|
|
/s/ Philip J Bradley
|
|
Director |
|
November 12, 2015 |
Philip J. Bradley |
|
|
|
|
|
|
|
|
|
/s/ Rahoul S. Banerjea
|
|
Chief Financial Officer |
|
November 12, 2015 |
Rahoul S. Banerjea |
|
(Principal Financial Officer and Principal Accounting Officer) |
|
|
Exhibit
10.1
Third
Amendment to Sections 27.1 and 27.2 of Equipment Supply Contract
Sections
27.1 and 27.2 of the Equipment Supply Contract effective January 2, 2015 between the undersigned parties are hereby amended as
follows:
Section
27.1
As
a result of two previous amendments, Section 27.1 currently reads as follows:
Pilot
Program Contingency. Customer’s obligations under this Contract shall be and hereby are contingent upon the institution,
completion by that date which is three hundred (300) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Customer’s option upon prior written notice to P2O), and Customer’s acceptance, in its sole discretion,
of the results of, of a pilot test program (a “Pilot Program”) whereby Customer shall utilize, on terms mutually
agreeable to P2O and Customer, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara Falls,
New York (the “Pilot Program Contingency”) to ascertain Customer’s willingness to go forward with the
transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and using
the relevant feedstock. Immediately upon the execution and delivery of this Contract by the parties hereto, the parties shall
in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
By
this Third Amendment, Section 27.1 is amended again to read as follows:
Pilot
Program Contingency. Customer’s obligations under this Contract shall be and hereby are contingent upon the institution,
completion by that date which is three hundred ninety (390) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Customer’s option upon prior written notice to P2O), and Customer’s acceptance, in its sole discretion,
of the results of, of a pilot test program (a “Pilot Program”) whereby Customer shall utilize, on terms mutually
agreeable to P2O and Customer, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara Falls,
New York (the “Pilot Program Contingency”) to ascertain Customer’s willingness to go forward with the
transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and using
the relevant feedstock. Immediately upon the execution and delivery of this Contract by the parties hereto, the parties shall
in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
Section
27.2
As
a result of two previous amendments, Section 27.2 currently reads as follows:
Financing
Contingency. Customer’s obligations under this Contract shall be and hereby are contingent upon Customer obtaining funding
for (i) the Pilot Program on terms acceptable to Customer in its sole discretion, on or before that date which is two hundred
ten (210) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms acceptable
to Customer in Customer’s sole discretion, on or before that date which is sixty (60) days after Customer’s written
notice of removal or satisfaction of the Pilot Program Contingency.
By
this Third Amendment, Section 27.2 is amended again to read as follows:
Financing
Contingency. Customer’s obligations under this Contract shall be and hereby are contingent upon Customer obtaining funding
for (i) the Pilot Program on terms acceptable to Customer in its sole discretion, on or before that date which is three hundred
(300) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms acceptable
to Customer in Customer’s sole discretion, on or before that date which is sixty (60) days after Customer’s written
notice of removal or satisfaction of the Pilot Program Contingency.
All
other terms and conditions of the Equipment Supply Contract shall remain the same.
Dated:
November 6, 2015 |
PLASTIC2OIL,
INC., a Nevada corporation |
|
|
|
|
By: |
/s/
Richard W. Heddle |
|
|
Richard
W. Heddle |
|
|
President
& CEO |
|
|
|
Dated:
November 6, 2015 |
ECONAVIGATION,
LLC, a New York limited liability company |
|
|
|
|
By: |
/s/
Mark D. Ragus |
|
|
Mark
D. Ragus |
|
|
President |
Exhibit
10.2
Third
Amendment to Sections 13.1 and 13.2 of Technology License and Referral Agreement
Sections
13.1 and 13.2 of the Technology License and Referral Agreement effective January 2, 2015 between the undersigned parties are hereby
amended as follows:
Section
13.1
As
a result of two previous amendments, Section 13.1 currently reads as follows:
Pilot
Program Contingency. Licensee’s obligations under this Agreement shall be and hereby are contingent upon the institution,
completion by that date which is three hundred (300) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Licensee’s option upon prior written notice to P2O), and Licensee’s acceptance, in its sole discretion,
of the results of, of a pilot test program (the “Pilot Program”), whereby Licensee shall utilize, on terms
mutually agreeable to P2O and Licensee, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara
Falls, New York (the “Pilot Program Contingency”) to ascertain Licensee’s willingness to go forward with
the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and
using the relevant feedstock. Immediately upon the execution and delivery of this Agreement by the parties hereto, the parties
shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
By
this Third Amendment, Section 13.1 is amended again to read as follows:
Pilot
Program Contingency. Licensee’s obligations under this Agreement shall be and hereby are contingent upon the institution,
completion by that date which is three hundred ninety (390) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Licensee’s option upon prior written notice to P2O), and Licensee’s acceptance, in its sole discretion,
of the results of, of a pilot test program (the “Pilot Program”), whereby Licensee shall utilize, on terms
mutually agreeable to P2O and Licensee, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara
Falls, New York (the “Pilot Program Contingency”) to ascertain Licensee’s willingness to go forward with
the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and
using the relevant feedstock. Immediately upon the execution and delivery of this Agreement by the parties hereto, the parties
shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
Section
13.2
As
a result of two previous amendments, Section 13.2 currently reads as follows:
Financing
Contingency. Licensee’s obligations under this Agreement shall be and hereby are contingent upon Licensee obtaining
funding for (i) the Pilot Program on terms acceptable to Licensee in its sole discretion, on or before that date which is two
hundred ten (210) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms
acceptable to Licensee in Licensee’s sole discretion, on or before that date which is sixty (60) days after Licensee’s
written notice of removal or satisfaction of the Pilot Test Contingency.
By
this Third Amendment, Section 13.2 is amended again to read as follows:
Financing
Contingency. Licensee’s obligations under this Agreement shall be and hereby are contingent upon Licensee obtaining
funding for (i) the Pilot Program on terms acceptable to Licensee in its sole discretion, on or before that date which is three
hundred (300) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms
acceptable to Licensee in Licensee’s sole discretion, on or before that date which is sixty (60) days after Licensee’s
written notice of removal or satisfaction of the Pilot Test Contingency.
All
other terms and conditions of the Technology License and Referral Agreement shall remain the same.
Dated:
November 6, 2015 |
PLASTIC2OIL,
INC., a Nevada corporation |
|
|
|
|
By: |
/s/
Richard W. Heddle |
|
|
Richard
W. Heddle |
|
|
President
& CEO |
|
|
|
Dated:
November 6, 2015 |
ECONAVIGATION,
LLC, a New York limited liability company |
|
|
|
|
By: |
/s/
Mark D. Ragus |
|
|
Mark
D. Ragus |
|
|
President |
Exhibit
10.3
Third
Amendment to Sections 23.1 and 23.2 of Catalyst Supply Agreement
Sections
23.1 and 23.2 of the Catalyst Supply Agreement effective January 2, 2015 between the undersigned parties are hereby amended as
follows:
Section
23.1
As
a result of two previous amendments, Section 23.1 currently reads as follows:
Pilot
Program Contingency. Customer’s obligations under this Catalyst Agreement shall be and hereby are contingent upon the
institution, completion by that date which is three hundred (300) days after the Effective Date (which date may be extended for
an additional thirty (30) days at Customer’s option upon prior written notice to Supplier), and Customer’s acceptance,
in its sole discretion, of the results of, of a pilot test program (a “Pilot Program”) whereby Customer shall
utilize, on terms mutually agreeable to Supplier and Customer, Supplier’s facility (the “Test Facility”)
at 20 Iroquois Street, Niagara Falls, New York (the “Pilot Program Contingency”) to ascertain Customer’s
willingness to go forward with the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance
Levels for the Initial Order and using the relevant feedstock. Immediately upon the execution and delivery of this Catalyst Agreement
by the parties hereto, the parties shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility
for the Pilot Program.
By
this Third Amendment, Section 23.1 is amended again to read as follows:
Pilot
Program Contingency. Customer’s obligations under this Catalyst Agreement shall be and hereby are contingent upon the
institution, completion by that date which is three hundred ninety (390) days after the Effective Date (which date may be extended
for an additional thirty (30) days at Customer’s option upon prior written notice to Supplier), and Customer’s acceptance,
in its sole discretion, of the results of, of a pilot test program (a “Pilot Program”) whereby Customer shall
utilize, on terms mutually agreeable to Supplier and Customer, Supplier’s facility (the “Test Facility”)
at 20 Iroquois Street, Niagara Falls, New York (the “Pilot Program Contingency”) to ascertain Customer’s
willingness to go forward with the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance
Levels for the Initial Order and using the relevant feedstock. Immediately upon the execution and delivery of this Catalyst Agreement
by the parties hereto, the parties shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility
for the Pilot Program.
Section
23.2
As
a result of two previous amendments, Section 23.2 currently reads as follows:
Financing
Contingency. Customer’s obligations under this Catalyst Agreement shall be and hereby are contingent upon Customer obtaining
funding for (i) the Pilot Program on terms acceptable to Customer in its sole discretion, on or before that date which is two
hundred ten (210) calendar days after the Effective Date, and (ii) the Initial Order (as defined in the Equipment Supply Contract)
and working capital in amounts and upon terms acceptable to Customer in Customer’s sole discretion, on or before that date
which is sixty (60) days after Customer’s written notice of removal or satisfaction of the Pilot Program Contingency (the
“Financing Contingency”; the Pilot Program Contingency and the Financing Contingency are herein collectively
referred to as the “Contingencies”).
By
this Third Amendment, Section 23.2 is amended again to read as follows:
Pilot
Program on terms acceptable to Customer in its sole discretion, on or before that date which is three hundred (300) calendar days
after the Effective Date, and (ii) the Initial Order (as defined in the Equipment Supply Contract) and working capital in amounts
and upon terms acceptable to Customer in Customer’s sole discretion, on or before that date which is sixty (60) days after
Customer’s written notice of removal or satisfaction of the Pilot Program Contingency (the “Financing Contingency”;
the Pilot Program Contingency and the Financing Contingency are herein collectively referred to as the “Contingencies”).
All
other terms and conditions of the Catalyst Supply Agreement shall remain the same.
Dated:
November 6, 2015 |
PLASTIC2OIL,
INC., a Nevada corporation |
|
|
|
|
By: |
/s/
Richard W. Heddle |
|
|
Richard
W. Heddle |
|
|
President
& CEO |
|
|
|
Dated:
November 6, 2015 |
ECONAVIGATION,
LLC, a New York limited liability company |
|
|
|
|
By: |
/s/
Mark D. Ragus |
|
|
Mark
D. Ragus |
|
|
President |
Exhibit
10.4
Third
Amendment to Sections 13.13.1 and 13.13.2 of Monitoring, Maintenance, Repair and Upgrade Agreement
Sections
13.13.1 and 13.13.2 of the Monitoring, Maintenance, Repair and Upgrade Agreement effective January 2, 2015 between the undersigned
parties are hereby amended as follows:
Section
13.13.1
As
a result of two previous amendments, Section 13.13.1 currently reads as follows:
Pilot
Program Contingency. Customer’s obligations under this Agreement shall be and hereby are contingent upon the institution,
completion by that date which is three hundred (300) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Customer’s option upon prior written notice to P2O), and Customer’s acceptance, in its sole discretion,
of the results of, of a pilot test program (the “Pilot Program”), whereby Customer shall utilize, on terms
mutually agreeable to P2O and Customer, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara
Falls, New York (the “Pilot Program Contingency”) to ascertain Customer’s willingness to go forward with
the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and
using the relevant feedstock. Immediately upon the execution and delivery of this Agreement by the parties hereto, the parties
shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
By
this Third Amendment, Section 13.13.1 is amended again to read as follows:
Pilot
Program Contingency. Customer’s obligations under this Agreement shall be and hereby are contingent upon the institution,
completion by that date which is three hundred ninety (390) days after the Effective Date (which date may be extended for an additional
thirty (30) days at Customer’s option upon prior written notice to P2O), and Customer’s acceptance, in its sole discretion,
of the results of, of a pilot test program (the “Pilot Program”), whereby Customer shall utilize, on terms
mutually agreeable to P2O and Customer, P2O’s facility (the “Test Facility”) at 20 Iroquois Street, Niagara
Falls, New York (the “Pilot Program Contingency”) to ascertain Customer’s willingness to go forward with
the transactions contemplated herein, and, if so ascertained, to establish Minimum Performance Levels for the Initial Order and
using the relevant feedstock. Immediately upon the execution and delivery of this Agreement by the parties hereto, the parties
shall in good faith diligently negotiate the terms of an agreement for use of the Test Facility for the Pilot Program.
Section
13.13.2
As
a result of two previous amendments, Section 13.13.2 currently reads as follows:
Financing
Contingency. Customer’s obligations under this Agreement shall be and hereby are contingent upon Customer obtaining
funding for (i) the Pilot Program on terms acceptable to Customer in its sole discretion, on or before that date which is two
hundred ten (210) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms
acceptable to Customer in Customer’s sole discretion, on or before that date which is sixty (60) days after Customer’s
written notice of removal or satisfaction of the Pilot Program Contingency.
By
this Third Amendment, Section 13.13.2 is amended again to read as follows:]
Financing
Contingency. Customer’s obligations under this Agreement shall be and hereby are contingent upon Customer obtaining
funding for (i) the Pilot Program on terms acceptable to Customer in its sole discretion, on or before that date which is three
hundred (300) calendar days after the Effective Date, and (ii) the Initial Order and working capital in amounts and upon terms
acceptable to Customer in Customer’s sole discretion, on or before that date which is sixty (60) days after Customer’s
written notice of removal or satisfaction of the Pilot Program Contingency.
All
other terms and conditions of the Monitoring, Maintenance, Repair and Upgrade Agreement shall remain the same.
Dated:
November 6, 2015 |
PLASTIC2OIL,
INC., a Nevada corporation |
|
|
|
|
By: |
/s/
Richard W. Heddle |
|
|
Richard
W. Heddle |
|
|
President
& CEO |
|
|
|
Dated:
November 6, 2015 |
ECONAVIGATION,
LLC, a New York limited liability company |
|
|
|
|
By: |
/s/
Mark D. Ragus |
|
|
Mark
D. Ragus |
|
|
President |
Exhibit 31.1
CERTIFICATION
OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Richard Heddle, certify
that:
1. |
I have reviewed this quarterly report on Form 10-Q
of Plastic2Oil, Inc. |
|
|
2. |
Based on my knowledge,
this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report; |
|
|
3. |
Based on my knowledge,
the financial statements, and other financial information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this quarterly report; |
|
|
4. |
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
|
a) |
designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared; |
|
|
|
|
b) |
designed such internal control over
financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
evaluated the effectiveness of the
registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
d) |
disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting, and; |
|
|
|
5. |
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing
the equivalent functions): |
|
|
|
|
a) |
all significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
b) |
any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting. |
Date: November 12, 2015 |
By: |
/s/ Richard
Heddle |
|
|
Richard Heddle |
|
|
President and Chief Executive
Officer |
Exhibit
31.2
CERTIFICATION
OF
PRINCIPAL FINANCIAL OFFICER
PURSUANT
TO SECTION 302
OF
THE SARBANES-OXLEY ACT OF 2002
I, Rahoul
S. Banerjea, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q
of Plastic2Oil, Inc. |
|
|
2. |
Based on my knowledge,
this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this quarterly report; |
|
|
3. |
Based on my knowledge,
the financial statements, and other financial information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this quarterly report; |
|
|
4. |
The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) and internal control over financial reporting (as defined in Exchange Act Rules 13a-
15(f) and 15d-15(f)) for the registrant and have: |
|
|
|
|
a) |
designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is being prepared; |
|
|
|
|
b) |
designed such internal control over
financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
evaluated the effectiveness of the
registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
d) |
disclosed in this report any change
in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal
control over financial reporting, and; |
|
|
|
5. |
The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing
the equivalent functions): |
|
|
|
|
a) |
all significant deficiencies and material
weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
b) |
any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting. |
Date: November 12, 2015 |
By: |
/s/ Rahoul
S. Banerjea |
|
|
Rahoul S. Banerjea |
|
|
Chief Financial
Officer |
Exhibit
32.1
CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the accompanying Quarterly Report on Form 10-Q of Plastic2Oil, Inc. for the quarter ended September 30, 2015,
I, Richard Heddle, President and Chief Executive Officer of Plastic2Oil Inc., hereby certify pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, to the best of my knowledge and belief, that:
1. | Such
Quarterly Report on Form 10-Q for the period ended September 30, 2015, fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and |
| |
2. | The
information contained in such Quarterly Report on Form 10-Q for the period ended September
30, 2015, fairly presents, in all material respects, the financial condition and results
of operations of Plastic2Oil, Inc. |
Date: November 12, 2015 |
By: |
/s/ Richard
Heddle |
|
|
Richard Heddle |
|
|
President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF PRINCIPAL
FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In
connection with the accompanying Quarterly Report on Form 10-Q of Plastic2Oil, Inc. for the quarter ended September 30, 2015,
I, Rahoul S. Banerjea, Chief Financial Officer of Plastic2Oil Inc., hereby certify pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, to the best of my knowledge and belief, that:
1. | Such
Quarterly Report on Form 10-Q for the period ended September 30, 2015, fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and |
| |
2. | The
information contained in such Quarterly Report on Form 10-Q for the period ended September
30, 2015, fairly presents, in all material respects, the financial condition and results
of operations of JBI Inc. |
Date: November 12, 2015 |
By: |
/s/ Rahoul
S. Banerjea |
|
|
Rahoul S. Banerjea |
|
|
Chief Financial
Officer |
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