Plastic2Oil, Inc. - Quarter Report: 2010 September (Form 10-Q)

f10q0910_jbi.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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, 2010

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-52444

JBI, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-4924000
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1783 Allanport Road

Thorold, Ontario, Canada L0S 1K0

(Address of principal executive offices)

Copies of communications to:

Gregg E. Jaclin, Esq.

Anslow + Jaclin, LLP

195 Route 9 South, Suite 204

Manalapan, New Jersey 07726

(732) 409-1212

Registrant’s telephone number, including area code: (905) 384-4383

Securities to be registered under Section 12(b) of the Act: None

Securities to be registered under Section 12(g) of the Act:

Title of each class to be so registered

Common stock, par value $.001

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes No x

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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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 o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See the definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Non-accelerated filer o

Accelerated filer o

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act. Yes o No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: As at November 17, 2010, there were 51,246,926 shares of Common Stock, $0.001 par value per share issued and outstanding.

Documents Incorporated By Reference –None

JBI, INC.

Index			Page

Part I.	Financial Information

	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets – September 30, 2010 (Unaudited) and December 31, 2009	1
		Condensed Consolidated Statements of Operations – Three and Nine Month Periods Ended September 30, 2010 and 2009 (Unaudited)	2
		Condensed Consolidated Statements of Changes in Shareholders’ Equity - Nine Month Period Ended September 30, 2010 (Unaudited)	3
		Condensed Consolidated Statements of Cash Flows –Nine Month Period Ended September 30, 2010 and 2009 (Unaudited)	4
		Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16
	Item 4.	Controls and Procedures	16
Part II.	Other Information
	Item 1.	Legal Proceedings	18
	Item 1 a)	Risk Factors	18
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
	Item 3.	Defaults Upon Senior Securities	18
	Item 4.	(Removed and Reserved)	18
	Item 5.	Other Information	19
	Item 6.	Exhibits	19
Signatures			20

Introductory Note: Caution Concerning Forward-Looking Statements

This Form 10-Q Report and the Company’s other communications and statements may contain “forward-looking statements,” including statements about the Company’s beliefs, plans, objectives, goals, expectations, estimates, projections and intentions. These statements are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company’s control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar expressions are intended to identify forward-looking statements. All forward-looking statements, by their nature, are subject to risks and uncertainties. The Company’s actual future results may differ materially from those set forth in its forward-looking statements. For information concerning these factors and related matters, see Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in this Report, and the following sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009: (a) “Risk Factors” in Part I, and (b) “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II. However, other factors besides those referenced could adversely affect the Company’s results, and you should not consider any such list of factors to be a complete set of all potential risks or uncertainties. Any forward-looking statements made by the Company herein speak as of the date of this Report. The Company does not undertake to update any forward-looking statement, except as required by law.

Unless the context otherwise indicates, all references in this report to the “Company,” “JBI,” “we,” “us,” or “our,” or similar words are to JBI, Inc. and its subsidiaries.

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS




ASSETS
	9/30/2010			12/31/2009
	(UNAUDITED)

CURRENT ASSETS
Cash and cash equivalents	$	276,892		$	26,307
Cash held in attorney's trust		130,121			3,123,595
Accounts receivable, net		1,967,217			1,662,202
Inventories		1,143,740			1,414,813
Prepaid expenses		148,051			51,549

TOTAL CURRENT ASSETS		3,666,021			6,278,466

PROPERTY AND EQUIPMENT
Leasehold improvements		485,491			473,609
Machinery and office equipment		2,210,279			572,295
Vehicles		7,370			12,325
Furniture and fixtures		16,903			17,679
Land & Buildings		519,330			-
		3,239,373			1,075,908
Less accumulated depreciation and amortization		(362,687	)		(101,120	)

NET PROPERTY AND EQUIPMENT		2,876,686			974,788

OTHER ASSETS
Restricted cash		144,500			144,500
Goodwill		5,179,249			5,179,249
Deposits		7,026			64,116
Patents, net		8,657			10,014

TOTAL OTHER ASSETS		5,339,432			5,397,879

TOTAL ASSETS	$	11,882,139		$	12,651,133


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,046,535		$	1,066,949
Accrued expenses		230,908			225,420
Income taxes payable		36,107			159,661
Deferred income taxes		60,903			60,903

TOTAL CURRENT LIABILITIES		1,374,453			1,512,933

LONG-TERM LIABILITIES
Mortgage Payable		271,845			-
TOTAL LONG-TERM LIABILITIES		271,845			-

COMMITMENTS AND CONTINGENCIES


TOTAL LIABILITIES		1,646,298			1,512,933

SHAREHOLDERS' EQUITY

Common Stock, par $0.001; 150,000,000 authorized, 51,031,926 and 69,453,840
shares issued and outstanding at September 30, 2010 and December 31, 2009,
respectively		51,031			69,454
Common Stock Subscribed		-			817,928
Stock Subscription Receivable		-			(817,928	)
Preferred stock, par $0.001; 5,000,000 authorized, 1,000,000 and 1,000,000
shares issued and outstanding at September 30, 2010 and December 31, 2009,
respectively		1,000			1,000
Additional paid in capital		19,621,320			13,377,032
Other Comprehensive Income - Cummulative Foreign Cuurency Translation		4,543			-
Accumulated Deficit		(9,442,053	)		(2,309,286	)

TOTAL SHAREHOLDERS' EQUITY		10,235,841			11,138,200

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	11,882,139		$	12,651,133

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	9/30/2010			9/30/2009			9/30/2010			9/30/2009

NET SALES
Pak-It	$	1,794,934		$	-		$	5,069,027		$	-
Javaco		1,482,646			550,676			5,536,741			550,676
Other		9,479			124,167			46,464			171,767
		3,287,059			674,843			10,652,232			722,443
COST OF SALES
Pak-It		1,370,530			-			4,217,540			-
Javaco		1,281,407			459,017			4,848,145			459,017
Other		4,442			14,768			31,941			18,158
		2,656,379			473,785			9,097,626			477,175

GROSS PROFIT		630,680			201,058			1,554,606			245,268

OPERATING EXPENSES
Compensation Paid in Stock		301,589			-			3,314,609			-
Other Operating Expenses		2,105,827			1,181,022			5,427,229			1,209,831

TOTAL OPERATING EXPENSE		2,407,416			1,181,022			8,741,838			1,209,831

INCOME/(LOSS) FROM OPERATIONS		(1,776,736	)		(979,964	)		(7,187,232	)		(964,563	)

OTHER INCOME (EXPENSE)
Interest expense, net		(7,817	)		(1,960	)		(7,929	)		(2,113	)
Other income, net		19,735			5,943			62,394			5,943
OTHER INCOME (EXPENSE), NET		11,918			3,983			54,465			3,830


INCOME/(LOSS) BEFORE INCOME TAXES		(1,764,818	)		(975,981	)		(7,132,767	)		(960,733	)

INCOME TAX PROVISION		-			-			-			-


NET INCOME/(LOSS)	$	(1,764,818	)	$	(975,981	)	$	(7,132,767	)	$	(960,733	)

Basic & diluted net income/(loss) per share		(0.03	)		(0.02	)		(0.13	)		(0.02	)

Weighted average number of common shares outstanding		50,999,144			55,905,716			54,999,807			60,562,073

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Nine Month Period Ended September 30, 2010


	Common Stock						Common Stock						Stock			Preferred Stock				Additional		Cummulative					Total
	$0.001 Par Value						Subscribed						Subscriptions			$0.001 Par Value				paid in		Foreign Curr.		Accumulated			Shareholders'
	Shares			Amount			Shares			Amount			Receivable			Shares		Amount		Capital		Translation		Deficit			Equity

BALANCE - DECEMBER 31, 2009		69,453,840		$	69,454			1,022,410		$	817,928		$	(817,928	)		1,000,000	$	1,000	$	13,377,032	$	-	$	(2,309,286	)	$	11,138,200

Common stock retired		(21,000,000	)		(21,000	)		-			-			-			-		-		21,000				-			-

Common stock issued for services, prices ranging from $1.18 to $4.85		839,397			838			-			-			-			-		-		3,313,771				-			3,314,609

Shares issued in connection with private placement, $0.80 per share, net of issuance costs of $13,992		1,259,910			1,260			(1,022,410	)		(817,928	)		817,928			-		-		992,776				-			994,036

Shares issued in connection with private placement, $4.00 per share, net of issuance costs of $0.00		478,779			479			-			-			-			-		-		1,914,637				-			1,915,116

Contributions by Shareholders		-			-			-			-			-			-		-		2,104				-			2,104

Comprehensive Income:

Cummulative Foreign Currency Translation		-			-			-			-			-			-		-		-		4,543		-			4,543

Net loss		-			-			-			-			-			-		-		-				(7,132,767	)		(7,132,767	)

Total Comprehensive Income/(Loss)		-			-			-			-			-			-		-		-							(7,128,224	)

BALANCE - SEPT 30, 2010		51,031,926		$	51,031			-		$	-		$	-			1,000,000	$	1,000	$	19,621,320	$	4,543	$	(9,442,053	)	$	10,235,841

The accompanying notes are an integral part of the consolidated financial statements.

JBI, Inc. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Period Ended September 30, 2010 and 2009

	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(7,132,767	)	$	(960,733	)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation		261,567			38,269
Amortization		1,357			-
Provision for uncollectible accounts		128,720			17,114
Impairment of Media Credits		-			1,000,000
Common shares issued for services		3,314,609			42,061
Common shares issued for debt cancellation		-			-
In-kind contribution		-			-
Changes in:
Accounts receivable		(433,735	)		(303,072	)
Inventories		271,073			(14,274	)
Prepaid expenses, deposits and other		(39,412	)		(95,500	)
Accounts payable and accrued expenses		(14,926	)		147,286
Income taxes payable		(123,554	)		231,308

NET CASH USED IN OPERATING ACTIVITIES		(3,767,068	)		102,459

CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in cash held in attorneys' trust		2,993,474			-
Cash acquisitions of property and equipment		(1,891,620	)		-
Cash received for acquisition of subsidiaries, net		-			455,046

NET CASH PROVIDED BY INVESTING ACTIVITIES		1,101,854			455,046

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		2,909,152			200,000
Shareholder contributions		2,104			-
Proceeds from shareholder advance		-			71,538
Repayment of note from affiliate		-			(199,404	)


NET CASH PROVIDED BY FINANCING ACTIVITIES		2,911,256			72,134

EFFECT OF EXCHANGE RATE CHANGES ON CASH		4,543			-

NET INCREASE IN CASH AND CASH EQUIVALENTS		250,585			629,639

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		26,307			3,806

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	276,892		$	633,445

Supplemental disclosure of non-cash investing and financing activities
Property acquired in connection with the issuance of mortgage payable	$	263,358			-

The accompanying notes are an integral part of the consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

These consolidated financial statements include the accounts of the JBI, Inc. and its wholly owned subsidiaries, Javaco, Inc., Pak-It, LLC, JBI (Canada), Inc., JBI RE #1, Inc., JBI RE One, Inc., Plastic2Oil Land, Inc. and Plastic2Oil Marine, Inc., Plastic2Oil of NY #1, LLC, (the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q of the Securities and Exchange Commission (the “Commission”). Accordingly, certain information and footnote disclosures required in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. Interim statements are subject to possible adjustment in connection with the annual audit of the Company’s accounts for the year ended December 31, 2010. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all necessary adjustments (consisting only of normal recurring adjustments) which the Company considers necessary for the fair presentation of the Company’s consolidated financial position as of September 30, 2010 and the results of its operations, cash flows and changes in shareholders’ equity for the three and nine month periods ended September 30, 2010 and 2009. Results for the three and nine months ended are not necessarily indicative of results that may be expected for the entire year. The unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto as of and for the year ended December 31, 2009 as included in the Company’s Form 10-K/A as filed with the commission on July 9, 2010.

Liquidity

While the Company has experienced a cumulative operating loss, a significant portion of the expenses incurred this year have related to non-cash items such as the issuance of stock compensation totaling over $3.3 million. Additionally, the Company has made significant one-time purchases of property and equipment relating to its Plastic2Oil technology and its fuel-blending site. Total capital purchases made in 2010 exceed $2.1 million. Upon receipt of required permits, the Company expects to begin commercial operation of its Plastic2Oil processor at its Niagara Falls, New York facility in the fourth quarter, thereby initiating a new revenue stream from the sale of the output from the process.

There can be no guarantee that the Company will be successful in obtaining this permit. In the event that New York permit is not obtained in the near future, the Company has been reviewing the feasibility of realizing P2O revenue in different jurisdictions with partners who have already obtained the necessary operating permits required for P2O. The Company is also reviewing the feasibility of installing a P2O machine in Ontario, where one of the Company's facilities recently obtained it’s air approval. In the event that a New York permit is not obtained and the Company fails to realize P2O revenue through different avenues, the Company would not currently have sufficient cash for the next 12 months. In the event that cash is needed before fuel is sold, the Company has a good current ratio and will seek short and/ or long-term borrowing opportunities. Additionally, the Company is taking steps to minimize expenses and reduce operating costs.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company has disclosed its significant accounting policies in “Note 2: Significant Accounting Policies” in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2009. The following significant accounting policies provide an update to those included under the same captions in the Company’s Annual Report on Form 10-K/A.

Estimates

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. The most significant estimates relate to goodwill, asset impairment, the value of assets and liabilities acquired, valuation of inventory, and the allowance for uncollectible accounts receivable. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Impairments

If the carrying value of an asset, including goodwill and identifiable intangible assets exceeds the sum of estimated undiscounted future cash flows, an impairment loss is recognized for the difference between estimated fair value and carrying value. Management assesses assets for recoverability at least annually, or whenever changes in circumstances indicate that an asset’s carrying amount may not be recoverable.

Goodwill

Goodwill resulted primarily from business acquisitions. In accordance with accounting rules, goodwill is not amortized, but is subject to an annual impairment test, which the Company performs in the 4th quarter. The Company evaluates the carrying value of goodwill during the fourth quarter of each year and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of a reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value. The Company does not believe that the current quarter operating loss has a negative impact on the current goodwill valuation.

Accounts Receivable

Accounts receivable represents 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 allocated 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. Accounts receivable determined to be uncollectible are recognized using the allowance method. The allowance for uncollectible accounts at September 30, 2010 was approximately $234,000 and $59,000 at December 31, 2009.

Revenue Recognition

The Company recognizes revenue when it is realized or realizable and earned, less estimated future doubtful accounts. 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. When products are provided, revenue is recognized when the product ships to the customer from either the Company or a supplier. For services, revenue is recognized upon receipt of payment from the customer.

Earnings 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. There were no potentially dilutive shares outstanding as of September 30, 2010.

Research and Development

All research, development, and engineering costs are expensed when incurred. During the second quarter, the Company transitioned from the research and development phase of P2O to the commercialization of the processor. Research and development expenses approximated $45,000 in the first quarter, $50,000 in the second quarter and $101,000 in the third quarter of 2010. There were no R&D expenses incurred during for the nine months ended September 30, 2009.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, accounts payable, and mortgage payable approximate their fair value due to their short-term nature.

Recent Accounting Pronouncements

Improving Disclosures about Fair Value Measurements (Accounting Standards Update 2010-06)

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements,” to require additional disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. The standard also clarifies existing disclosures about the level of disaggregation, valuation techniques and inputs to fair value measurements. As this standard only affects disclosures related to fair value, the adoption of this standard did not have a material effect on the Company’s consolidated balance sheets, results of operations, or cash flows.

Dodd-Frank Wall Street Reform and Consumer Protection Act (Wall Street Reform Act)

On July 21, 2010, the Wall Street Reform Act was signed into law. Among other provisions, the Act permanently exempts small public companies with less than $75 million in market capitalization (non-accelerated filers) from the requirement to obtain an external audit on the effectiveness of internal financial reporting controls provided in Section 404(b) of the Sarbanes-Oxley Act of 2002 (SOX) in order to reduce the burden on small public companies. Section 404(b) requires a registrant to provide an attestation report on management’s assessment of internal controls over financial reporting by the registrant’s external auditor. Despite this exemption, the Company must still comply with Section 404(a) of SOX which requires management to assess the performance of internal controls. The aggregate market value of voting stock held by non-affiliates of the Company on June 30, 2010 was approximately $56 million, thereby qualifying the Company for the exemption. The market capitalization requirement will be assessed again on June 30, 2011.

NOTE 3 – EQUITY TRANSACTIONS

Beginning in 2009 and continuing through January 14, 2010, the Company consummated a confidential private placement with certain accredited investors for the issuance and sale of 8,439,893 shares of the common stock. The offering was at $0.80 and the gross proceeds received by the Company were $6,751,914. The total shares issued pursuant to the offering were 8,439,893, of which 1,259,910 shares were issued in 2010. As a result of the private placement the Company paid all debt (except normal recurring accounts payable and accruals) and added in excess of $3.1 million in available cash.

In May, 2010, the Company consummated a confidential private placement with certain accredited investors for the issuance and sale of up to 1,000,000 shares of common stock, $0.001 par value per share at per share price of $4.00. The net proceeds received by the Company were in the amount of $1,915,116, for the sale of 478,779 shares.

The Company’s majority shareholder made a capital contribution of approximately $2,000 for foreign currency translation costs.

In March 2010, the President and CEO returned and retired 21 million shares of common stock.

Year-to-date, the Company has issued 839,397 shares of stock as compensation to various parties at an expense of $3,314,609. Of these, 4,700 were issued to employees of Pak-It, 100 shares per employee, on January 7, 2010. On February 25, 2010, the Company issued a total of 400,000 shares to 5 key employees and consultants as bonuses and for past services. During the second quarter, 175,800 shares were issued for services rendered, 10,000 shares were issued to each of the Company’s three independent members of the Board of Directors, and the remaining 13,474 were issued to 3 employees. During the third quarter, 30,000 shares were issued for services rendered and 185,423 were issued to employees as bonuses. The shares issued were generally valued at the closing share price on the respective issue dates and were reported as operating expenses in the statement of operations. Shares issued to settle existing monetary commitments were valued at the existing commitment amount.

NOTE 4 – BUSINESS COMBINATIONS

During 2009, the Company acquired Javaco and Pak-It, and had completed internal valuations to support the allocation of the purchase price and the enterprise value of the entities. The Company has engaged the services of valuation specialists to perform third-party valuations on the subsidiaries of Javaco and Pak-It but management does not expect the valuations will be materially different from those previously performed by management. Any difference will be adjusted when the valuations are completed and then recorded as a current period charge as needed.

The following (unaudited) pro forma results of operations have been prepared assuming the acquisitions of Pak-It and Javaco had occurred at January 1, 2009:

	Three Months Ended September 30, 2009			Nine Months Ended September 30, 2009
Sales	$	3,819,656		$	10,132,399
Net income/(loss)		(46,790	)		149,701
Net loss per share—Basic		0.00			0.00
Net loss per share—Diluted		0.00			0.00

NOTE 5 – SEGMENT REPORTING

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. During the quarter, the Company had three principal operating segments; JBI, Pak-It, and Javaco.

These operating segments were determined based on the nature of the products and services offered. The Company’s chief executive officer has been identified as the chief operating decision maker, and directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company evaluates performance based on several factors, of which the primary financial measure is net income. The accounting policies of the business segments are the same as those described in “Note 2: Summary of Significant Accounting Policies.” Intersegment sales are accounted for at fair value as if sales were to third parties. The following tables show the operations of the Company’s reportable segments for the three and nine months ended September 30, 2010:

	JBI (P2O, JBI Canada Inc., and Data)			Pak-It			Javaco		Total
For the 3 months ended September 30, 2010
Net sales	$	9,479		$	1,794,934		$	1,482,646	$	3,287,059
Net loss	$	(1,734,520	)	$	(24,976	)	$	(5,322)	$	(1,764,818	)
For the 9 months ended September 30, 2010
Net sales	$	46,464		$	5,069,027		$	5,536,741	$	10,652,232
Net income/ (loss)	$	(6,582,781	)	$	(606,949	)	$	56,963	$	(7,132,767	)
Total assets	$	2,678,960		$	4,479,871		$	4,723,308	$	11,882,139
Accounts receivable	$	-		$	480,288		$	1,486,929	$	1,967,217
Inventories	$	-		$	643,476		$	500,264	$	1,143,740
Goodwill	$	-		$	2,809,859		$	2,369,390	$	5,179,249

The Company has centralized several corporate functions at the Pak-It facility including human resources and purchasing. As such, many US-based transactions are accounted for through Pak-It resulting in an increase in expenses associated with Pak-It that would not otherwise be incurred by the operating unit.

Information as to the Company’s quarterly sales in different geographical areas is as follows:

Net Sales:	For the 3 months ended September 30, 2010		For the 9 months ended September 30, 2010
United States	$	2,499,292	$	6,904,922
Mexico		373,554		1,138,268
Peru		20,844		1,574,116
Costa Rica		368,608		992,647
Other		24,761		42,279
	$	3,287,059	$	10,652,232

The Company has concluded that 2009 segment information was not significant to these financial statements.

Sales are attributable to geographic areas based on location of customer. Neither the Company nor any of its segments depends on any single customer, small group of customers, or government for more than 10% of its sales.

Also, because substantial portions of the Company’s sales are derived from the sales of products manufactured in the United States, long-lived assets located outside the United States are less than 10%.

NOTE 6 – RELATED PARTY TRANSACTIONS

The President and CEO returned 21 million shares of Common stock in March 2010.

In June 2010, the Company acquired a fuel-blending site from a minority shareholder for $130,000 (Canadian dollars). Further, in October 2010, the Company issued an additional 20,000 shares of common stock to this individual as compensation for services provided in conjunction with setting up the property for operations.

NOTE 7 – LONG-TERM DEBT

Long term debt consists of the following at September 30, 2010:

Mortgage note payable to seller, in monthly installments of $1,610 (Canadian dollars), 7.0% interest only, due on July 15, 2015, secured by office building and land. The balance outstanding at September 30, 2010 was $271,845 (US dollars).

The debt matures on July 15, 2015.

NOTE 8 – FOREIGN CURRENCY

The financial position and results of operations of the Company’s foreign subsidiary are measured using the foreign subsidiary’s local currency as the functional currency. Revenues and expenses of such subsidiary have been translated into U.S. dollars at historical exchange rates. Monetary assets and liabilities have been translated at the rates of exchange on the balance-sheet date and nonmonetary assets and liabilities have been translated at historical exchange rates. The resulting translation gain and loss adjustments are recorded directly as a separate component of shareholders’ equity, unless there is a sale or complete liquidation of the underlying foreign investments. Foreign currency translation adjustments resulted in gains of $4,543 and $0 in 2010 and 2009, respectively, have been included in other accumulated comprehensive income.

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Foreign currency transaction losses included in operations totaled $5,120 in 2010 and $0 in 2009.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

There are no known judgments against the Company, nor are there any known actions or suits filed or threatened against it or its officers and directors, in their capacities as such. We are not aware of any claims against the Company or any reputed claims against it at this time, except for claims of two former employees of the Pak-It subsidiary and one former JBI employee. These former employees have alleged that certain monies are due to them pursuant to their employment agreements and the Company has retained legal counsel to handle the claims. The amounts of the claims are immaterial to these financial statements.

The Company signed an Area Development Agreement in February 2010 with AS PTO, LLC. This agreement is contingent upon the issuance of an air permit for the Company’s P2O processor in New York. Failure to obtain the air permit makes the agreement null and void.

The Company has employment agreements with its officers, key employees, and consultants that provide for minimum compensation, the issuance of common stock, the issuance of stock options and severance payments due upon termination. Under the terms of these agreements the Company has committed to issue approximately 270,000 shares of common stock through August 2011, and potentially 275,000 shares contingent on the achievement of certain milestones. Further under the terms of an employment agreement the Company has issued options to purchase 250,000 shares of common stock at an exercise price of $4.89 per share. These options vest immediately upon the achievement of certain milestones. None of the specified milestones have been met, and as such none of the contingent shares have been issued and no compensation has been recorded related to the options.

NOTE 10 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events occurring after the balance sheet date and has identified the following:

The Company received notice dated October 15, 2010 that the Ontario Ministry of Environment registered a “certificate of Approval for Air, Section 9, EPA” in the Company’s name. A “Certificate of Approval for Air” in Ontario is equivalent to a NYDEC Air Permit in the United States. The Company also received a Certificate of Approval for Industrial Sewage Works, Section 53, from the Ministry of the Environment. These approvals are for use at the Company’s fuel blending site. The Ministry of Environment allowed the transfer of existing approvals (permits) of the blending site to the Company.

In October, 2010, CEO John Bordynuik canceled 200,000 of his shares, a private placement stock certificate was adjusted by 5,000 shares to the correct amount, and the Company issued 410,000 shares as compensation for services and to employees thereby raising the total outstanding shares by 215,000.

On November 10th, 2010, JBI Inc.’s simple air permit application was officially submitted to the DEC after significant consultation and meetings between the parties. JBI Inc.’s environmental consultant has significant experience with permitting and in consulting with the DEC prior to submitting our permit application, we mutually agreed upon language and data so that many of the questions that would typically arise during a permit review process were already eliminated. These lengthy consultations and discussions with the DEC about the permit language and data greatly reduce the amount of time required for the DEC to review a submitted application.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Management began executing its business plan in 2009 by acquiring three revenue generating sources, and concentrating R&D resources on scaling P2O for an anticipated launch in 2010. Detailed summaries of each acquisition and a summary of the company’s P2O technology and process are described in detail below.

Through specific recruiting efforts, management believes that it has assembled, and will continue to assemble, a competent team of professionals with the capabilities and dedication to develop JBI Inc.’s organic growth, while simultaneously contributing to the development of the Company’s subsidiaries. The Company’s business philosophy is exemplified through its own proprietary developments, as well as through its acquisitions, which have a demonstrated propensity towards being eco-friendly.

By offering ‘green’ products and utilizing our proprietary technologies, JBI Inc. is oriented to provide solutions for what the Company sees as both environmental problems and business opportunities. With a product mix ranging from Pak-It, with its environmentally friendly value-added cleaning products, where we save fuel by not shipping excess water, to Plastic2Oil, where we create fuel from what is currently a costly plastics disposal problem, the Company believes it is well positioned for growth.

Significant Developments and Strategic Actions

On July 30, 2010 Pak-It launched a new retail product line called DropShot. DropShot’s initial advertising campaign was managed by Western Creative and included a 60-second and 120-second commercial, as well as an online store, www.buydropshot.com. The launch of DropShot commercials was seen by the Company as a way to gain a better understanding of this market’s dynamics. With the airtime we purchased, the commercials provided limited success, and the Company expects to pursue a more in depth retail approach when it makes more financial sense.

DropShot’s unique selling proposition lies with its packaging process, which is positioned to capitalize on the ‘green’ movement that many businesses and consumers have become focused on. Although the retail-cleaning sector is highly competitive with low barriers to entry, by exploiting our technological advantage, and through correct product positioning, the Company believes there is an opportunity to derive considerable value from what many would consider a saturated market. A successful marketing approach will involve significant up-front financial investment to make sure that DropShot and Pak-It products produce the revenue we believe they are capable of.

When purchasing PakIt, we saw that there was a considerable amount business value that was being lost to inefficient internal controls and operating procedures. In addition, the Pak-It accounting system runs from a DOS operating system that turns tracking orders and analyzing data into a complex process. We have invested in a new accounting system for this subsidiary, which is currently being implemented. With this new accounting system, purchasing, production orders, inventory, sales, and shipping/receiving will be integrated into a network with the capacity to accommodate larger sales volumes, increased inventory turnover, and a shortened cash conversion cycle.

Being a start-up with subsidiaries, resource allocation is of utmost importance for the Company’s business development and our shareholder value. Keeping this in mind, management is currently committed to allocating the majority of financial and human capital to the commercialization of our Plastic2Oil business.

On December 9, 2009 a New York state certified lab, IsleChem, was engaged to verify the Company’s Plastic2Oil process. During 40 test runs, IsleChem was able to isolate the conditions that allowed the process to run optimally and they verified that our Plastic2Oil process is scalable and repeatable.

Following IsleChem’s report, the Company assembled a 20T Plastic2Oil processor in at a facility in Niagara Falls, NY. In addition to the P2O machine, the Company purchased a shredder and granulator to preprocess any bulk plastic that the Company may encounter. The P2O process produces a minor by-product of off-gas, which is much like natural gas. After testing at high processing rates, it was found that all of the off-gas could not be burned in the processor’s furnace. Flaring excess off-gas is common in the oil and gas industry, but this practice is not environmentally friendly, is a waste of valuable gas, and would require a separate permit. To avoid flaring the excess gas, the Company purchased a gas compression system in June 2010vthat buffers and regulates the off-gas. The gas is then stored in mobile tanks and can be resold or used to cold start the P2O furnace.

There have been many other additions to the P2O machine and facility since the last quarterly filing, all of which have been designed to increase efficiencies and improve operations. A second condenser was added to the P2O system so that there is one condenser to condense the heavy fuel (diesel) and another to condense the light fractions (gasoline). Additional improvements include an expansion of the furnace, installation of a small cooling tower and the purchase of a small diesel generator for times when our machinery is disconnected from the electrical grid.

We have made investments in securing the premises of our P2O site. We installed a multi-camera security system, a video archival security system, a perimeter fence, and we built a small guardhouse to control access to the facility. Off-duty East Buffalo law enforcement have contracted with JBI Inc. to protect and secure the property around the clock.

To assist in control, data logging, operations, and management, a complete P2O automation system that includes 63 sensors, was developed by our CEO. In June 2010, it was discovered that oxygen sensors supplied by a major US sensor manufacturer had failed after being exposed to the process over time. A number of oxygen sensors were tested until suitable replacements were found. As of the date of this filing, all sensors on the P2O processor continue to function properly. This delayed the testing of our emissions, and consequently our application to the New York Department of Environmental Conservation (DEC) simple air permit. During July and August 2010, the machine was operated at a steady state in order to gather data for the emissions test on our stack.

The Company scheduled a third party engineering firm, Conestoga Rovers & Associates (CRA), to conduct our stack test. It was completed on August 17, 2010 and witnessed by associated members of the DEC. IsleChem assisted the Company during this period by providing engineering support in gathering the data required for the application of our DEC simple air permit.

On September 17, 2010, the Company received the stack test results from CRA. The Company had expected to receive the CRA report within 7-10 days of the testing, however, an additionall three weeks passed before it was received. The results indicate that the processor is emitting 14.87% oxygen to the stack, while only emitting 3.16 ppm (parts per million) of carbon monoxide, 0.81 lb/hr (86.4 ppm) of NOx, SO2 and THC levels that were below 1 ppm, and a particulate level below 0.02 lb/hr. In other words, the process puts a high percentage of oxygen back into the air while emitting very little, if any, toxic substances during the conversion of waste plastic into usable hydrocarbon fuels. The stack test confirmed that the P2O processor emissions are far below maximum emissions allowed under a DEC simple air permit and consequently confirmed that the only air permit we require for the process is a simple air permit.

The Company expected to be operating P2O in the third quarter of 2010; however the delay in receiving CRA’s stack test report set back our application to the DEC. Pending the review and finalization of our air permit by the DEC, the Company expects to begin commercially operating our Niagara Falls, NY processor in the fourth quarter Much of the development of our Plastic2Oil business is contingent on having our P2O machine operating commercially.

In conjunction with development of the P2O processor, the Company has continued the development of its fuel-blending site located in Allanburg, Ontario, Canada. This site was purchased in August 2010 for $130,000. Significant upgrades were undertaken by JBI to ensure the site’s operational integrity. Some improvements include seals on the tanks, new lines, valves, loading and unloading racks, maintenance on all pumps, replacing of the check valves and the replacement and calibration of the anti-corrosion systems. The lines and tanks were pressure tested and the tank wall thickness and pipelines were certified. All of the tanks were cleaned out and the levels replaced. The entire site was repainted to conform to the latest fuel blending site standards and safety standards. Maintenance was performed on the butane injection systems and lab equipment was purchased for testing furnace oil, diesel and gasoline. Also, the heating and cooling systems on the site were replaced, gate and security installments were made, and additional maintenance was performed.

The Company purchased a used Genie Lift to be used for the cleaning and maintenance of the tanks, the electrical wiring on site and for light maintenance. General property maintenance included the required removal of vegetation from the yard, the fuel rack area and building sites, as well as the leveling of a high traffic area using eight loads of stone. To improve drainage, a new 18 inch culvert was installed. In facilitating maintenance and upgrades, the Company engaged certified contractors to pump fuel through the site and also engaged an engineering firm to assist in submitting a new site plan to the city to address the aforementioned changes. Additionally, three Company employees completed an independent training course and became certified as site operators. The Company spent approximately $75,000 to perform developments at the blending site.

As a young and growing business with different subsidiaries, it is our duty to impose prudent management amongst our businesses in an effort to allocate our resources effectively and efficiently.

When JBI Inc. acquired certain assets from John Bordynuik Inc. the Company began to operate what was once John Bordynuik Inc’s. data recovery business. This acquisition included tape drives, servers, and a mobile data recovery facility that can be deployed on-site to recover information for customers with highly sensitive data. The Company has a large backlog of tapes to be migrated has been sought by other international entities that are interested in having data recovered.

The tape business is not as financially intensive as Pak-It or P2O, but equally or even more intensive with regards to the allocation of time and human capital, specifically from John Bordynuik, our CEO. John is the only person authorized to analyze and mine the data from this business, and with consideration of our other growing businesses, he is currently unable to dedicate significant amounts of time to this endeavor. We are not pursuing new business right now due to the time constraints related to John Bordynuik’s position as CEO, however we do have a backlog of tapes to be read. JBI Inc. is in still in contact with all of our current tape customers in order to maintain our working relationships. Our customers have been impressed with JBI Inc’s. tape reading abilities and understand our business’ position at this time.

JBI Inc’s Javaco subsidiary had accounts receivable of over $2 Million in June of 2010. The Company uncovered inefficiencies in Javaco’s operations and consolidated some of the workforce at this subsidiary in order to improve performance and working capital turnover. Javaco is now being focused towards higher profit margin sales, and the Company is identifying these customers and tailoring an integrated sales approach that we expect will improve this subsidiary’s earnings.

Results of Operations

For the quarter year ended September 30, 2010, we generated $3,287,059 in revenues, and incurred a net loss of $1,764,818 compared to revenue of $674,843 and net loss of $975,981 for the quarter ended September 30, 2009.

Year-to-date through September 30, 2010, the Company’s revenues total $10,652,232 with a net loss totaling $7,132,767. For the nine months ended September 30, 2009, the Company’s revenues totaled $722,443 with a net loss totaling $960,733.

Results for the quarter ended September 30,2009 include only partial quarterly numbers due to the acquisitions completed during that quarter.

Revenue Sources

We derive revenues from the sale of bulk cleaning chemicals and patented cleaning solutions in water soluble sachets through our Pak-It subsidiary, which comprised $1,794,934 of total revenues during the quarter ended September 30, 2010. The acquisition of Pak-It was completed on September 30, 2009 and therefore no revenue was recorded for the quarter ended September 30, 2009.

Additionally, we derive revenues from Javaco through the sales and distribution of electronic components. These sales comprised $1,482,646 of total revenues during the quarter ended September 30, 2010. From the date of acquisition through September 30, 2009, Javaco recognized $550,676 in revenue.

As addressed earlier in this item, we have not produced revenue this quarter through our data recovery subsidiary. John Bordynuik’s dedication to building JBI Inc. as a whole has limited the amount of time available for him to work on the data recovery business. As such, there have been no revenues produced this quarter from this business. The Company has a backlog of tapes, and we have maintained contact with our data recovery customers in order to keep an ongoing working relationship.

We expect that the commercial launch of Plastic2Oil will result in sales of the products produced by our P2O machine.

Operating Expenses

The Company has incurred many non-recurring expenses in preparation for the commercialization of its Plastic2Oil technology, the operation of its fuel-blending site, and the restructuring of Pak-It. The Company’s operating and other expenses for 2010 have exceeded gross margin by $7,132,767, resulting in a net loss. Many of the expenses incurred in 2010 have been non-cash and/or non-recurring.

A breakdown of operating expenses for the three months ended September 30, 2010 is as follows:

Salaries and benefits		$	761,000
Rent and office-related expenses	444,000
Travel and Entertainment	76,000
Marketing	132,000
Other	29,000
Selling, general and administrative expenses			681,000
Stock compensation expense			302,000
Contract labor and outside services			263,000
Legal	162,000
Accounting	34,000
Other	10,000
Professional fees			206,000
Depreciation			109,000
Other			85,000
Total		$	2,407,000

The Company has been working actively to reduce operating expenses. The rent at the Company’s original Niagara Falls office was scheduled to increase substantially, to $25,000 /month. The Company purchased an office building near our fuel-blending site for $370,000, with $100,000 down payment. Our mortgage is approximately $1,610 per month. The ceilings in the new building are 24 feet high - useful for P2O research and development - and the new site has more office floor space to better accommodate our employees. We have made several additional improvements including upgrades to the electrical and networking systems, installation of a security system and build-out of the restrooms, kitchen, and boardroom.

In addition to JBI Inc’s relocation, Javaco also re-located to Columbus, Ohio. This was a cost saving initiative, and Javaco’s annualized rent expense has dropped from $56,000 to $22,000.

Year-to-date, stock compensation has been issued and expensed totaling $3,314,609, with $301,589 occurring in the third quarter. This non-cash expense will continue in future quarters in order to secure performance incentives for talented employees identified by the Company. The compensation amount will vary based on number of shares issued and the stock price on the date of issuance.

The Company has incurred many non-recurring expenses, which include, in no order, the commercialization of Plastic2Oil, legal fees, regulatory compliance fees, accounting fees, and in some instances, selling general and administrative expenses.

Stock-Based Compensation

The Company periodically issues shares of common stock for services rendered or for financing costs. Such shares are valued based on the quoted market price on the transaction date.

The Company has been planning to adopt a formal plan which addresses all forms of share-based payment awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. No such plan had been adopted as of November 17, 2010; however, the Company expects to follow through with this compensation plan in the fourth quarter of 2010. As salaries and benefits were a significant portion of operating expenses, this will effectively preserve the Company’s cash and increase performance incentives until a time when it is more prudent for our business to move salaries back to cash.

Liquidity & Capital Resources

As of September 30, 2010, we had $276,892 cash on hand and $130,121 in an attorney trust account. The Company is actively considering several options to implement a cash plan to help manage future expenditures.

During the third quarter of 2010 the Company purchased property and equipment of $416,142 principally relating to development of the P2O processor and upgrades at the fuel-blending site, bringing the total investment in property and equipment to $2,154,978 year-to-date 2010. Some specific investments include approximately $130,000 to purchase the fuel-blending site, and $75,000 for site upgrades. There was approximately $118,000 for parts and equipment relating to P2O, including the off-gas compression system, a shredder and a granulator. During the quarter the Company paid a $100,000 down payment towards the purchase of a new corporate office building located in Thorold, Ontario. The purchase price of the building was $369,769 at an interest rate of 7%. The vendor took back the mortgage on the building, which is denominated in Canadian dollars and will fluctuate based on the exchange rate in effect. The Company expects to continue to make significant investments in property and equipment in the future.

While the Company has experienced a cumulative operating loss, a significant portion of the expenses incurred this year have related to non-cash and non-recurring items. The Company does not currently have sufficient cash for the next 12 months, however it is expected that the Company’s current cash balance will sustain operations until the DEC issues an air permit for our Niagara Falls, NY P2O machine. Upon receipt of this air permit, the Company expects to immediately commence P2O operations in order to generate revenue and earnings from the P2O machine.

In speaking with various investment funds and high net worth individuals, the Company expects that once an air permit is obtained, raising significant amounts of capital for the purpose of building P2O sites will be a relatively straightforward process, however there can be no guarantee. In the event that cash is needed in the interim, JBI Inc. is positioned favorably for small debt and equity issuances.

Critical Accounting Policies, Estimates and Assumptions

The Company believes the following discussion addresses its most critical accounting policies, which are those that are most important to the portrayal of the financial condition and results of operations and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Accounting policies, in addition to the critical accounting policies referenced below, are presented in Note 2 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, “Summary of Accounting Policies.”

Estimates

The preparation of financial statements in conformity with U. S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. The most significant estimates relate to Goodwill, the value of assets and liabilities acquired, valuation of inventory, and the allowance for uncollectible accounts receivable. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant.

Inventories

Inventories, which consist primarily of electrical components and chemicals, are stated at the lower of cost or market. The Company uses the first-in, first-out (FIFO) method of determining cost.

Property and Equipment

Property 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	5-7 years
	Vehicles	5 years
	Furniture and fixtures	7 years
	Office and industrial buildings	25 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.

Impairments

Goodwill

Goodwill resulted primarily from business acquisitions. In accordance with accounting rules, goodwill is not amortized, but is subject to an annual impairment test, which the Company performs in the 4th quarter. The Company evaluates the carrying value of goodwill during the fourth quarter of each year, and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Such circumstances could include, but are not limited to (1) a significant adverse change in legal factors or in business climate, (2) unanticipated competition, or (3) an adverse action or assessment by a regulator. When evaluating whether goodwill is impaired, the Company compares the fair value of the reporting unit to which the goodwill is assigned to the reporting unit’s carrying amount, including goodwill. The fair value of the reporting unit is estimated using a combination of the income, or discounted cash flows, and the market approach, which utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, then the amount of the impairment loss must be measured. The impairment loss would be calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of a reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the other assets and liabilities of that unit based on their fair values. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied fair value of goodwill. An impairment loss would be recognized when the carrying amount of goodwill exceeds its implied fair value. The Company’s evaluation of goodwill completed during the year resulted in no impairment losses.

Revenue Recognition

Off-Balance Sheet Arrangements

None

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for a Smaller Reporting Company.

Item 4. Controls and Procedures

Management’s Report on Internal Control over Financial Reporting

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 (Exchange Act), for the period ended September 30, 2010. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Management’s Discussion of Material Weakness

Management has identified the following groups of control deficiencies, each of which, in the aggregate, represents a material weakness in the Company’s internal control over financial reporting as of September 30, 2010:

	o	Material journal entries identified and recorded as a result of audit procedures
	o o	Restatement of previously issued financial statements Overall ineffective oversight of the financial reporting process including: · Omitted disclosures for related party transactions, loss contingencies and accounting policies. · Controls over accounting for acquisitions. · Timing and proper recording of equity transactions. · Documentation of material transactions related to acquisitions.

Changes in Internal Controls Over Financial Reporting

The Company has continued to take remediation steps detailed below to enhance its internal control over financial reporting and reduce control deficiencies. With regards to the improvement of our internal controls over financial reporting, we believe the following steps are reducing our deficiencies, but have not completely eliminated them. We will continue to work on the elimination of control weaknesses and deficiencies noted.

Management of the Company takes very seriously the strength and reliability of the internal control environment for the Company. During the period ended September 30, 2010, the Company has implemented new internal policies and intends to undertake additional steps necessary to improve the control environment that include:

	o	The Company has implemented an internal disclosure policy to govern the disclosure of material, non-public information in a manner designed to provide full and fair disclosure of information about the Company. This disclosure policy is intended to ensure that management and employees of the Company comply with applicable laws including the U.S, Securities Exchange Commission (“SEC”) Fair Disclosure Rules (Regulation FD) governing disclosure of material, non-public information to the public.
	o o o o	Strengthening the effectiveness of corporate governance by hiring additional personnel who will oversee compliance issues and proceedings Establishing an audit committee of the Board. Engaging a non-independent PCAOB registered accounting firm to provide accounting advice to Management. Assigning additional members of the Management team to assist in preparing and reviewing the ongoing financial reporting process.

Management acknowledges its responsibility for internal controls over financial reporting and seeks to continually improve these controls. In order to achieve compliance with Section 404 of the Sarbanes Oxley Act, we are performing system and process documentation and evaluation needed to comply with Section 404, which is both costly and challenging. We believe our process for documenting, evaluating and monitoring our internal control over financial reporting is consistent with the objectives of Section 404 of the Act.

Part II OTHER INFORMATION

Item 1. Legal Proceedings

There are no known judgments against the Company, nor are there any known actions or suits filed or threatened against it or its officers and directors, in their capacities as such. We are not aware of any claims against the Company or any reputed claims against it at this time except for claims of two former employees of the Pak-It subsidiary and one former JBI employee. These former employees have alleged that certain monies are due them pursuant to their employment agreements and the Company has retained legal counsel to handle the claims. The amounts of the claims are immaterial to the financial statements of the Company.

Item 1A. Risk Factors

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our annual report on Form 10-K/A for the year ended December 31, 2009, filed with the SEC on July 9, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

None.

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits

2.1		Securities Purchase Agreement between 310 Holdings, Inc. and Domark International, Inc. (Incorporated by reference to Form 8-K filed on August 28, 2009).
3.1		Amended Articles of Incorporation (Incorporated by reference to Form 8-K filed on October 6, 2010)
3.2		Bylaws (Incorporated by reference to the Form. SB2 filed with the Securities and Exchange Commission on December 11, 2006.)
10.1		Asset Purchase Agreement *
10.2		Unit Purchase Agreement by and among 310 Holdings, Inc., Pak-It, LLC and the Pak-It, LLC Unitholders**
10.3		Loan Agreement**
10.4		Pledge Escrow Agreement**
10.5		Security Agreement Inventory**
10.6		Security Agreement Equipment**
10.7		Security Agreement Accounts, General Intangibles, Contract Rights**
10.8		$1,200,000 Note**
10.9		$2,665,000 Liability Note**
10.10		Stock Purchase Agreement (incorporated by reference to Form 8-K filed on July 1, 2009)
21.1		JBI RE ONE Inc., an Ontario, Canada corporation
21.2		Plastic2Oil Land, Inc., a Nevada corporation
21.3		Plastic2Oil Marine, Inc. a Nevada corporation
21.4		PAK-IT, LLC a Florida corporation
21.5		Javaco, Inc., an Ohio corporation
21.6		Plastic2Oil of NY #1, LLC a New York corporation
21.7		JBI RE #1, Inc., a New York corporation
21.8		JBI (Canada), Inc., an Ontario, Canada corporation

31.1		Certification of Chief Executive Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended
32..1		Certification of Chief Executive Officer Pursuant to 18 U. S. C. Section 1350.
32.2		Certification of Chief Financial Officer Pursuant to 18 U. S. C. Section 1350.

* Incorporated by reference to Form 8-K filed on June 26, 2009.

** Incorporated by reference to Form 8-K October 1, 2009.

SIGNATURES

Pursuant to the requirements 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.

JBI, INC.

Date: November 17, 2010	By:	/s/ John Bordynuik
		Name: John Bordynuik
		Title: President, CEO, Director (Principal Executive Officer)

	By:	/s/ Ron Baldwin, Jr.
		Name: Ron Baldwin, Jr.
		Title: Chief Financial Officer (Principal Financial Officer)