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 quarterly period ended
September 30, 2017
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 [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] | ||
| Emerging growth company [ ] |
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 13, 2017, there were 124,756,158 shares of the Registrant’s common stock, $0.001 par value, outstanding.
PLASTIC2OIL, INC.
Table of Contents
| 2 |
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; 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” (as supplemented or amended from time to time) in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission on April, 7, 2017.
Some of the forward-looking statements may be considered to be financial outlooks for purposes of applicable securities legislation including, but not limited to, statements concerning capital expenditures. These financial outlooks are presented to allow the Company to benchmark the results of our Company’s Plastic2Oil business. These financial outlooks may not be appropriate for other purposes and readers should not assume they would be achieved.
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.
| 3 |
PART I - FINANCIAL INFORMATION
PLASTIC2OIL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As
of September 30, 2017 | As
of December 31, 2016 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 348,086 | $ | 270,898 | ||||
| Restricted cash (Note 2 ) | 100,498 | 100,423 | ||||||
| Accounts receivable, net of allowance of $22,994 and $22,994, respectively. | - | 21,950 | ||||||
| Prepaid expenses and other current assets | 41,021 | 14,907 | ||||||
| TOTAL CURRENT ASSETS | 489,605 | 408,178 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET: | ||||||||
| Property, plant and equipment, net (Note3) | 1,570,831 | 1,552,613 | ||||||
| Property, plant and equipment, net - held for sale | - | 287,124 | ||||||
| TOTAL PROPERTY, PLANT AND EQUIPMENT | 1,570,831 | 1,839,737 | ||||||
| Deposits (Note 2) | 10,000 | 27,662 | ||||||
| TOTAL ASSETS | $ | 2,070,436 | $ | 2,275,577 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 1,911,554 | $ | 2,036,469 | ||||
| Accrued expenses | 2,537,706 | 2,310,679 | ||||||
| Demand promissory note – related party, current portion (Note 4) | 2,528,158 | 2,263,328 | ||||||
| Mortgages payable and capital leases (Note 5) | 21,156 | 227,455 | ||||||
| TOTAL CURRENT LIABILITIES | 6,998,574 | 6,837,931 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Asset retirement obligations (Note 2) | 65,440 | 64,000 | ||||||
| Secured promissory notes – related party (Note 4) | 6,470,405 | 5,782,846 | ||||||
| Secured promissory notes (Note 4) | 112,319 | 102,838 | ||||||
| TOTAL LONG-TERM LIABILITIES | 6,648,164 | 5,949,684 | ||||||
| TOTAL LIABILITIES | 13,646,738 | 12,787,615 | ||||||
| Commitments and contingencies ( Note 6) | ||||||||
| STOCKHOLDERS’ DEFICIT: | ||||||||
| Common stock, par $0.001; 250,000,000 authorized, 124,756,158 shares issued and outstanding | 124,756 | 124,756 | ||||||
| Additional paid in capital | 67,165,824 | 67,113,822 | ||||||
| Accumulated other comprehensive income (loss) | (42,294 | ) | 193,516 | |||||
| Accumulated deficit | (78,824,588 | ) | (77,944,132 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (11,576,302 | ) | (10,512,038 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 2,070,436 | $ | 2,275,577 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 4 |
PLASTIC2OIL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling general and administrative expenses | ||||||||||||||||
| Professional Fees | $ | 20,270 | $ | 23,633 | $ | 308,167 | $ | 90,677 | ||||||||
| Compensation | 153,588 | 126,094 | 481,821 | 396,102 | ||||||||||||
| Other | 29,184 | 69,059 | 134,106 | 214,244 | ||||||||||||
| Depreciation of property, plant and equipment and accretion of long-term liability | 95,028 | 216,579 | 296,616 | 652,877 | ||||||||||||
| TOTAL OPERATING EXPENSES | 298,070 | 435,365 | 1,220,710 | 1,353,900 | ||||||||||||
| (LOSS) FROM OPERATIONS | (298,070 | ) | (435,365 | ) | (1,220,710 | ) | (1,353,900 | ) | ||||||||
| OTHER (INCOME) EXPENSES | ||||||||||||||||
| Impairment loss - property, plant and equipment | - | 1,020,349 | 13,158 | 1,020,349 | ||||||||||||
| Gain on disposal of property, plant and equipment | - | - | (255,676 | ) | - | |||||||||||
| Interest expense, net | 229,976 | 195,853 | 683,420 | 560,044 | ||||||||||||
| Other (income) expense, net | 49 | - | (781,156 | ) | 34 | |||||||||||
| TOTAL OTHER (INCOME) EXPENSES | 230,025 | 1,216,202 | (340,254 | ) | 1,580,427 | |||||||||||
| (LOSS) BEFORE INCOME TAXES | (528,095 | ) | (1,651,567 | ) | (880,456 | ) | (2,934,327 | ) | ||||||||
| Provision for Income taxes | - | - | - | - | ||||||||||||
| NET (LOSS) | $ | (528,095 | ) | $ | (1,651,567 | ) | $ | (880,456 | ) | $ | (2,934,327 | ) | ||||
| Basic and diluted income (loss) per share | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Basic and diluted (Note 2) | 124,756,158 | 124,756,158 | 124,756,158 | 124,756,158 | ||||||||||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 5 |
PLASTIC2OIL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| NET ( LOSS) | $ | (528,095 | ) | $ | (1,651,567 | ) | $ | (880,456 | ) | $ | (2,934,327 | ) | ||||
| OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX | ||||||||||||||||
| Foreign currency items | 88,091 | (19,424 | ) | 235,810 | 104,606 | |||||||||||
| COMPREHENSIVE (LOSS) | $ | (440,004 | ) | $ | (1,670,991 | ) | $ | (644,646 | ) | $ | (2,829,721 | ) | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 6 |
PLASTIC2OIL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30,
(Unaudited)
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| NET (LOSS) | (880,456 | ) | (2,934,327 | ) | ||||
| Reconciliation of loss to net cash used in operations: | ||||||||
| Depreciation of property plant and equipment | 147,793 | 507,508 | ||||||
| Accretion of long-term liability | 149,302 | 145,369 | ||||||
| Impairment loss - property, plant and equipment | 13,158 | 1,020,349 | ||||||
| Accrued interest expense | 678,299 | 527,145 | ||||||
| Stock options issued for Services | 52,002 | - | ||||||
| Issuance of warrants in conjunction with promissory notes | 4,000 | |||||||
| Gain on sale of property,plant and equipment | (255,676 | ) | - | |||||
| Working capital changes: | ||||||||
| Accounts receivable | 21,950 | 3,345 | ||||||
| Prepaid expenses and other current assets | (8,451 | ) | (20,765 | ) | ||||
| Accounts payable | (137,746 | ) | (6,536 | ) | ||||
| Accrued expenses | 211,175 | 144,743 | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | (8,650 | ) | (609,169 | ) | ||||
| CASH FLOW FROM INVESTMENT ACTIVITIES: | ||||||||
| Increase in restricted cash | (75 | ) | (51 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (75 | ) | (51 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from sale of property, plant and equipment | 365,070 | - | ||||||
| Proceeds from short-term loans – related party | - | 525,504 | ||||||
| Proceeds from long-term loans | 100,000 | |||||||
| Proceeds from long-term loans – related party | 100,000 | |||||||
| Repayment of mortgages and capital leases | (279,157 | ) | (41,032 | ) | ||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 85,913 | 684,472 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 77,188 | 75,252 | ||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 270,898 | 18,488 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 348,086 | $ | 93,740 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | 4,180 | $ | 26,807 | ||||
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
| 7 |
PLASTIC2OIL, 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. On April 24, 2009, the Company’s founder, former CEO and Chief of Technology, John Bordynuik, 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. 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. P2O currently, as of the date of this filing, has two processors at its Niagara Falls, NY facility (the “Niagara Falls Facility”). Both processors are currently idle since December 2013. 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.
Currently, we do not have sufficient cash to operate our business, which has forced us to suspend our operations until we receive a capital infusion or cash advances on the sale of our processors.
Going Concern
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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 net losses from continuing operations of $880,456, and $2,934,327, respectively, for the nine months ended September 30, 2017, and 2016, respectively. At September 30, 2017, the Company had a working capital deficit of $6,508,968, and an accumulated deficit of $78,824,588. 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 loans from related parties. For the years ended December 31, 2016 and 2015, the Company’s auditors included a going concern opinion in its report on the Company’s audited financial statements for such periods.
The Company will continue to require substantial funds to continue the expansion of its P2O business to achieve commercial productions, and to resume 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, 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 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.
| 8 |
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Plastic2Oil of NY#1 Inc., Plastic2Oil (Canada) Inc., JBI CDE Inc., Plastic2Oil Re One Inc., JBI Re #1 Inc., Plastic2Oil Marine Inc., Javaco, and Pak-it. All intercompany transactions and balances have been eliminated on consolidation. Amounts in the consolidated financial statements are expressed in US dollars. Pak-It and Javaco have also been consolidated; however, as mentioned their operations are classified as discontinued operations (see Note 12).
Interim Disclosure
In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, which are considered necessary for a fair presentation of the results for the periods presented. These condensed consolidated financial statements are presented in considerably less detail than complete financial statements that are intended to present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. For this reason, they should be read in conjunction with the entity’s most recent complete financial statements included in its annual report for the year ended December 31, 2016 on Form 10-K filed with the Securities and Exchange Commission (the SEC) on April 7, 2017 that include all the disclosures required by generally accepted accounting principles.
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, accrued liabilities, accounts receivable exposures and valuation of options and warrants.
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, 2017 and December 31, 2016, the Company had $100,498 and $100,423, 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.
Accounts Receivable
Accounts receivable represent unsecured obligations due from customers under terms requesting payments upon receipt of invoice 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 as of September 30, 2017 and December 31, 2016 was $22,994.
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 they are classified 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.
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 (see Note 12).
During the nine months ended September 30, 2017 and 2016, the Company recorded impairment losses on property, plant and equipment of $13,158 and $1,020,349, respectively, in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amounts of the long-lived assets are not recoverable and exceeds its fair value. The Company estimates the fair value of equipment for impairment purposes using a discounted cash flow method.
| 9 |
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 in the condensed consolidated balance sheets and is depreciated over the asset’s estimated useful life and is included in depreciation and accretion expense in the 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 condensed consolidated statements of operations. Actual expenditures incurred are charged against the accumulated obligation. As of September 30, 2017 and December 31, 2016, the carrying value of the asset retirement obligations was $65,440 and $64,000, respectively. These costs include disposal of plastic and other non-hazardous waste, site closing labor, testing, and sampling of the site upon closure.
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 utility services deposit and 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. Deposits were $10,000 and $27,662 as of September 30, 2017 and December 31, 2016, respectively.
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 (see Note 5).
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 take possession of the processors since Title to the Goods and the risk of loss transfer 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).
Data storage and recovery sales are recognized when the product has been shipped or the services have been rendered to the customer.
| 10 |
Foreign Currency Translation
The 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 date. 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. Foreign exchange gain of $57,307 and gain of $99, respectively, are included as general and administrative expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016, respectively. The 2017 foreign exchange gain results from the payoff of the 1783 Allanport property mortgage.
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 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, 2017 and December 31, 2016. The Company files tax returns in the U.S federal and state jurisdictions as well as a foreign country. The years ended December 31, 2013 through December 31, 2016 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 nine months ended September 30, 2017, potential dilutive common stock equivalents consisted 5,850,000 shares underlying common stock warrants and 6,580,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2016, potential dilutive common stock equivalents 14,550,000 shares underlying common stock warrants, and 1,540,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was 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. The Company also routinely assesses the collectability of the short-term note receivable and determines its exposure for non-performance based on the specific holder and other pertinent information.
| 11 |
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, leases, promissory notes, long-term debt, and mortgage payable approximate fair value because of the short-term nature of these items.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenues are recognized at the time when goods or services are transferred to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. We believe that the adoption of this standard will impact engagements that contain variable fee arrangements, including those in which we earn a completion fee when and if certain predefined outcomes occur, and certain engagements with fixed-fees that have multiple performance obligations. We expect to recognize revenue under certain success fee arrangements earlier upon adoption of this standard than we do under current guidance. We will adopt this standard using the modified retrospective method effective January 1, 2018.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual and interim reporting periods beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In July 2015, FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that an entity measure inventory at the lower of cost and net realizable value. This ASU does not apply to inventory measured using last-in, first-out. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In October 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibition against immediate recognition of current and deferred income tax effects on intra-entity transfers of assets other than inventory. This standard is effective January 1, 2019, although early adoption is permitted as early as January 1, 2017. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
| 12 |
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including the accounting for forfeitures, employer tax withholding on share-based compensation, income tax consequences, and clarifies the statement of cash flows presentation for certain components of share-based awards, all of which are intended to simplify various aspects of the accounting for share-based compensation. The ASU will require that the difference between the actual tax benefit realized upon option exercise or restricted share or restricted stock unit release and the tax benefit recorded based on the fair value of the stock award at the time of grant (the “excess tax benefits”) to be reflected as a reduction of the current period provision for income taxes with any shortfall recorded as an increase in the tax provision rather than as a component of changes to additional paid-in capital. The ASU will also require the excess tax benefit or detriment realized to be reflected as operating cash flows rather than financing cash flows. The standard is effective beginning January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that replaces existing lease guidance. Under this ASU, leases will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04: Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard requires entities to measure goodwill impairment using the difference between the carrying amount and the fair value of the reporting unit, instead of performing a hypothetical purchase price allocation. This guidance is effective beginning January 1, 2020, although early adoption is permitted. The adoption of this guidance would only impact the measurement of a future goodwill impairment to the extent applicable.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing lease guidance. Under this ASU, we will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
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 consolidated financial statements.
| 13 |
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET
Property, Plant and Equipment consist of the following at:
| As of September 30, 2017 | Cost | Accumulated Depreciation | Net Book Value | |||||||||
| Leasehold improvements | $ | 218,054 | $ | (38,484 | ) | $ | 179,570 | |||||
| Machinery and office equipment | 1,626,379 | (1,357,626 | ) | 268,753 | ||||||||
| Furniture and fixtures | 16,368 | (16,368 | ) | - | ||||||||
| Land | 243,859 | - | 243,859 | |||||||||
| Asset retirement obligation | 58,363 | (9,125 | ) | 49,238 | ||||||||
| Office and industrial buildings | 1,084,899 | (259,292 | ) | 825,607 | ||||||||
| Equipment under capital lease | 53,257 | (49,453 | ) | 3,804 | ||||||||
| Total | $ | 3,301,179 | $ | (1,730,348 | ) | $ | 1,570,831 | |||||
| As of December 31, 2016 | Cost | Accumulated Depreciation | Net Book Value | |||||||||
| Leasehold improvements | $ | 218,054 | $ | (32,029 | ) | $ | 186,025 | |||||
| Machinery and office equipment | 1,738,414 | (1,539,203 | ) | 199,211 | ||||||||
| Furniture and fixtures | 16,368 | (16,368 | ) | - | ||||||||
| Land | 273,118 | - | 273,118 | |||||||||
| Asset retirement obligation | 58,363 | (7,101 | ) | 51,262 | ||||||||
| Office and industrial buildings | 1,433,523 | (312,912 | ) | 1,120,611 | ||||||||
| Equipment under capital lease | 53,257 | (43,747 | ) | 9,510 | ||||||||
| Total | $ | 3,791,097 | $ | (1,951,360 | ) | $ | 1,839,737 | |||||
For the nine months ended September 30, 2017 and 2016, the Company recognized $296,616 and $652,877, respectively of depreciation expense. At September 30, 2017 and December 31, 2016, machinery and equipment with a cost of $53,257 and accumulated amortization of $49,453 and $41,844 respectively, were under capital lease. During the nine months ended September 30, 2017 and December 31, 2016, the Company recognized $5,706, and $5,706, respectively, of depreciation expense related to these assets under capital lease.
On March 31, 2017, the Company sold its land and building located at 1783 Allanport Road, Thorold, Ontario, for a gain of approximately $254,000. The proceeds were used towards repayment of the outstanding mortgage, real estate taxes and closing costs. The Company reviews for impairment of long-lived assets on an asset by asset basis, which resulted in an impairment booking of $13,158 for the nine months ending September 30, 2017.
| 14 |
NOTE 4 - SECURED PROMISSORY NOTES
SECURED PROMISSORY NOTES -RELATED PARTY
Related Party notes payable consists of the following at periods ended:
| As of September 30, 2017 | As of December 31, 2016 | |||||||
| Secured Demand Promissory Note (provided by a related party) bearing interest of 4% per annum. | $ | 1,948,995 | $ | 1,695,926 | ||||
| Secured Demand Promissory Note (provided by a related party) bearing interest of 12% per annum. | 579,163 | 567,402 | ||||||
| Secured Promissory Notes (provided by a related party -$1,000,000 in November 19, 2014) bearing interest of 12% per annum compounded annually, 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, and payable upon maturity in 2019 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. | 1,369,868 | 1,248,894 | ||||||
| Secured Promissory Notes (provided by a related party - $1,000,000 in August 29, 2013 and $2,000,000 in September 31, 2014) bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to three million shares of the Company’s common stock at an exercise price of $0.54 per share and payable upon maturity in 2018 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. | 4,559,343 | 4,041,737 | ||||||
| Secured Promissory Note -$100,000 in August 24, 2016 bearing interest of 12% per annum compounded annually, 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, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. | 111,809 | 102,368 | ||||||
| Secured Promissory Note -$400,000 in October 18, 2016 bearing interest of 12% per annum compounded annually, 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, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. | 429,385 | 389,847 | ||||||
| Total | 8,998,563 | 8,046,174 | ||||||
| Less: current portion | 2,528,158 | 2,263,328 | ||||||
| Secured promissory notes – related party | $ | 6,470,405 | $ | 5,782,846 | ||||
| Continuity of Secured Promissory Notes – Related Party | As of September 30, 2017 | As of December 31, 2016 | ||||||
| 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 | ||||||
| Face value of August 25, 2016 secured note payable | 100,000 | 100,000 | ||||||
| Face value of October 18, 2016 secured note payable | 400,000 | 400,000 | ||||||
| Total face value of promissory notes payable | 4,500,000 | 4,000,000 | ||||||
| Discount on November 19, 2014 secured notes payable (1,000,000 warrants) | (58,082 | ) | (58,082 | ) | ||||
| Discount on August 29, 2013 secured note payable (1,000,000 warrants) | (310,200 | ) | (310,200 | ) | ||||
| Discount on September 30, 2013 secured note payable (2,000,000 warrants) | (600,400 | ) | (600,400 | ) | ||||
| Discount on August 24, 2016 secured notes payable (100,000 warrants) | (2,000 | ) | (2,000 | ) | ||||
| Discount on October 18, 2016 secured notes payable (500,000 warrants) | (20,000 | ) | (20,000 | ) | ||||
| Accretion of discount on secured notes payable ($4,000,000 secured note payable) | 770,046 | 624,744 | ||||||
| Accretion of discount on secured notes payable ($500,000 secured note payable) | 4,100 | 800 | ||||||
| Interest on secured notes payable ($4,000,000 secured note payable) | 2,127,847 | 1,634,570 | ||||||
| Interest on secured notes payable ($500,000 secured note payable) | 59,094 | 13,814 | ||||||
| Carrying value of Secured Promissory Notes | $ | 6,470,405 | $ | 5,283,245 | ||||
| The following annual payments of principal required over the next five years in respect to these related party secured notes payables: | - |
| Years Ending December 31, | Annual Payments | ||||
| 2017 | $ | 2,159,661 | |||
| 2018 | 3,000,000 | ||||
| 2019 | 1,000,000 | ||||
| 2020 | - | ||||
| 2021 | 500,000 | ||||
| Total | $ | 8,998,563 | |||
| 15 |
SECURED PROMISSORY NOTES
Secured notes payable consists of the following at periods ended:
| As of September 30, 2017 | As of December 31, 2016 | |||||||
| Secured Promissory Note -$100,000 in August 10, 2016 bearing interest of 12% per annum compounded annually, 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, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. | 112,319 | 102,838 | ||||||
| Total | 112,319 | 102,838 | ||||||
| Less: current portion | - | - | ||||||
| Secured promissory notes | $ | 112,319 | $ | 102,838 | ||||
| Continuity of Secured Promissory Notes | As of September 30, 2017 | As of December 31, 2016 | ||||||
| Face value of August 10, 2016 secured note payable | $ | 100,000 | $ | 100,000 | ||||
| Total face value of promissory notes payable | 100,000 | 100,000 | ||||||
| Discount on August 10, 2016 secured notes payable (100,000 warrants) | (2,000 | ) | (2,000 | ) | ||||
| Accretion of discount on secured notes payable ($100,000 secured note payable) | 433 | 133 | ||||||
| Interest on secured notes payable($500,000 secured note payable) | 13,886 | 4,705 | ||||||
| Carrying value of Secured Promissory Notes | $ | 112,319 | $ | 102,838 | ||||
| The following annual payments of principal required over the next five years in respect to these secured notes payable: |
| Years Ending December 31, | Annual Payments | ||||
| 2017 | $ | - | |||
| 2018 | - | ||||
| 2019 | - | ||||
| 2020 | - | ||||
| 2021 | 100,000 | ||||
| Total | $ | 100,000 | |||
| 16 |
NOTE 5 - MORTGAGES PAYABLE AND CAPITAL LEASES
The Mortgages Payable and Capital Leases consists of the following at periods ending:
| As of September 30, 2017 | As of December 31, 2016 | |||||||
| Mortgage in the amount of $280,000 Canadian dollars, bears simple interest at 7% per annum, secured by the land and building, and matured on June 15, 2015. Principal and interest were due, in their entirety, at maturity. In consideration for 10,000 shares, the maturity was extended from June 15, 2015 to December 15, 2015 and subsequently to June 15, 2016 by the Mortgage holder. The mortgage was repaid on March 31, 2017. | $ | - | $ | 206,910 | (1) | |||
| Equipment capital lease bears interest at 3.9% per annum, secured by the equipment and matured on May 10, 2016, Principal and interest were due, in their entirety, at maturity. The maturity was extended to May 10, 2016 by the Lessor. The capital lease is in default. | 21,156 | (2) | 20,546 | (2) | ||||
| Total | 21,156 | 227,455 | ||||||
| Less: current portion | 21,156 | 227,455 | ||||||
| Mortgages payable and capital leases | $ | - | $ | - | ||||
(1) Based on $280,000 Canadian dollars converted to U.S. Dollars using the conversion rate on December 31, 2016.
(2) Includes accrued interest.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Commitments
On April 17, 2017, the Company received cash in the amount of $524,010, net of legal expenses from the settlement of the Glenny and Maskell litigation. The Company filed the lawsuit on May 25, 2012 at the Ontario Superior Court of Justice, seeking damages consisting of the costs of defense and any damages that may be awarded against the Company, our former CEO John Bordynuik, and former CFO Ron Baldwin in the Class Action and in the SEC Action. The Ontario Superior Court of Justice issued the dismissal order dated May 9, 2017. The case was settled in the U.S. with ACE (Insurance carrier) in or about May 2013, pursuant to what is known as a “Mary Carter” (confidential) settlement.
As of September 30, 2017, the Company has committed to purchase certain pieces of key machinery from vendors related to the future expansion of its operations. At December 31, 2016, we recorded impairment loss $1,448,464 on the deposits in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amount of the long-lived assets are not recoverable and exceeds its fair value. The Company will be required to pay approximately $540,000 upon the delivery of these assets which is expected occur with the delivery of processor #4 and processor #5.
The Company leased premises in Thorold, Ontario, Canada which was previously used in the operation Plastic2Oil (Canada), Inc. doing business as Regional Recycling of Niagara (“RRON”). During the third quarter of 2013, the Company determined that it would shut down the operations of RRON. The employees of RRON were given notice of the shut down in the first week of September 2013, 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. The property was vacated on November 10, 2015. On January 15, 2016, the Company entered into a Surrender of Lease agreement which terminated its lease, dated December 1, 2010, between Avondale Store Limited Properties and JBI, (Canada) Inc. relating to the Company’s premises located at 1786 Allanport Road, Thorold, Canada. The effective date of the termination was October 31, 2015. The premises was the site of the Company’s Regional Recycling Center, which was part of a business line that was discontinued by the Company in 2013. The Company anticipates the termination will save approximately $1,161,360 in lease payments over the original life of the lease which had a term ending on December 1, 2030. The Company settled all unpaid rent on July 26, 2017, covering the period from May 2016 to October 2016.
| 17 |
Contingencies
As of September 30, 2017, the Company is involved in litigation and 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 7 - WARRANTS
The following table summarizes the activities for the period.
Warrants Number | Weighted Average Exercise Price | Weighted Average Remaining Term | ||||||||||
| OUTSTANDING, December 31, 2016 | 14,950,000 | $ | 0.18 | 0.9 | ||||||||
| Expired | (9,100,000 | ) | (0.08 | ) | ||||||||
| OUTSTANDING, September 30, 2017 | 5,850,000 | $ | 0.34 | 1.5 | ||||||||
There were no warrants issued during the nine months ended September 30, 2017. For, the nine months ended September 30, 2017, 9,100,000 of warrants expired related to the February 2017 through April 2017 private placements.
| 18 |
NOTE 8 – STOCK OPTIONS
2012 Plan
There were no options granted during the nine months ended September 30, 2017 and 2016. As of September 30, 2017, 4,330,000 options were outstanding of which 2,330,000 are fully vested. During the nine months ended September 30, 2017, fully vested options awarded to a terminated employee expired to purchase 60,000 shares.
A summary of stock option activity for the nine months ended September 30, 2017 is as follows:
Outstanding Stock Options | Weighted-Average Exercise Price | Aggregate Intrinsic Value (1) | ||||||||||
| Balance as of December 31, 2016 | 4,390,000 | $ | 1.12 | $ | - | |||||||
| Expired | (60,000 | ) | 0.38 | - | ||||||||
| Balance as of September 30, 2017 | 4,330,000 | $ | 0.42 | $ | - | |||||||
| Exercisable as of September 30, 2017 | 2,330,000 | $ | 0.73 | $ | - | |||||||
| Equity awards available for grant, net of restricted stock (811,576) at September 30, 2017 | 4,858,424 | |||||||||||
| (1) | Amounts represent the difference between the exercise price and the fair value of common stock at period end for all in the money options outstanding based on the fair value per share of common stock. |
As of September 30, 2017, the Company expects to recognize $37,333 of, compensation through March 31, 2019 related to the vesting of stock options.
2016 Incentive Plan
There were no options granted during the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, 2,250,000 options were outstanding and are fully vested.
| A summary of stock option activity for the nine months ended September 30, 2017 is as follows: | ||||||||||||
Outstanding Stock Options | Weighted-Average Exercise Price | Aggregate Intrinsic Value (1) | ||||||||||
| Balance as of December 31, 2016 | 2,250,000 | 0.17 | ||||||||||
| Balance as of September 30, 2017 | 2,250,000 | $ | 0.17 | $ | - | |||||||
| Exercisable as of September 30, 2017 | 2,250,000 | $ | 0.17 | $ | - | |||||||
| 19 |
NOTE 9 – RELATED PARTY TRANSACTIONS
From June 2014 to September 30, 2017, Mr. Richard Heddle, the Company’s President and Chief Executive Officer, or his affiliated companies made several personal loans to the company to provide working capital. As of September 30, 2017, the current aggregate outstanding balance, including accrued interest at 4% per annum, due and owing to Mr. Heddle was $1,948,995. (See Note 4).
On February 11, 2016, the Company issued a promissory note in favor of Mr.Heddle to memorialize various advances, which were made by Mr. Heddle to the Company from February 11, 2016 until September 30, 2017. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $579,163. (See Note 4).The promissory note bears interest at the rate of 12% per annum. All principal and interest on the promissory note is due and payable in full by the Company on demand. The repayment of promissory note will be secured by assets of the Company. The proceeds of these advances are being used for working capital purposes.
At September 30, 2017 and December 31, 2016, the company’s accounts payable and accrued expenses included $124,981 and $132,218, respectively, outstanding balance due to Heddle Marine Services, a business controlled by Mr. Heddle 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 including 2015 cleanup costs incurred in order to terminate the lease with Avondale properties on the discontinued (RRON) Operation. In addition, in 2016, $12,500 was paid for feedstock analysis to a business in which Mr. Heddle holds a material financial interest.
The Company issued to Hilander Limited, a business controlled by Mr. Jason Aspin, a Secured Promissory Note -$100,000 in August 24, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to one hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $111,809. (See Note 4).On October 12, 2017, Mr. Aspin was appointed a Board member of the Company..
The Company issued to Atlantic Advances Power Technologies, a business controlled by Mr. Aspin, a Secured Promissory Note -$400,000 in October 18, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to four hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $429,385. (See Note 4).
NOTE 10 – SEGMENT REPORTING
For the nine months ended September 30, 2017 and 2016, the Company had no revenue. The Company’s processors were idle for all of 2016 and remained idle during the nine months ended September 30, 2017.
When operating, the Company had 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.
When operating, 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.”
P2O assets include the Company headquarters and various machinery and equipment used at the Niagara Falls Facility. At September 30, 2017, total long-lived assets of $1,370,542 and $200,289 were located in the United States and Canada, respectively. As of December 31, 2016, total long-lived assets of $1,832,078 and $344,671, were located in the United States and Canada, respectively. At September 30, 2017 and December 31, 2016, the mortgage payable of $0 and $206,910, respectively, and the equipment capital lease of $21,156 and $20,546, respectively, both disclosed in Note 5, relate to assets held in Canada.
NOTE 11 – 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.
| 20 |
NOTE 12 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Regional Recycling of Niagara
On January 15, 2016, the Company entered into a Surrender of Lease agreement, which terminated its lease, dated December 1, 2010, between Avondale Store Limited Properties and JBI, (Canada) Inc. relating to the Company’s premises located at 1786 Allanport Road, Thorold, Canada. The effective date of the termination was October 31, 2015. The premise was the site of the Company’s Regional Recycling Center, which was part of a business line that was discontinued by the Company in 2013. The Company anticipates the termination will save approximately $1,161,360 in lease payments over the original life of the lease, which had a term ending on December 1, 2030. The Company settled all unpaid rent on July 26, 2017 covering the period from May 2016 to October 2016.
NOTE 13 – SUBSEQUENT EVENTS
As described in the Company’s Current Report on FOM 8-K filed with the SEC on October 18, 2017, the Board of Directors (the “Board”) increasesd the number of directors comprising the Board from two to four members and appointed Jason C. Aspin and Lee C. Brain to fill the vacancies created thereby, effective as of October 12, 2017.
| 21 |
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 the sectioned entitled “Risk Factors” (as supplemented or amended from time to time) in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed with the Securities and Exchange Commission on April, 7, 2017.
Business Overview
For the nine months ended September 30, 2017 and 2016, the Company has no revenue. The Company’s P2O processors were idle for all of 2016 and remained idle during the nine months ended September 30, 2017. The Company’s data storage and recovery business was idle during the nine months ended September 30, 2017.
On April 17, 2017, the Company recorded $781,156 to Other Income from the settlement of the Glenny and Maskell lawsuit. Net cash received was $524,010, net of legal expenses (see Note 6).
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”). As of this filing date of the report, our two operating processors were idle and not producing fuel products. 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, 2017, we had exited all of these businesses and their results in all periods presented are classified as discontinued operations (see Note 12).
Our P2O business is a commercial manufacturing and production business. We plan to grow mainly from sale of processors, and secondarily from the sale of fuel products. Historically, 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- 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | Total | |||||||||||||||||||
| Cash raised | $ | 31,088,110 | $ | 1,705,095 | $ | 25,000 | $ | 600,000 | $ | - | $ | 33,418,205 | ||||||||||||
| R&D cost | $ | 2,452,560 | $ | 20,999 | $ | 1,653 | $ | - | $ | - | $ | 2,475,212 | ||||||||||||
| Investment in property, plant & Equipment | $ | 4,792,433 | $ | 13,775 | $ | - | $ | - | $ | - | $ | 4,806,208 | ||||||||||||
| Fuel produced in gallons | 655,037 | 12,959 | - | - | - | 667,996 | ||||||||||||||||||
| 22 |
Plastic2Oil Business
Our P2O business has elements of both a recycling business and a fuel refiner/ production business, which makes it difficult to identify and make direct comparisons to competitors. Both the recycling and energy sectors are characterized by rapid technological change. Our future success will depend on our ability to achieve and maintain a competitive position with respect to technological advances in both of these sectors. We believe that our business currently faces competition in the plastics-to-energy market, including competition from PK Clean, Vadxx Energy, Green Envirotec Holdings LLC, and RES polyflow, each of which has developed alternative methods for obtaining and generating fuel from plastics. See “Risk Factors—Risks Related to Our Business.” Because P2O solution products include a variety of fuels, we also face competition from the broader petroleum industry.
We continue our business strategy with the goal of becoming a leading North American company that transforms waste plastic into ultra- clean, ultra-low sulphur fuel.
When in operation, 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, NewYork. 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. These processors were idle for all of 2016 and remained idle for the nine months ended September 30, 2017. 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. Since inception, we have produced a total of 667,996 gallons of fuel, however no fuel was produced in the nine months ended September 30, 2017 and 2016 for the reasons described below.
| 23 |
Listing on the OTCQB
At November 13, 2017, we had 124,756,158 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 10, 2017, the last trading day prior to the date of this filing, the closing price of the common stock on the OTCQB was $0.04.
Sources of Revenues and Expenses
Results of Operations – Three and Nine months ended September 30, 2017 compared to Three and Nine months Ended September 30, 2016.
Revenue
On April 17, 2017, we settled the Glenny and Maskell litigation. This resulted in proceeds to us of $781,156, which is reflected in Other Income for the nine months ended September 30, 2017.
As we shifted our business strategy to selling fuel processors, we did not derive any revenue from processor sales in 2016 or during the nine months ended September 30, 2017. We did not derive any revenue from our Data Business for the nine months ended September 30, 2017.
We had no fuel production or processor sales in the nine months ended September 30, 2017. Consequently, there was neither fuel shipment nor fuel revenue. This 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 and the lack of operating cash. The damage requires substantial working capital for general repairs and replacement of damaged condensers and we have been unable to obtain the financing necessary to make these repairs. These processors were idle for all of 2014, 2015, and 2016 and remain idle through the date of this filing. Management estimates the processors will remain idle until the Company can raise additional capital.
As indicated earlier, we did not produce any fuel in 2017 and 2016 and we had no revenue from our Data Business segment for the nine months ended September 30, 2017 and 2016. The Company’s operating expenses consisted of the following:
Operating Expenses
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Selling, General and Administrative expenses | ||||||||||||||||
| Professional Fees | $ | 20,270 | $ | 23,633 | $ | 308,167 | $ | 90,677 | ||||||||
| Compensation | 153,588 | 126,094 | 481,821 | 396,102 | ||||||||||||
| Other | 29,184 | 69,059 | 134,106 | 214,244 | ||||||||||||
| Depreciation & Accretion | 95,028 | 216,579 | 296,616 | 652,877 | ||||||||||||
| Total Operating Expenses | $ | 298,070 | $ | 435,365 | $ | 1,220,710 | $ | 1,353,900 | ||||||||
We incurred operating expenses of $298,070 and $1,220,710, respectively, during the three months and nine months ended September 30, 2017, respectively, compared to $435,365 and $1,353,900 respectively, for the three and nine months ended September 30, 2016, respectively. This $137,295 and $133,190 decrease in operating expenses for the three and nine months September 30, 2017 was mainly driven by:
| 1. | An increase of $226,428 in legal fees related to the sale of the 1783 Allanport property and the settlement of the Glenny and Maskell litigation. The Glenny and Maskell settlement is reflected in the Other Income (expense) in the financial statements. |
| 2. | An increase of $52,002 in non-cash compensation cost, related to the option grants from 2016. |
| 3. | Decrease of $39,875 (three months) and $80,138 (nine months) in operational expenses from action taken in 2015 through 2017; and |
| 4. | Decrease of $121,551 (three months) and $356,261 in depreciation expense related to 2016 impaired property, plant and equipment. |
Non-Operating Expenses
Interest Expenses
For the three and nine months ended September 30, 2017, we incurred net interest expense of $229,976 and 683,420, respectively, as compared to $195,853 and $560,044, respectively, for the three and nine months ended September 30, 2016 mostly on the related party secured promissory and short term notes.
Income Tax Expenses
For the nine months ended September 30, 2017, and 2016, 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.
| 24 |
Net Loss
We incurred net losses of $528,095 and $880,456, respectively, for the Three and Nine months ended September 30, 2017 as compared to a net loss of $1,651,567 and 2,934,327, respectively, for the three and nine months ended September 30, 2016. The Glenny and Maskell settlement is reflected in the Other Income (expense) in the financial statements. The $137,295 and $ 133,190 increase in operating expenses for the three and nine months ended September 30, 2017, respectively, was mainly driven by:
| 1. | An increase of $226, 428 in legal fees related to the sale of the 1783 Allenport property and the settlement of the Glenny and Maskell litigation. The Glenny and Maskell settlement is reflected in the Other Income (expense) in the financial statements. |
| 2. | An increase of $52,002 in non-cash compensation cost, related to the option grants from 2016. |
| 3. | Decrease of $39,875 (three months) and $80,138 (nine months) in operational expenses from action taken in 2015 through 2017; and |
| 4. | Decrease of $121,551 (three months) and $356,261 in depreciation expense related to 2016 impaired property, plant and equipment. |
Non-Operating Expenses
Liquidity and Capital Resources
We do not have sufficient cash to operate our business, which has forced us to suspend our operations until such time as we receive a capital infusion or cash advances on the sale of our processors. We intend to source additional capital through the sale of our equity and debt securities and other financing methods. We plan to use the cash proceeds from any financing to complete the repairs on Processors #3 to resume production of fuels for pilot runs and customer demonstrations. At September 30, 2017, we had a cash balance of $348,086. Our principal sources of liquidity in 2017 were the proceeds from the sale of the property located at 1783 Allanport Road, Thorold, Ontario Canada and proceeds from the settlement of the Glenny and Maskell (Canadian Insurance Broker) lawsuit. Our principal sources of liquidity in 2016 were the proceeds from related party short-term secured loans from our chief executive officer.
As discussed earlier in this MD&A, our processors are currently idle and, thus, we are not producing fuel or generating fuel sales or processor 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 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 the company can raise additional capital. 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 2017, 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, lack of revenue 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.
| 25 |
Cash Flow from Operating Activities
For the Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Net Income (loss) from continuing operations | (880,456 | ) | $ | (2,934,327 | ) | |||
| Net Income (loss) from discontinued operations | - | - | ||||||
| Net Income(loss) | (880,456 | ) | (2,934,327 | ) | ||||
| Net cash provided by (used in) operating activities | (8,650 | ) | (609,169 | ) | ||||
| Cash flow from investing activities | ||||||||
| Net cash used in investing activities | (75 | ) | (51 | ) | ||||
| Cash flows from Financing activities: | ||||||||
| Net cash provided by financing activities | 85,913 | 684,472 | ||||||
| Cash and cash equivalents at beginning of period | 270,898 | 18,488 | ||||||
| Cash and cash equivalents at end of period | 348,086 | $ | 93,740 | |||||
Cash Flow from Operations
Cash used in operations was $8,650 and $609,169, respectively for the nine months ended September 30, 2017 and 2016, respectively. In 2017 and 2016, cash was mainly used to continue funding the minimum operating costs. In 2017, the Glenny and Maskell settlement included cash in the amount of $524,010, net of legal expenses (see Note 6).
Cash Flow from Investing Activities
Cash flow used in investing activities was $75 and $51 for the nine months ended September 30, 2017 and 2016, respectively, and was attributed to an increase in restricted cash.
Cash Flow from Financing Activities
Cash flow from financing activities was $85,913, and $684,472, for the nine months ended September 30, 2017 and 2016, respectively. For 2017 and 2016, these amounts were mainly driven by the proceeds sale of property in Ontario, Canada, Glenny Maskell settlement and amounts received from short-term notes from related parties.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements in the periods ended September 30, 2017 and 2016.
| 26 |
Transactions with Related Parties
From June 2014 to September 30, 2017, Mr. Richard Heddle, the Company’s President and Chief Executive Officer, made several personal loans to the company to provide working capital. As of September 301, 2017 and December 31, 2016, the aggregate outstanding balance, including accrued interest at 4% per annum, was $1,948,995 and $1,695,926, respectively. (See Note 4).
From January 2016 to September 30, 2017, Mr. Heddle made several personal loans to the company to provide working capital. At September 30, 2017 and December 31, 2016, the aggregate outstanding balance, including accrued interest at 12% per annum, was $579,163 and $567,402, respectively. (See Note 4).
At September 30, 2017, the Company’s accounts payable and accrued expenses included a $124,981 (adjusted for currency fluctuation) outstanding balance due to Heddle Marine Services, a business controlled by Mr. Heddle. 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 including 2015 cleanup costs incurred in order to terminate the lease with Avondale properties on the discontinued RRON Operation. In addition, in 2016, $12,500 was paid for feedstock analysis to a business in which Mr. Heddle holds a material financial interest.
The Company issued to Hilander Limited, a business controlled by Mr. Jason Aspin ,a Secured Promissory Note -$100,000 in August 24, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to one hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. On October 12, 2017, Mr. Aspin was appointed a Board member of the Company. As of September 30, 2017 and December 31, 2016, the aggregate outstanding balance, including accrued interest at 4% per annum, was 111,809 and $102,368, respectively. (See Note 4).
The Company issued to Atlantic Advances Power Technologies, a business controlled by Mr. Jason Aspin, a Secured Promissory Note -$400,000 in October 18, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to four hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. Mr. Aspin was appointed a Board member of Plastic2Oil, Inc. As of September 301, 2017 and December 31, 2016, the aggregate outstanding balance, including accrued interest at 4% per annum, was $429,385 and $389,847, respectively. (See Note 4).
Critical Accounting Policies
Basis of Consolidation
The condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, Plastic2Oil (Canada) Inc., JBI CDE Inc., Plastic2OilI Re One Inc., and JBI Re #1 Inc., Plastic2Oil of NY #1, and Plastic2Oil Marine Inc. The results of Javaco and Pak-It are consolidated and classified as discontinued operations for all periods presented (See Note 12). All of our intercompany transactions and balances have been eliminated on consolidation. Amounts in the consolidated financial statements are expressed in U.S. dollars.
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-lives assets, share based compensation, asset retirement obligations, inventory obsolescence, accrued liabilities and accounts receivable exposures.
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.
| 27 |
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 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 statement 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.
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 (See Note 12).
During the nine months ended September 30, 2017 and 2016, the Company recorded impairment losses on property, plant and equipment of $13,158 and $1,020,349 respectively, in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amount of the long-lived assets are not recoverable and exceeds its fair value. The Company estimates the fair value of equipment for impairment purposes using a discounted cash flow method.
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 obligations.
| 28 |
Environmental Contingencies
The Company records environmental liabilities at their undiscounted amounts on our consolidated 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 sheet. No amounts for recovery have been accrued to date.
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 take possession of the processors since title to the goods and the risk of loss transfer 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 contract or negotiated prior to the time of pick up. The Company negotiates the pricing of the fuel based on the quality of the product and the type of fuel being sold (e.g. Naphtha, Fuel Oil No.6 or Fuel Oil No. 2).
Foreign Currency Translation
The 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 date. 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. Foreign exchange gains and losses are included in the consolidated statements of operations. Resulting differences are reflected in accumulated other comprehensive income in the accompanying consolidated balance sheets. Foreign exchange gain of $57,307 and loss of $99 for monetary items are included as general and administrative expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016, respectively. The 2017 foreign exchange gain results from the payoff of the 1783 Allanport property mortgage.
| 29 |
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 interests. We are exposed to opportunity risk should interest rates decrease. The amount of interest bearing short-term debt outstanding as of September 30, 2017 and December 31, 2016 was $2,549,314 and $2,490,783, 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.
| 30 |
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
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, 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, 2017. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of September 30, 2017 our disclosure controls and procedures were 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, and reported within the time periods specified in the SEC’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 Company currently has just two directors, one of whom is member of executive management and not independent. The Company does not maintain separately designated audit, compensation, and nominating and corporate governance committees of the Board.
Changes in Internal Control 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, 2016.
| 31 |
For a discussion of legal proceedings affecting the Company, see the information in Note 6, “Commitments and Contingencies,” to the financial statements, included in Part I of this Report.
As a ‘smaller reporting company”, we are not required to provide the information required by this item.
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.
None.
The exhibits required by this item are listed on the Exhibit Index attached hereto, which is incorporated herein by reference.
| 32 |
Pursuant to the requirements of of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| PLASTIC2OIL, INC. | ||
| Date: November 13, 2017 | By: | /s/ Richard Heddle |
| Name: | Richard Heddle | |
| Title: | President and Chief Executive Officer (Principal Executive Officer) | |
| 33 |
Item 6. Exhibit Index
Exhibit Number |
Description | |
| 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. | |
| 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 |
| 34 |
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 13, 2017 | 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 13, 2017 | 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, 2017, 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, 2017, 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, 2017, fairly presents, in all material respects, the financial condition and results of operations of Plastic2Oil, Inc. |
| Date: November 13, 2017 | 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, 2017, 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, 2017, 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, 2017, fairly presents, in all material respects, the financial condition and results of operations of Plastic2Oil Inc. |
| Date: November 13, 2017 | By: | /s/ Rahoul S. Banerjea |
| Rahoul S. Banerjea | ||
| Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Nov. 13, 2017 |
|
| Document And Entity Information | ||
| Entity Registrant Name | Plastic2Oil, Inc. | |
| Entity Central Index Key | 0001381105 | |
| Document Type | 10-Q | |
| Document Period End Date | Sep. 30, 2017 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Filer Category | Smaller Reporting Company | |
| Entity Common Stock, Shares Outstanding | 124,756,158 | |
| Trading Symbol | PTOI | |
| Document Fiscal Period Focus | Q3 | |
| Document Fiscal Year Focus | 2017 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Net of allowance accounts receivable | $ 22,994 | $ 22,994 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 250,000,000 | 250,000,000 |
| Common stock, shares issued | 124,756,158 | 124,756,158 |
| Common stock, shares outstanding | 124,756,158 | 124,756,158 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Selling general and administrative expenses | ||||
| Professional Fees | $ 20,270 | $ 23,633 | $ 308,167 | $ 90,677 |
| Compensation | 153,588 | 126,094 | 481,821 | 396,102 |
| Other | 29,184 | 69,059 | 134,106 | 214,244 |
| Depreciation of property, plant and equipment and accretion of long- term liability | 95,028 | 216,579 | 296,616 | 652,877 |
| TOTAL OPERATING EXPENSES | 298,070 | 435,365 | 1,220,710 | 1,353,900 |
| (LOSS) FROM OPERATIONS | (298,070) | (435,365) | (1,220,710) | (1,353,900) |
| OTHER (INCOME) EXPENSES | ||||
| Impairment loss - property, plant and equipment | 1,020,349 | (13,158) | (1,020,349) | |
| Gain on disposal of property, plant and equipment | (255,676) | |||
| Interest expense, net | 229,976 | 195,853 | 683,420 | 560,044 |
| Other (income) expense, net | 49 | (781,156) | 34 | |
| TOTAL OTHER (INCOME) EXPENSES | 230,025 | 1,216,202 | (340,254) | 1,580,427 |
| (LOSS) BEFORE INCOME TAXES | (528,095) | (1,651,567) | (880,456) | (2,934,327) |
| Provision for Income taxes | ||||
| NET LOSS | $ (528,095) | $ (1,651,567) | $ (880,456) | $ (2,934,327) |
| Basic and diluted income (loss) per share | $ (0.00) | $ (0.01) | $ (0.01) | $ (0.02) |
| Weighted average number of shares outstanding | ||||
| Basic and diluted (Note 2) | 124,756,158 | 124,756,158 | 124,756,158 | 124,756,158 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
| Statement of Comprehensive Income [Abstract] | ||||
| NET (LOSS) | $ (528,095) | $ (1,651,567) | $ (880,456) | $ (2,934,327) |
| OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX | ||||
| Foreign currency items | 88,091 | (19,424) | 235,810 | 104,606 |
| COMPREHENSIVE (LOSS) | $ (440,004) | $ (1,670,991) | $ (644,646) | $ (2,829,721) |
Organization and Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Organization and Going Concern |
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. On April 24, 2009, the Company’s founder, former CEO and Chief of Technology, John Bordynuik, 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. 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. P2O currently, as of the date of this filing, has two processors at its Niagara Falls, NY facility (the “Niagara Falls Facility”). Both processors are currently idle since December 2013. 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.
Currently, we do not have sufficient cash to operate our business, which has forced us to suspend our operations until we receive a capital infusion or cash advances on the sale of our processors.
Going Concern
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. 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 net losses from continuing operations of $880,456, and $2,934,327, respectively, for the nine months ended September 30, 2017, and 2016, respectively. At September 30, 2017, the Company had a working capital deficit of $6,508,968, and an accumulated deficit of $78,824,588. 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 loans from related parties. For the years ended December 31, 2016 and 2015, the Company’s auditors included a going concern opinion in its report on the Company’s audited financial statements for such periods.
The Company will continue to require substantial funds to continue the expansion of its P2O business to achieve commercial productions, and to resume 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, 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 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. |
Summary of Accounting Policies |
9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Summary of Accounting Policies |
NOTE 2 – SUMMARY OF ACCOUNTING POLICIES
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Plastic2Oil of NY#1 Inc., Plastic2Oil (Canada) Inc., JBI CDE Inc., Plastic2Oil Re One Inc., JBI Re #1 Inc., Plastic2Oil Marine Inc., Javaco, and Pak-it. All intercompany transactions and balances have been eliminated on consolidation. Amounts in the consolidated financial statements are expressed in US dollars. Pak-It and Javaco have also been consolidated; however, as mentioned their operations are classified as discontinued operations (see Note 12).
Interim Disclosure
In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, which are considered necessary for a fair presentation of the results for the periods presented. These condensed consolidated financial statements are presented in considerably less detail than complete financial statements that are intended to present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. For this reason, they should be read in conjunction with the entity’s most recent complete financial statements included in its annual report for the year ended December 31, 2016 on Form 10-K filed with the Securities and Exchange Commission (the SEC) on April 7, 2017 that include all the disclosures required by generally accepted accounting principles.
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, accrued liabilities, accounts receivable exposures and valuation of options and warrants.
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, 2017 and December 31, 2016, the Company had $100,498 and $100,423, 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.
Accounts Receivable
Accounts receivable represent unsecured obligations due from customers under terms requesting payments upon receipt of invoice 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 as of September 30, 2017 and December 31, 2016 was $22,994.
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 they are classified as follows:
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.
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 (see Note 12).
During the nine months ended September 30, 2017 and 2016, the Company recorded impairment losses on property, plant and equipment of $13,158 and $1,020,349, respectively, in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amounts of the long-lived assets are not recoverable and exceeds its fair value. The Company estimates the fair value of equipment for impairment purposes using a discounted cash flow method.
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 in the condensed consolidated balance sheets and is depreciated over the asset’s estimated useful life and is included in depreciation and accretion expense in the 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 condensed consolidated statements of operations. Actual expenditures incurred are charged against the accumulated obligation. As of September 30, 2017 and December 31, 2016, the carrying value of the asset retirement obligations was $65,440 and $64,000, respectively. These costs include disposal of plastic and other non-hazardous waste, site closing labor, testing, and sampling of the site upon closure.
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 utility services deposit and 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. Deposits were $10,000 and $27,662 as of September 30, 2017 and December 31, 2016, respectively.
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 (see Note 5).
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 take possession of the processors since Title to the Goods and the risk of loss transfer 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).
Data storage and recovery sales are recognized when the product has been shipped or the services have been rendered to the customer.
Foreign Currency Translation
The 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 date. 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. Foreign exchange gain of $57,307 and gain of $99, respectively, are included as general and administrative expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016, respectively. The 2017 foreign exchange gain results from the payoff of the 1783 Allanport property mortgage.
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 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, 2017 and December 31, 2016. The Company files tax returns in the U.S federal and state jurisdictions as well as a foreign country. The years ended December 31, 2013 through December 31, 2016 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 nine months ended September 30, 2017, potential dilutive common stock equivalents consisted 5,850,000 shares underlying common stock warrants and 6,580,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2016, potential dilutive common stock equivalents 14,550,000 shares underlying common stock warrants, and 1,540,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was 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. The Company also routinely assesses the collectability of the short-term note receivable and determines its exposure for non-performance based on the specific holder and other pertinent information.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, leases, promissory notes, long-term debt, and mortgage payable approximate fair value because of the short-term nature of these items.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenues are recognized at the time when goods or services are transferred to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. We believe that the adoption of this standard will impact engagements that contain variable fee arrangements, including those in which we earn a completion fee when and if certain predefined outcomes occur, and certain engagements with fixed-fees that have multiple performance obligations. We expect to recognize revenue under certain success fee arrangements earlier upon adoption of this standard than we do under current guidance. We will adopt this standard using the modified retrospective method effective January 1, 2018.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual and interim reporting periods beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In July 2015, FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that an entity measure inventory at the lower of cost and net realizable value. This ASU does not apply to inventory measured using last-in, first-out. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In October 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibition against immediate recognition of current and deferred income tax effects on intra-entity transfers of assets other than inventory. This standard is effective January 1, 2019, although early adoption is permitted as early as January 1, 2017. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including the accounting for forfeitures, employer tax withholding on share-based compensation, income tax consequences, and clarifies the statement of cash flows presentation for certain components of share-based awards, all of which are intended to simplify various aspects of the accounting for share-based compensation. The ASU will require that the difference between the actual tax benefit realized upon option exercise or restricted share or restricted stock unit release and the tax benefit recorded based on the fair value of the stock award at the time of grant (the “excess tax benefits”) to be reflected as a reduction of the current period provision for income taxes with any shortfall recorded as an increase in the tax provision rather than as a component of changes to additional paid-in capital. The ASU will also require the excess tax benefit or detriment realized to be reflected as operating cash flows rather than financing cash flows. The standard is effective beginning January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that replaces existing lease guidance. Under this ASU, leases will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04: Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard requires entities to measure goodwill impairment using the difference between the carrying amount and the fair value of the reporting unit, instead of performing a hypothetical purchase price allocation. This guidance is effective beginning January 1, 2020, although early adoption is permitted. The adoption of this guidance would only impact the measurement of a future goodwill impairment to the extent applicable.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing lease guidance. Under this ASU, we will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
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 consolidated financial statements. |
Property, Plant and Equipment, Net |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment, Net |
NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET
Property, Plant and Equipment consist of the following at:
For the nine months ended September 30, 2017 and 2016, the Company recognized $296,616 and $652,877, respectively of depreciation expense. At September 30, 2017 and December 31, 2016, machinery and equipment with a cost of $53,257 and accumulated amortization of $49,453 and $41,844 respectively, were under capital lease. During the nine months ended September 30, 2017 and December 31, 2016, the Company recognized $5,706, and $5,706, respectively, of depreciation expense related to these assets under capital lease.
On March 31, 2017, the Company sold its land and building located at 1783 Allanport Road, Thorold, Ontario, for a gain of approximately $254,000. The proceeds were used towards repayment of the outstanding mortgage, real estate taxes and closing costs. The Company reviews for impairment of long-lived assets on an asset by asset basis, which resulted in an impairment booking of $13,158 for the nine months ending September 30, 2017. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Promissory Notes |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Secured Promissory Notes |
NOTE 4 - SECURED PROMISSORY NOTES
SECURED PROMISSORY NOTES -RELATED PARTY
Related Party notes payable consists of the following at periods ended:
SECURED PROMISSORY NOTES
Secured notes payable consists of the following at periods ended:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages Payable and Capital Leases |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgages Payable and Capital Leases |
NOTE 5 - MORTGAGES PAYABLE AND CAPITAL LEASES
The Mortgages Payable and Capital Leases consists of the following at periods ending:
(1) Based on $280,000 Canadian dollars converted to U.S. Dollars using the conversion rate on December 31, 2016.
(2) Includes accrued interest. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies |
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Commitments
On April 17, 2017, the Company received cash in the amount of $524,010, net of legal expenses from the settlement of the Glenny and Maskell litigation. The Company filed the lawsuit on May 25, 2012 at the Ontario Superior Court of Justice, seeking damages consisting of the costs of defense and any damages that may be awarded against the Company, our former CEO John Bordynuik, and former CFO Ron Baldwin in the Class Action and in the SEC Action. The Ontario Superior Court of Justice issued the dismissal order dated May 9, 2017. The case was settled in the U.S. with ACE (Insurance carrier) in or about May 2013, pursuant to what is known as a “Mary Carter” (confidential) settlement.
As of September 30, 2017, the Company has committed to purchase certain pieces of key machinery from vendors related to the future expansion of its operations. At December 31, 2016, we recorded impairment loss $1,448,464 on the deposits in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amount of the long-lived assets are not recoverable and exceeds its fair value. The Company will be required to pay approximately $540,000 upon the delivery of these assets which is expected occur with the delivery of processor #4 and processor #5.
The Company leased premises in Thorold, Ontario, Canada which was previously used in the operation Plastic2Oil (Canada), Inc. doing business as Regional Recycling of Niagara (“RRON”). During the third quarter of 2013, the Company determined that it would shut down the operations of RRON. The employees of RRON were given notice of the shut down in the first week of September 2013, 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. The property was vacated on November 10, 2015. On January 15, 2016, the Company entered into a Surrender of Lease agreement which terminated its lease, dated December 1, 2010, between Avondale Store Limited Properties and JBI, (Canada) Inc. relating to the Company’s premises located at 1786 Allanport Road, Thorold, Canada. The effective date of the termination was October 31, 2015. The premises was the site of the Company’s Regional Recycling Center, which was part of a business line that was discontinued by the Company in 2013. The Company anticipates the termination will save approximately $1,161,360 in lease payments over the original life of the lease which had a term ending on December 1, 2030. The Company settled all unpaid rent on July 26, 2017, covering the period from May 2016 to October 2016.
Contingencies
As of September 30, 2017, the Company is involved in litigation and 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. |
Warrants |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants |
NOTE 7 - WARRANTS
The following table summarizes the activities for the period.
There were no warrants issued during the nine months ended September 30, 2017. For, the nine months ended September 30, 2017, 9,100,000 of warrants expired related to the February 2017 through April 2017 private placements. |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options |
NOTE 8 – STOCK OPTIONS
2012 Plan
There were no options granted during the nine months ended September 30, 2017 and 2016. As of September 30, 2017, 4,330,000 options were outstanding of which 2,330,000 are fully vested. During the nine months ended September 30, 2017, fully vested options awarded to a terminated employee expired to purchase 60,000 shares.
A summary of stock option activity for the nine months ended September 30, 2017 is as follows:
As of September 30, 2017, the Company expects to recognize $37,333 of, compensation through March 31, 2019 related to the vesting of stock options.
2016 Incentive Plan
There were no options granted during the nine months ended September 30, 2017 and 2016, respectively. As of September 30, 2017, 2,250,000 options were outstanding and are fully vested.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions |
NOTE 9 – RELATED PARTY TRANSACTIONS
From June 2014 to September 30, 2017, Mr. Richard Heddle, the Company’s President and Chief Executive Officer, or his affiliated companies made several personal loans to the company to provide working capital. As of September 30, 2017, the current aggregate outstanding balance, including accrued interest at 4% per annum, due and owing to Mr. Heddle was $1,948,995. (See Note 4).
On February 11, 2016, the Company issued a promissory note in favor of Mr.Heddle to memorialize various advances, which were made by Mr. Heddle to the Company from February 11, 2016 until September 30, 2017. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $579,163. (See Note 4).The promissory note bears interest at the rate of 12% per annum. All principal and interest on the promissory note is due and payable in full by the Company on demand. The repayment of promissory note will be secured by assets of the Company. The proceeds of these advances are being used for working capital purposes.
At September 30, 2017 and December 31, 2016, the company’s accounts payable and accrued expenses included $124,981 and $132,218, respectively, outstanding balance due to Heddle Marine Services, a business controlled by Mr. Heddle 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 including 2015 cleanup costs incurred in order to terminate the lease with Avondale properties on the discontinued (RRON) Operation. In addition, in 2016, $12,500 was paid for feedstock analysis to a business in which Mr. Heddle holds a material financial interest.
The Company issued to Hilander Limited, a business controlled by Mr. Jason Aspin, a Secured Promissory Note -$100,000 in August 24, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to one hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share, and payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $111,809. (See Note 4).On October 12, 2017, Mr. Aspin was appointed a Board member of the Company..
The Company issued to Atlantic Advances Power Technologies, a business controlled by Mr. Aspin, a Secured Promissory Note -$400,000 in October 18, 2016 bearing interest of 12% per annum compounded annually, together with a five-year warrant to purchase up to four hundred thousand shares of the Company’s common stock at an exercise price of $0.12 per share payable upon maturity in 2021 and secured by a security interest in substantially all of the assets of the Company and its subsidiaries. As of September 30, 2017, the current aggregate outstanding balance including accrued interest at 12% per annum was $429,385. (See Note 4). |
Segment Reporting |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Segment Reporting [Abstract] | |
| Segment Reporting |
NOTE 10 – SEGMENT REPORTING
For the nine months ended September 30, 2017 and 2016, the Company had no revenue. The Company’s processors were idle for all of 2016 and remained idle during the nine months ended September 30, 2017.
When operating, the Company had 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.
When operating, 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.”
P2O assets include the Company headquarters and various machinery and equipment used at the Niagara Falls Facility. At September 30, 2017, total long-lived assets of $1,370,542 and $200,289 were located in the United States and Canada, respectively. As of December 31, 2016, total long-lived assets of $1,832,078 and $344,671, were located in the United States and Canada, respectively. At September 30, 2017 and December 31, 2016, the mortgage payable of $0 and $206,910, respectively, and the equipment capital lease of $21,156 and $20,546, respectively, both disclosed in Note 5, relate to assets held in Canada. |
Risk Management |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Risks and Uncertainties [Abstract] | |
| Risk Management |
NOTE 11 – 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. |
Discontinued Operations and Assets Held for Sale |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Discontinued Operations and Disposal Groups [Abstract] | |
| Discontinued Operations and Assets Held for Sale |
NOTE 12 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Regional Recycling of Niagara
On January 15, 2016, the Company entered into a Surrender of Lease agreement, which terminated its lease, dated December 1, 2010, between Avondale Store Limited Properties and JBI, (Canada) Inc. relating to the Company’s premises located at 1786 Allanport Road, Thorold, Canada. The effective date of the termination was October 31, 2015. The premise was the site of the Company’s Regional Recycling Center, which was part of a business line that was discontinued by the Company in 2013. The Company anticipates the termination will save approximately $1,161,360 in lease payments over the original life of the lease, which had a term ending on December 1, 2030. The Company settled all unpaid rent on July 26, 2017 covering the period from May 2016 to October 2016. |
Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Subsequent Events [Abstract] | |
| Subsequent Events |
NOTE 13 – SUBSEQUENT EVENTS
As described in the Company’s Current Report on FOM 8-K filed with the SEC on October 18, 2017, the Board of Directors (the “Board”) increasesd the number of directors comprising the Board from two to four members and appointed Jason C. Aspin and Lee C. Brain to fill the vacancies created thereby, effective as of October 12, 2017. |
Summary of Accounting Policies (Policies) |
9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Basis of Consolidation |
Basis of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Plastic2Oil of NY#1 Inc., Plastic2Oil (Canada) Inc., JBI CDE Inc., Plastic2Oil Re One Inc., JBI Re #1 Inc., Plastic2Oil Marine Inc., Javaco, and Pak-it. All intercompany transactions and balances have been eliminated on consolidation. Amounts in the consolidated financial statements are expressed in US dollars. Pak-It and Javaco have also been consolidated; however, as mentioned their operations are classified as discontinued operations (see Note 12). |
||||||||||||
| Interim Disclosure |
Interim Disclosure
In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, which are considered necessary for a fair presentation of the results for the periods presented. These condensed consolidated financial statements are presented in considerably less detail than complete financial statements that are intended to present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. For this reason, they should be read in conjunction with the entity’s most recent complete financial statements included in its annual report for the year ended December 31, 2016 on Form 10-K filed with the Securities and Exchange Commission (the SEC) on April 7, 2017 that include all the disclosures required by generally accepted accounting principles. |
||||||||||||
| Estimates |
Interim Disclosure
In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, which are considered necessary for a fair presentation of the results for the periods presented. These condensed consolidated financial statements are presented in considerably less detail than complete financial statements that are intended to present financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. For this reason, they should be read in conjunction with the entity’s most recent complete financial statements included in its annual report for the year ended December 31, 2016 on Form 10-K filed with the Securities and Exchange Commission (the SEC) on April 7, 2017 that include all the disclosures required by generally accepted accounting principles. |
||||||||||||
| Cash and Cash Equivalents |
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 |
Restricted Cash
At September 30, 2017 and December 31, 2016, the Company had $100,498 and $100,423, 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. |
||||||||||||
| Accounts Receivable |
Accounts Receivable
Accounts receivable represent unsecured obligations due from customers under terms requesting payments upon receipt of invoice 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 as of September 30, 2017 and December 31, 2016 was $22,994. |
||||||||||||
| Property, Plant and Equipment |
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 they are classified as follows:
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. |
||||||||||||
| Impairment of Long-Lived Assets |
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 (see Note 12).
During the nine months ended September 30, 2017 and 2016, the Company recorded impairment losses on property, plant and equipment of $13,158 and $1,020,349, respectively, in accordance to ASC 360-10-50-2 where an impairment loss will be recognized only if the carrying amounts of the long-lived assets are not recoverable and exceeds its fair value. The Company estimates the fair value of equipment for impairment purposes using a discounted cash flow method. |
||||||||||||
| Asset Retirement Obligations |
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 in the condensed consolidated balance sheets and is depreciated over the asset’s estimated useful life and is included in depreciation and accretion expense in the 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 condensed consolidated statements of operations. Actual expenditures incurred are charged against the accumulated obligation. As of September 30, 2017 and December 31, 2016, the carrying value of the asset retirement obligations was $65,440 and $64,000, respectively. These costs include disposal of plastic and other non-hazardous waste, site closing labor, testing, and sampling of the site upon closure. |
||||||||||||
| Environmental Contingencies |
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
Deposits represent utility services deposit and 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. Deposits were $10,000 and $27,662 as of September 30, 2017 and December 31, 2016, respectively. |
||||||||||||
| Leases |
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 (see Note 5).
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 |
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 take possession of the processors since Title to the Goods and the risk of loss transfer 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).
Data storage and recovery sales are recognized when the product has been shipped or the services have been rendered to the customer. |
||||||||||||
| Foreign Currency Translation |
Foreign Currency Translation
The 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 date. 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. Foreign exchange gain of $57,307 and gain of $99, respectively, are included as general and administrative expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2017 and 2016, respectively. The 2017 foreign exchange gain results from the payoff of the 1783 Allanport property mortgage. |
||||||||||||
| Income Taxes |
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 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, 2017 and December 31, 2016. The Company files tax returns in the U.S federal and state jurisdictions as well as a foreign country. The years ended December 31, 2013 through December 31, 2016 are open tax years for IRS review. |
||||||||||||
| Loss Per Share |
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 nine months ended September 30, 2017, potential dilutive common stock equivalents consisted 5,850,000 shares underlying common stock warrants and 6,580,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was anti-dilutive. For the nine months ended September 30, 2016, potential dilutive common stock equivalents 14,550,000 shares underlying common stock warrants, and 1,540,000 shares underlying stock options, which were not included in the calculation of the diluted loss per share because their effect was anti-dilutive. |
||||||||||||
| Segment Reporting |
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 |
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. The Company also routinely assesses the collectability of the short-term note receivable and determines its exposure for non-performance based on the specific holder and other pertinent information. |
||||||||||||
| Fair Value of Financial Instruments |
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, leases, promissory notes, long-term debt, and mortgage payable approximate fair value because of the short-term nature of these items. |
||||||||||||
| Recently Issued Accounting Pronouncements |
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this ASU and subsequently issued amendments, revenues are recognized at the time when goods or services are transferred to a customer in an amount that reflects the consideration it expects to receive in exchange for those goods or services. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. We believe that the adoption of this standard will impact engagements that contain variable fee arrangements, including those in which we earn a completion fee when and if certain predefined outcomes occur, and certain engagements with fixed-fees that have multiple performance obligations. We expect to recognize revenue under certain success fee arrangements earlier upon adoption of this standard than we do under current guidance. We will adopt this standard using the modified retrospective method effective January 1, 2018.
In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes. This update requires an entity to classify deferred tax liabilities and assets as noncurrent within a classified statement of financial position. ASU 2015-17 is effective for annual and interim reporting periods beginning after December 15, 2016. This update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. Early application is permitted as of the beginning of the interim or annual reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In July 2015, FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 requires that an entity measure inventory at the lower of cost and net realizable value. This ASU does not apply to inventory measured using last-in, first-out. ASU 2015-11 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date, which defers the effective date of ASU 2014-09 by one year. ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company does not expect the new standard to have a significant impact on its consolidated financial position, results of operations or cash flows.
In October 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibition against immediate recognition of current and deferred income tax effects on intra-entity transfers of assets other than inventory. This standard is effective January 1, 2019, although early adoption is permitted as early as January 1, 2017. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how cash receipts and cash payments are classified in the statement of cash flows. This standard is effective January 1, 2018, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This standard makes several modifications to Topic 718, including the accounting for forfeitures, employer tax withholding on share-based compensation, income tax consequences, and clarifies the statement of cash flows presentation for certain components of share-based awards, all of which are intended to simplify various aspects of the accounting for share-based compensation. The ASU will require that the difference between the actual tax benefit realized upon option exercise or restricted share or restricted stock unit release and the tax benefit recorded based on the fair value of the stock award at the time of grant (the “excess tax benefits”) to be reflected as a reduction of the current period provision for income taxes with any shortfall recorded as an increase in the tax provision rather than as a component of changes to additional paid-in capital. The ASU will also require the excess tax benefit or detriment realized to be reflected as operating cash flows rather than financing cash flows. The standard is effective beginning January 1, 2017. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), that replaces existing lease guidance. Under this ASU, leases will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. The Company has not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04: Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This standard requires entities to measure goodwill impairment using the difference between the carrying amount and the fair value of the reporting unit, instead of performing a hypothetical purchase price allocation. This guidance is effective beginning January 1, 2020, although early adoption is permitted. The adoption of this guidance would only impact the measurement of a future goodwill impairment to the extent applicable.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing lease guidance. Under this ASU, we will be required to record right-of-use assets and corresponding lease liabilities on the balance sheet. This guidance is effective beginning January 1, 2019. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented. We have not yet determined the impact that the adoption of this guidance will have on our consolidated financial statements.
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 consolidated financial statements. |
Summary of Accounting Policies (Tables) |
9 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Schedule of Property, Plant and Equipment Useful Life |
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 they are classified as follows:
|
Property, Plant and Equipment, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property, Plant and Equipment |
Property, Plant and Equipment consist of the following at:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Promissory Notes (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Notes Payable |
Related Party notes payable consists of the following at periods ended:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Secured Promissory Related Party |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Annual Repayments to Related Party |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Secured Debt |
Secured notes payable consists of the following at periods ended:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Secure Promissory Notes |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Annual Repayments |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages Payable and Capital Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Mortgages Payable and Capital Leases |
The Mortgages Payable and Capital Leases consists of the following at periods ending:
(1) Based on $280,000 Canadian dollars converted to U.S. Dollars using the conversion rate on December 31, 2016.
(2) Includes accrued interest. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrants Activity |
The following table summarizes the activities for the period.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity |
A summary of stock option activity for the nine months ended September 30, 2017 is as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2016 Incentive Plan [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Going Concern (Details Narrative) - USD ($) |
9 Months Ended | |||
|---|---|---|---|---|
Apr. 24, 2009 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
| Net income and net loss from continuing operations | $ 880,456 | $ 2,934,327 | ||
| Working capital deficit | 6,508,968 | |||
| Accumulated deficit | $ 78,824,588 | $ 77,944,132 | ||
| John Bordynuik [Member] | ||||
| Percentage of ownership | 63.00% | |||
| Number of shares purchased during period | 310 | |||
Summary of Accounting Policies (Details Narrative) |
3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2017
USD ($)
Segment
shares
|
Sep. 30, 2016
USD ($)
shares
|
Dec. 31, 2016
USD ($)
|
|
| Restricted cash amount | $ 100,498 | $ 100,498 | $ 100,423 | ||
| Allowances for uncollectible accounts | 22,994 | 22,994 | 22,994 | ||
| Impairment losses on property, plant and equipment | $ (1,020,349) | 13,158 | $ 1,020,349 | ||
| Asset retirement obligations discount | $ 57,530 | ||||
| Percentage of discount rate | 2.96% | ||||
| Asset retirement obligations | 65,440 | $ 65,440 | 64,000 | ||
| Deposits | $ 10,000 | 10,000 | $ 27,662 | ||
| Recognized foreign exchange gain (losses) | $ 57,307 | $ 99 | |||
| Number of reportable segments | Segment | 2 | ||||
| Warrant [Member] | |||||
| Antidilutive securities excluded from computation of earnings per share | shares | 5,850,000 | 14,550,000 | |||
| Stock Option [Member] | |||||
| Antidilutive securities excluded from computation of earnings per share | shares | 6,580,000 | 1,540,000 | |||
Summary of Accounting Policies - Schedule of Property, Plant and Equipment Useful Life (Details) |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Leasehold Improvements [Member] | |
| Property plant and equipment useful life description | lesser of useful life or term of the lease |
| Machinery and Office Equipment [Member] | Minimum [Member] | |
| Property plant and equipment useful life | 3 years |
| Machinery and Office Equipment [Member] | Maximum [Member] | |
| Property plant and equipment useful life | 15 years |
| Furniture And Fixtures [Member] | |
| Property plant and equipment useful life | 7 years |
| Office and Industrial Buildings [Member] | Minimum [Member] | |
| Property plant and equipment useful life | 25 years |
| Office and Industrial Buildings [Member] | Maximum [Member] | |
| Property plant and equipment useful life | 30 years |
Property, Plant and Equipment, Net (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Mar. 31, 2017 |
Dec. 31, 2016 |
|
| Depreciation expense | $ 95,028 | $ 216,579 | $ 296,616 | $ 652,877 | ||
| Property, plant and equipment, net -held for sale | $ 287,124 | |||||
| Impairment losses on deposits, property, plant and equipment | $ (1,020,349) | 13,158 | 1,020,349 | |||
| Machinery and Office Equipment [Member] | ||||||
| Machinery and equipment cost | 53,257 | 53,257 | 53,257 | |||
| Accumulated amortization | $ 49,453 | 49,453 | $ 41,844 | |||
| Assets Under Capital Lease [Member] | ||||||
| Depreciation expense | $ 5,706 | $ 5,706 | ||||
| Land, Office and Industrial Building [Member] | ||||||
| Property, plant and equipment, net -held for sale | $ 254,000 | |||||
Secured Promissory Notes - Schedule of Related Party Notes Payable (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Secured debt, total | $ 112,319 | $ 102,838 |
| Less: current portion | 2,528,158 | 2,263,328 |
| Related Party [Member] | ||
| Secured debt, total | 8,998,563 | 8,046,174 |
| Less: current portion | 2,528,158 | 2,263,328 |
| Secured promissory notes - related party | 6,470,405 | 5,782,846 |
| Related Party [Member] | Secured Demand Promissory Note 1 [Member] | ||
| Secured debt, total | 1,948,995 | 1,695,926 |
| Related Party [Member] | Secured Demand Promissory Note 2 [Member] | ||
| Secured debt, total | 579,163 | 567,402 |
| Related Party [Member] | Secured Promissory Notes 1 [Member] | ||
| Secured debt, total | 1,369,868 | 1,248,894 |
| Related Party [Member] | Secured Promissory Notes 2 [Member] | ||
| Secured debt, total | 4,559,343 | 4,041,737 |
| Related Party [Member] | Secured Promissory Notes 3 [Member] | ||
| Secured debt, total | 111,809 | 102,368 |
| Related Party [Member] | Secured Promissory Notes 4 [Member] | ||
| Secured debt, total | $ 429,385 | $ 389,847 |
Secured Promissory Notes - Schedule of Secured Promissory Related Party (Details) (Parenthetical) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Related Party [Member] | ||
| Secured note payable | $ 4,000,000 | $ 4,000,000 |
| Interest on secured notes payable | $ 4,000,000 | $ 4,000,000 |
| Related Party [Member] | November 19, 2014 [Member] | ||
| Number of warrant shares | 1,000,000 | 1,000,000 |
| Related Party [Member] | August 29, 2013 [Member] | ||
| Number of warrant shares | 1,000,000 | 1,000,000 |
| Related Party [Member] | September 30, 2013 [Member] | ||
| Number of warrant shares | 2,000,000 | 2,000,000 |
| Related Party [Member] | August 24, 2016 [Member] | ||
| Number of warrant shares | 100,000 | 100,000 |
| Related Party [Member] | October 18, 2016 [Member] | ||
| Number of warrant shares | 500,000 | 500,000 |
| Related Party One [Member] | ||
| Secured note payable | $ 500,000 | $ 500,000 |
| Interest on secured notes payable | $ 500,000 | $ 500,000 |
Secured Promissory Notes - Schedule of Annual Repayments to Related Party (Details) |
Dec. 31, 2016
USD ($)
|
|---|---|
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 | |
| 2021 | 100,000 |
| Total | 100,000 |
| Related Party [Member] | |
| 2017 | 2,528,158 |
| 2018 | 3,000,000 |
| 2019 | 1,000,000 |
| 2020 | |
| 2021 | 500,000 |
| Total | $ 8,998,563 |
Secured Promissory Notes - Schedule of Secured Debt (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Secured debt, total | $ 112,319 | $ 102,838 |
| Less: current portion | 2,528,158 | 2,263,328 |
| Secured promissory notes | 6,470,405 | 5,782,846 |
| Notes Payable [Member] | ||
| Secured debt, total | 112,319 | 102,838 |
| Less: current portion | ||
| Secured promissory notes | 112,319 | 102,838 |
| Secured Promissory Notes [Member] | Notes Payable [Member] | ||
| Secured debt, total | $ 112,319 | $ 102,838 |
Secured Promissory Notes - Schedule of Secured Debt (Details) (Parenthetical) - USD ($) |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
Aug. 10, 2016 |
|
| Debt Bearing interest | 12.00% | ||
| Warrant to purchase shares of common stock | |||
| Secured Promissory Notes [Member] | Notes Payable [Member] | |||
| Note (provided by related party) | $ 100,000 | ||
| Debt Bearing interest | 12.00% | 12.00% | |
| Notes maturity date | 2021 | 2021 | |
| Warrant term | 5 years | 5 years | |
| Warrant to purchase shares of common stock | 1,000,000 | 1,000,000 | |
| Warrants exercise price per share | $ 0.12 | $ 0.12 |
Secured Promissory Notes - Schedule of Secure Promissory Notes (Details) - Notes Payable [Member] - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Total face value of promissory notes payable | $ 100,000 | $ 100,000 |
| Accretion of discounts on secured notes payable | 433 | 133 |
| Interest on secured notes payable | 13,886 | 4,705 |
| Carrying value of Secured Promissory Notes | 112,319 | 102,838 |
| August 10, 2016 [Member] | ||
| Total face value of promissory notes payable | 100,000 | 100,000 |
| Discount on secured note payable | $ (2,000) | $ (2,000) |
Secured Promissory Notes - Schedule of Secure Promissory Notes (Details) (Parenthetical) - Notes Payable [Member] - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Secured note payable | $ 100,000 | $ 100,000 |
| Interest on secured notes payable | $ 500,000 | $ 500,000 |
| August 10, 2016 [Member] | ||
| Number of warrant shares | 100,000 | 100,000 |
Secured Promissory Notes - Schedule of Annual Repayments (Details) |
Dec. 31, 2016
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 | |
| 2021 | 100,000 |
| Total | $ 100,000 |
Mortgages Payable and Capital Leases - Schedule of Mortgages Payable and Capital Leases (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
|||||
|---|---|---|---|---|---|---|---|
| Capital lease obligations, total | $ 21,156 | $ 227,455 | |||||
| Less: current portion | 21,156 | 227,455 | |||||
| Mortgages payable and capital leases | |||||||
| Mortgages Payable and Capital Leases 1 [Member] | |||||||
| Capital lease obligations, total | 206,910 | [1] | |||||
| Mortgages Payable and Capital Leases 2 [Member] | |||||||
| Capital lease obligations, total | [2] | $ 21,156 | $ 20,546 | ||||
| |||||||
Mortgages Payable and Capital Leases - Schedule of Mortgages Payable and Capital Leases (Details) (Parenthetical) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Debt instrument interest rate | 12.00% | |
| Mortgages Payable and Capital Leases 1 [Member] | ||
| Foreign currency conversion rate | $ 280,000 | $ 280,000 |
| Debt instrument interest rate | 7.00% | 7.00% |
| Consideration of shares | 10,000 | 10,000 |
| Debt instrument maturity description | maturity was extended from June 15, 2015 to December 15, 2015 and subsequently to June 15, 2016 by the Mortgage holder | maturity was extended from June 15, 2015 to December 15, 2015 and subsequently to June 15, 2016 by the Mortgage holder |
| Mortgages Payable and Capital Leases 2 [Member] | ||
| Debt instrument interest rate | 3.90% | 3.90% |
| Debt instrument maturity description | equipment and matured on May 10, 2016, Principal and interest were due, in their entirety, at maturity. The maturity was extended to May 10, 2016 by the Lessor. | equipment and matured on May 10, 2016, Principal and interest were due, in their entirety, at maturity. The maturity was extended to May 10, 2016 by the Lessor. |
Commitments and Contingencies (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Apr. 17, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Impairment loss on deposits | $ 1,448,464 | ||
| Unpaid balance of machinery | $ 540,000 | ||
| Remaining lease payments | $ 1,161,360 | ||
| Lease expiration date | Dec. 01, 2030 | ||
| Glenny and Maskell litigation [Member] | |||
| Litigation settlement, amount | $ 524,010 |
Warrants (Details Narrative) |
Sep. 30, 2017
shares
|
|---|---|
| Warrant to purchase shares of common stock | |
| Private Placement [Member] | February 2017 through April 2017 [Member] | |
| Warrant to purchase shares of common stock | 9,100,000 |
Warrants - Schedule of Warrants Activity (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2017
$ / shares
shares
| |
| Warrants | |
| Warrants Number Outstanding, Beginning Balance | 14,950,000 |
| Warrants Number Expired | (9,100,000) |
| Warrants Number Outstanding, Ending Balance | 5,850,000 |
| Weighted Average Exercise Price Outstanding, Beginning Balance | $ / shares | $ 0.18 |
| Weighted Average Exercise Price Expired | (0.08) |
| Weighted Average Exercise Price Outstanding, Ending Balance | $ / shares | $ 0.34 |
| Weighted Average Remaining Term Outstanding, Beginning Balance | 10 months 25 days |
| Weighted Average Remaining Term Outstanding, Expired | 0 years |
| Weighted Average Remaining Term Outstanding, Ending Balance | 1 year 6 months |
Stock Options (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2017 |
Dec. 31, 2016 |
|
| Number of stock options outstanding shares | 4,330,000 | 4,390,000 |
| Terminated Employee [Member] | ||
| Shares outstanding and fully vested | 60,000 | |
| 2012 Plan [Member] | ||
| Number of stock options outstanding shares | 4,330,000 | |
| Shares outstanding and fully vested | 2,330,000 | |
| 2012 Plan [Member] | March 31, 2019 [Member] | ||
| Share-based compensation vesting of stock options value | $ 37,333 | |
| 2016 Incentive Plan [Member] | ||
| Number of stock options outstanding shares | 2,250,000 | 2,250,000 |
| Shares outstanding and fully vested | 2,250,000 |
Stock Options - Summary of Stock Option Activity (Details) (Parenthetical) |
9 Months Ended |
|---|---|
|
Sep. 30, 2017
shares
| |
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
| Equity awards available for grant, restricted stock | 811,576 |
Related Party Transactions (Details Narrative) - USD ($) |
12 Months Ended | |||
|---|---|---|---|---|
Oct. 18, 2016 |
Aug. 24, 2016 |
Dec. 31, 2016 |
Sep. 30, 2017 |
|
| Percentage of accrued interest | 12.00% | |||
| Outstanding balance | $ 579,163 | |||
| Debt instrument interest rate | 12.00% | |||
| Warrant to purchase shares of common stock | ||||
| Mr. Richard Heddle [Member] | ||||
| Percentage of accrued interest | 4.00% | |||
| Outstanding balance | $ 1,948,995 | |||
| Payment to related party | $ 12,500 | |||
| Mr. Richard Heddle [Member] | Heddle Marine Services [Member] | ||||
| Outstanding balance | $ 132,218 | $ 124,981 | ||
| Mr. Jason Aspin [Member] | Hilander Limited [Member] | ||||
| Percentage of accrued interest | 12.00% | |||
| Outstanding balance | $ 111,809 | |||
| Debt instrument interest rate | 12.00% | |||
| Note (provided by related party) | $ 100,000 | |||
| Notes maturity date | 2021 | |||
| Warrant term | 5 years | |||
| Warrant to purchase shares of common stock | 100,000 | |||
| Warrants exercise price per share | $ 0.12 | |||
| Mr. Jason Aspin [Member] | Atlantic Advances Power Technologies [Member] | ||||
| Percentage of accrued interest | 12.00% | |||
| Outstanding balance | $ 429,385 | |||
| Debt instrument interest rate | 12.00% | |||
| Note (provided by related party) | $ 400,000 | |||
| Notes maturity date | 2021 | |||
| Warrant term | 5 years | |||
| Warrant to purchase shares of common stock | 400,000 | |||
| Warrants exercise price per share | $ 0.12 |
Segment Reporting (Details Narrative) |
9 Months Ended | |
|---|---|---|
|
Sep. 30, 2017
USD ($)
Segment
|
Dec. 31, 2016
USD ($)
|
|
| Number of operating segments | Segment | 2 | |
| Mortgage payable | $ 100,000 | |
| Equipment capital lease | $ 21,156 | 227,455 |
| United States [Member] | ||
| Long-lived assets | 1,370,542 | 1,832,078 |
| Canada [Member] | ||
| Long-lived assets | 200,289 | 344,671 |
| Mortgage payable | 0 | 206,910 |
| Equipment capital lease | $ 21,156 | $ 20,546 |
Discontinued Operations and Assets Held for Sale (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Jan. 15, 2016 |
Sep. 30, 2017 |
|
| Lease expiration date | Dec. 01, 2030 | |
| Surrender of Lease Agreement [Member] | Regional Recycling of Niagara [Member] | ||
| Lease payments | $ 1,161,360 | |
| Lease termination description | The effective date of the termination was October 31, 2015. | |
| Lease expiration date | Dec. 01, 2030 |
Subsequent Events (Details Narrative) - Subsequent Event [Member] |
Oct. 18, 2017
Segment
|
|---|---|
| Minimum [Member] | |
| Number of directors | 2 |
| Maximum [Member] | |
| Number of directors | 4 |