"...and don't forget to add the cost of plastic to make your numbers more realistic."
Why should he?
According to this recently produced document JBI has "Processed approx. 2 million pounds of plastic waste to date".
sec.gov
The phrase "to date" presumably refers to the May 22 date of the presentation that will include that information, so it would have included plastic processed since the 10-Q financials of 3/30.
sec.gov;
My understanding of the rules of accounting would have called for the reflection of the cost of that plastic as either Inventory or, if sold, Cost of Goods Sold in the financials published since the beginning of the P2O program. (I'm ignoring the financial treatment of the fuel that was "given away for testing", if that actually happened.)
In an earlier example of this cost (of materials only) you said:
" We'll pick the very cheapest option that fits which, at $0.35 for colored, post-consumer HDPE, is the cheapest by far " and used that scrap pricing as what I understood to be the least likely cost of JBI's feedstock (versus the proposed FREE feed stock used to compile the $10/bbl cost proposed by others).
If we were to arbitrarily assume that 1.5 of that 2 million pounds of plastic was processed through 3/31/12 (and beginning some time in 2010 or 2011), the "very cheapest" total cost of that plastic would have been $525,000.
The 10-K says 2 things of interest regarding this issue:
"Inventories, which consist primarily of electrical components at Javaco and plastics and processed fuel at P2O, are stated at the lower of cost or market."
"Costs of Sales for P2O consist primarily of costs to shred and process plastic into a usable form for use in the Processor and costs to operate the processor."
A strict interpretation of the above would be that 1)the cost of plastic itself is included as a cost of inventory, implying that there IS a cost of plastic, yet 2)Cost of Sales doesn't include a cost of plastic, implying that the plastic is FREE! The statements were repeated in the 10-Q.
You have argued that the company must be buying scrap plastic versus receiving it free, using the following justification:
" Let's face it, if he could get those plastic for free or could get paid to take it in any useful quantities like he has said in the past in his 'forward-looking' statements, he could make shareholders rich just by getting "waste" plastic for free and then reselling it on the scrap market."
It's a common sense justification, but it's no more based on known fact in terms of the actual source of the feedstock than the reliance on JB's word that you find so interminably unacceptable.
What I'd really like to know is if you think that the financial statements support one position or the other......free or purchased plastic. If there is an answer in the public domain, that's where it should be. |
