Plastic2Oil, Inc. - Quarter Report: 2011 September (Form 10-Q)

f10q0911_jbi.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2011

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)		(I.R.S. Employer Identification No.)

1783 Allanport Road

Thorold Ontario L0S 1K0

(Address of principal executive offices)(Zip Code)

(905) 384-4383

Registrant’s telephone number, including area code

N/A

(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 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 x No o

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Non-accelerated filer o

(Do not check if smaller reporting company)

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 Exchange Act). Yes o No x

As of November 18, 2011 there were 70,773,174 shares of Common Stock, $0.001 par value per share, issued and outstanding.

JBI Inc.

Index

Page

Part I Financial Information
	Item 1	Financial Statements	4
		Interim Condensed Consolidated Balance Sheets – September 30, 2011 (Unaudited) and December 31, 2010	4
		Interim Condensed Consolidated Statements of Operations – Nine and Three Month Periods Ended September 30, 2011 and 2010 (Unaudited)	5
		Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity – Nine Month Period Ended September 30, 2011 (Unaudited)	6
		Interim Condensed Consolidated Statements of Cash Flows Nine Month Periods Ended September 30, 2011 and 2010 (Unaudited)	7
		Notes to Interim Condensed Consolidated Financial Statements (Unaudited)	8
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3	Quantitative and Qualitative Disclosures about Market Risk	31
	Item 4	Controls and Procedures	31

Part II Other Information
	Item 1	Legal Proceedings	32
	Item 1A	Risk Factors	33
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 3	Defaults Upon Senior Securities	34
	Item 4	(Removed and Reserved)	34
	Item 5	Other Information	34
	Item 6	Exhibits	34

Signatures

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Form 10-Q (“Report”) contains “forward looking information” within the meaning of applicable securities laws. Such statements include, but are not limited to, statements with respect to the Company’s beliefs, plans, strategies, objectives, goals and expectations, including expectations about the future financial or operating performance of the 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 information. 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 the 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 the 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 the 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 information 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 labour 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 the Company to control commodity prices; risks associated with the regulatory environment within which the 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 information are discussed in more detail in the section entitled in this Report and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Some of the forward-looking information 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 the Plastic2Oil business. These financial outlooks may not be appropriate for other purposes and readers should not assume they will be achieved.

The Company does not intend to, and the Company disclaims any obligation to, update any forward-looking information (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 registration statement to “JBI” the “Company,” “we,” “our” or “us” means JBI, Inc., a Nevada corporation.

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

JBI, Inc. and Subsidiaries

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2011 (Unaudited)			December 31, 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,407,638		$	724,156
Cash held in attorney trust (Note 2)		67,176			264,467
Restricted cash (Note 2)		-			144,500
Accounts receivable, net of allowance for doubtful accounts of $320,050 (2010 - $391,251) (Note 2)		369,485			828,664
Inventories, net of reserve of $43,125 (2010 - $115,000) (Note 5)		391,186			303,065
Prepaid expenses		100,860			151,637
Assets held for sale (Note 16 )		1,029,227			2,790,292
TOTAL CURRENT ASSETS		4,365,572			5,206,781

PROPERTY, PLANT AND EQUIPMENT, NET (Note 6)		3,452,981			2,239,277
OTHER ASSETS
Intangible assets, net (Note 7)		-			382,651
Deposits		-			2,693
TOTAL OTHER ASSETS		-			385,344
TOTAL ASSETS	$	7,818,490		$	7,831,402
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,388,180		$	1,083,589
Accrued expenses		480,692			822,520
Short-term loans (Notes 8(a) and 13)		315,618			365,601
Notes payable (Note 8(b))		37,500			112,500
Current portion of long-term debt (Note 10)		228,453			-
Income taxes payable		1,249			7,030

TOTAL CURRENT LIABILITIES		2,451,692			2,391,240

LONG-TERM LIABILITIES
Deferred income taxes (Note 9)		-			126,221
Long-term debt (Note 10)		300,787			280,561

TOTAL LIABILITIES		2,752,479			2,798,022
Commitments and Contingencies (Note 11)
SHAREHOLDERS' EQUITY (Note 12)
Common Stock, par $0.001; 150,000,000 authorized 68,418,271 shares at September 30, 2011 and 51,241,926 shares at December 31, 2010		68,418			51,243
Common Stock Subscribed,1,452,580 shares at cost at September 30, 2011 and 2,653,334 shares at cost at December 31, 2010		1,031,932			1,334,167
Preferred stock, par $0.001; 5,000,000 authorized, 1,000,000 shares issued and outstanding at September 30, 2011 and December 31, 2010		1,000			1,000
Additional paid in capital		33,234,206			19,933,211
Accumulated deficit		(29,269,545	)		(16,286,241	)
TOTAL SHAREHOLDERS' EQUITY		5,066,011			5,033,380
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	7,818,490		$	7,831,402

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

JBI, Inc. and Subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine and Three Month Periods Ended September 30,

(Unaudited)

	Nine Months Ended September 30, 2011			Restated as per Note 4 Nine Months Ended September 30, 2010			Three Months Ended September 30, 2011			Restated as per Note 4 Three Months Ended September 30, 2010
SALES
Javaco	$	1,681,928		$	5,536,741		$	651,443		$	1,482,646
P2O		221,653			-			140,552			-
Other		38,225			46,464			-			9,479
TOTALSALES		1,941,806			5,583,205			791,995			1,492,125
COST OF SALES
Javaco		1,366,897			4,848,145			468,847			1,281,407
P2O		50,539			-			23,010			-
Other		-			31,941			-			4,442
TOTAL COST OF SALES		1,417,436			4,880,086			491,857			1,285,849
GROSS PROFIT		524,370			703,119			300,138			206,276
OPERATING EXPENSES
Selling, general and administrative expenses		9,468,254			6,037,064			3,125,686			1,438,659

Depreciation of property, plant and equipment		274,610			222,627			105,007			99,327

Amortization of intangible assets		27,781			83,116			-			28,010
Research and development expenses		896,836			-			390,350			-
Impairment loss (Note 2)		354,870			-			-			-
TOTAL OPERATING EXPENSE		11,022,351			6,342,807			3,621,043			1,565,996
LOSS FROM OPERATIONS		(10,497,981	)		(5,639,688	)		(3,320,905	)		(1,359,720	)
OTHER INCOME (EXPENSE)
Interest expense, net		(32,412	)		-			(20,893	)		-
Other income, net		-			6,201			-			7,816
		(32,412	)		6,201			(20,893	)		7,816
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		(10,530,393	)		(5,645,889	)		(3,341,798	)		(1,367,536	)
INCOME TAXES FROM CONTINUING OPERATIONS (Note 9)
Future income tax (recovery) provision		-			(13,506	)		-			47,397
NET LOSS FROM CONTINUING OPERATIONS		(10,530,393	)		(5,632,383	)		(3,341,798	)		(1,414,933	)
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAX (Note 16)		(2,452,911	)		(1,118,844	)		(377,617	)		(222,590	)
NET LOSS	$	(12,983,304	)	$	(6,751,227	)	$	(3,719,415	)	$	(1,637,523	)
Basic & diluted loss per share for continuing operations	$	(0.18	)	$	(0.10	)	$	(0.05	)	$	(0.03	)

Basic & diluted loss per share for discontinued operation	$	(0.04	)	$	(0.02	)	$	(0.01	)	$	(0.00	)
Weighted average number of common shares outstanding		58,507,805			54,999,807			66,598,399			50,999,144

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

JBI, Inc. and Subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

Nine Month Period Ended September 30, 2011 (Unaudited)

	Common Stock $0.001 Par Value						Common Stock Subscribed						Preferred Stock $0.001 Par Value				Additional paid in			Accumulated			Total Shareholders’
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Deficit			Equity

BALANCE, DECEMBER 31, 2010		51,241,926		$	51,243			2,653,334		$	1,334,167			1,000,000	$	1,000	$	19,933,211		$	(16,286,241	)	$	5,033,380

Common stock issued in connection with private placement, $0.50 per share, closed in the prior year, net of issuance costs of $26,000		2,430,000			2,430			(2,430,000	)		(1,189,000	)		-		-		1,186,570			-			-

Common stock issued for service provided in the prior year, valued at $0.65 per share		223,334			223			(223,334	)		(145,167	)		-		-		144,944			-			-

Common stock issued for severance, $0.82 per share		100,000			100			-			-			-		-		81,900			-			82,000

Common stock issued for services, $0.80 per share		375,000			375			-			-			-		-		299,625			-			300,000

Common stock issued for services, $0.80 per share		240,924			241			-			-			-		-		192,498			-			192,739

Common stock issued in connection with purchase of building		44,964			45			-			-			-		-		26,934			-			26,979

Common stock issued in connection with private placement, $0.70 per share		2,010,484			2,010			-			-			-		-		1,405,328			-			1,407,338

Common stock issued for services, $2.12 per share		184,099			184			-			-			-		-		390,106			-			390,290

Common stock issued for reimbursement of expenses and repayment of short-term advance, $0.70 per share		214,286			214			-			-			-		-		149,786			-			150,000

Common stock issued for services, $3.27 per share		125,000			125			-			-			-		-		408,625			-			408,750

Common stock issued for services, $0.80 per share		205,307			205			-			-			-		-		164,041			-			164,246

Common stock issued for services, $4.15 per share		49,658			49			-			-			-		-		206,032			-			206,081

Common stock issued for services, $0.85 per share		210,000			210			-			-			-		-		178,290			-			178,500

Common stock issued for services, $3.93 per share		266,971			267									-		-		1,048,929			-			1,049,196

Common stock issued in connection with private placement, $0.70 per share		8,157,057			8,157									-		-		5,701,783			-			5,709,940

Common stock cancelled in connection with private placement, $0.70 per share		(30,000	)		(30	)								-		-		(20,970	)		-			(21,000	)

Common stock issued in connection with private placement, $0.70 per share		407,143			407									-		-		284,593			-			285,000

Common stock issued as finders’ fees in connection with private placement		1,228,857			1,229			-			-			-		-		(1,229	)		-			-

Common stock issued for services, $2.91 per share		313,460			314			-			-			-		-		911,855			-			912,169

Common stock issued for services, $2.30 per share		60,000			60			-			-			-		-		137,940			-			138,000

Common stock subscribed in connection with private placement, $0.70 per share		-			-			1,428,571			1,000,000			-		-		-			-			1,000,000

Common stock issued as finders’ fees in connection with private placement		142,857			143			-			-			-		-		(143	)		-			-

Common stock issued for services, $1.89 per share		75,000			75			-			-			-		-		141,675			-			141,750

Common stock issued for services, $1.86 per share		40,000			40			-			-			-		-		74,360			-			74,400

Common stock issued for services, $1.85 per share		82,500			83			-			-			-		-		152,542			-			152,625

Common stock issued for services, $1.80 per share		19,444			19			-			-			-		-		34,981			-			35,000

Common stock approved to be issued for services, $1.33 per share		-			-			24,009			31,932			-		-		-			-			31,932

Net loss		-			-			-			-			-		-		-			(12,983,304	)		(12,983,304	)

BALANCE, SEPTEMBER 30, 2011		68,418,271		$	68,418			1,452,580		$	1,031,932			1,000,000	$	1,000	$	33,234,206		$	(29,269,545	)	$	5,066,011

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

JBI, Inc. and Subsidiaries

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Month Period Ended September 30, 2011 and 2010

	2011			2010 (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES ATTRIBUTABLE TO CONTINUING OPERATIONS:
Net loss from continuing operations	$	(10,530,393	)	$	(5,632,383	)
Items not affecting cash attributable to continuing operations:
Depreciation of property, plant and equipment		274,610			222,627
Amortization of intangible assets		27,781			83,116
Impairment charges		354,870			-
Provision for (recovery of) uncollectible accounts		(67,240	)		32,370
Decrease in inventory allowance		(71,875	)		-
Loss on foreign exchange		(28,967	)		-
Deferred taxes		-			(13,506	)
Stock issued for services		4,541,393			3,314,609
Working capital changes attributable to continuing operations:
Accounts receivable		237,079			(381,038	)
Inventories		(27,039	)		140,681
Prepaid expenses		68,644			(93,201	)
Accounts payable		381,785			(75,394	)
Accrued expenses		(191,461	)		(33,585	)
Income taxes payable		(5,781	)		(6,412	)

NET CASH USED IN OPERATING ACTIVITIES ATTRIBUTABLE TO CONTINUING OPERATIONS		(5,036,594	)		(2,442,116	)

CASH FLOWS FROM INVESTING ACTIVITIES ATTRIBUTABLE TO CONTINUING OPERATIONS
Property, plant and equipment additions		(1,614,973	)		(1,797,237	)
Increase in deposits		2,693			57,090
Decrease in restricted cash		144,500			-
Decrease in cash held in attorney trust		197,291			2,993,474


NET CASH (USED BY) PROVIDED BY INVESTING ACTIVITIES ATTRIBUTABLE TO CONTINUING OPERATIONS		(1,270,489	)		1,253,327

CASH FLOWS FROM FINANCING ACTIVITIES ATTIBUTABLE TO CONTINUING OPERATIONS
Stock issuance proceeds, net		8,381,280			2,909,152
Repayment of long term debt		(7,426	)		-
Contribution from shareholder		-			2,104
Repayments of note payable		(75,000	)		-

NET CASH PROVIDED BY FINANCING ACTIVITIES ATTRIBUTABLE TO CONTINUING OPERATIONS		8,298,854			2,911,256

TOTAL CASH PROVIDED BY CONTINUING OPERATIONS		1,991,771			1,722,467

CASH FLOWS FROM DISCONTINUED OPERATIONS
Net cash used in operating activities attributable to discontinued operations		(308,289	)		(1,382,042	)
Net cash used in investing activities attributable to discontinued operations		-			(94,383	)
Net cash used in financing attributable to discontinued operations		-			-


TOTAL CASH USED BY DISCONTINUED OPERATIONS		(308,289	)		(1,476,425	)

EFFECTS OF CHANGE IN FOREIGN CURRENCY EXCHANGE RATES ON CASH AND CASH EQUIVALENTS BALANCES		-			4,543

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,683,482			250,585

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		724,156			26,307

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,407,638		$	276,892

Supplemental disclosure of cash flow information (Note 15)

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

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Nine months ended September 30, 2011 (unaudited)

NOTE 1 – ORGANIZATION AND GOING CONCERN

JBI, Inc. (the Company) was originally incorporated as 310 Holdings, Inc. (“310”) in the State of Nevada on April 20, 2006. 310 had no significant activity from inception through 2009. In April 2009, John Bordynuik purchased 63% of the issued and outstanding shares of 310, and was subsequently appointed President and CEO. During 2009, the Company changed its name to JBI, Inc. and began operations of its main business, Plastic2Oil. Plastic2Oil is a combination of proprietary technologies and processes developed by JBI which convert waste plastics into fuel. JBI currently operates a 20 MT processor out of its Niagara Falls Facility.

The Company has made two business acquisitions since being purchased by John Bordynuik:

On August 24, 2009, the Company acquired Javaco, Inc. (“Javaco”) a distributor of electronic components, including home theater and audio video products.

On September 30, 2009, the Company acquired Pak-it, LLC (“Pak-it”). Pak-it operates a bulk chemical processing, mixing, and packaging facility. It also has developed and patented a delivery system that packages condensed cleaners in small water-soluble packages. During the second quarter of the current fiscal year, management determined that the operations of Pak-it were no longer aligned with the Company’s future strategic focus on conversion of waste plastics to fuel. Sale criteria for Pak-it were developed and active marketing has been commenced to sell certain assets of Pak-it. Certain assets of Pak-it are classified as held for sale as of period end (Note 16).

The unaudited interim 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 ("US GAAP") 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, 2011. In the opinion of the Company’s management, the accompanying unaudited interim 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, 2011 and the results of operations, cash flows, and changes in stockholders’ equity for the nine and three month periods ended September 30, 2011 and 2010. Results for the nine and three months ended are not necessarily indicative of results that may be expected for the entire year. The unaudited interim 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, 2010 as included in the Company’s Form 10-K as amended and filed with the Commission on July 18, 2011.

These interim condensed consolidated financial statements have been prepared in accordance with accounting principles which contemplate the continuation of the Company as a going concern which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has experienced negative cash flows from operations since inception and has an accumulated deficit of $29,269,545 at September 30, 2011. These factors raise substantial doubt about the Company’s ability to continue to operate in the normal course of business. The Company has funded its activities to date almost exclusively from equity financings.

The Company will continue to require substantial funds to continue development of its core business of Plactic2Oil to achieve permitted commercial productions, and to commence sales and marketing efforts, if full regulatory approvals are obtained. 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 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 the Company be unable to continue in operation.

NOTE 2 – SUMMARY OF ACCOUNTING POLICIES

The Company has disclosed its accounting policies in “NOTE 2 – SUMMARY OF ACCOUNTING POLICIES” in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The following accounting policies provide an update to those included under the same captions in the Company’s Annual Report on Form 10-K as amended and filed with the Commission on July 18, 2011.

Principles of Consolidation

The interim condensed consolidated financial statements include the accounts of JBI, Inc., as well as all wholly owned subsidiaries required to be consolidated under GAAP. All significant intercompany accounts and transactions are eliminated in consolidation.

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 those estimates. Significant estimates include amounts for impairment of intangible assets, share based compensation, inventory obsolescence, accrued liabilities and accounts receivable exposures.

Cash Held in Attorney Trust

The cash held in attorney trust represents subscriptions received from the issuance of shares but not released to the Company as at the respective balance sheet date.

Restricted Cash

At December 31, 2010, pursuant to the terms of an employment agreement between the Company and an officer, the Company was required to have $144,500 held in an attorney trust account for the settlement of any future severance payments. As of September 30, 2011, the officer resigned and the restricted cash was paid out in April 2011.

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 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 as at September 30, 2011 and December 31, 2010 was $320,050 and $391,251, respectively.

Intangible Assets

Intangible assets consist of customer related, marketing related and technology related intangible assets.

Marketing related intangible assets includes trade names, trademarks and internet domain names associated with the acquired businesses and are considered separable. The Company amortizes marketing related intangible assets on a straight-line basis over their estimated useful lives which range from 8 to 9 years.

Acquired technology is initially recorded at fair value based on the present value of the estimated net future income-producing capabilities of the patents acquired. The Company amortizes acquired technology over its estimated useful life of 10 years on a straight-line basis.

Intangible assets are amortized on a straight-line basis over their estimated useful life of 8 to 10 years. Amortization expense for the nine month periods ended, September 30, 2011 and 2010 was $27,781 and $83,116 (see note 7), respectively. Amortization expense for the three month periods ended, September 30, 2011 and 2010 was $Nil and $28,010, respectively.

Intangible assets with a finite life are tested for impairment whenever events or circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. If events or changes in circumstances indicate that the carrying amount of any of these intangible assets may not be recoverable, an impairment charge will be recognized for the amount by which the carrying amount of these assets exceeds their fair value. The Company determined that the significant reduction of revenues from the Javaco business warranted a reduction of the carrying value of the associated intangible assets to $Nil and accordingly an impairment charge of $354,870 was recorded for the nine month period ended September 30, 2011 (2010 - $Nil). Impairment charge of $Nil was recorded for the three month period ended September 30, 2011 (2010 - $Nil).

Advertising costs

The Company expenses advertising costs as incurred. Advertising costs were $18,954 and $56,834 during the nine month periods ended September 30, 2011 and 2010, respectively. Advertising costs were $8,502 and $825 during the three month periods ended September 30, 2011 and 2010, respectively.

Research and Development

The Company is engaged in research and development work. Research and development costs are charged as operating expense of the Company as incurred. For the nine month periods ended September 30, 2011 and 2010, the Company expensed $896,836 and $Nil, respectively, towards research and development costs. For the three month periods ended September 30, 2011 and 2010, the Company expensed $390,350 and $Nil, respectively, towards research and development costs.

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.

Segmented Reporting

The Company operates in three reportable segments in 2011 (four in 2010). Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 280-10 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. The Company's operating segments include plastic to oil conversion (Plastic2oil), distribution of electronic components (Javaco) and Corporate. The Company previously had another reportable segment, a bulk chemical manufacturer (Pak-it), which was classified as discontinued during the period.

Concentrations and Credit Risk

Financial instruments which potentially expose the Company to concentrations of credit risk consist principally of accounts receivable. 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.

Discontinued Operations

A business is classified as a discontinued operation when (i) the operations and cash flows of the business can be clearly distinguished and have been or will be eliminated from our ongoing operations; (ii) the business has either been disposed of or is classified as held for sale; and (iii) the Company will not have any significant continuing involvement in the operations of the business after the disposal transactions. Significant judgments are involved in determining whether a business meets the criteria for discontinued operations reporting and the period in which these criteria are met.

If a business is reported as a discontinued operation, the results of operations through the date of sale, including any gain or loss recognized on the disposition, are presented on a separate line of the income statement. Interest on debt directly attributable to the discontinued operation is allocated to discontinued operations. Gains and losses related to the sale of businesses that do not meet the discontinued operation criteria are reported in continuing operations and separately disclosed if significant.

Assets Held for Sale

An asset or business is classified as held for sale when (i) management commits to a plan to sell and it is actively marketed; (ii) it is available for immediate sale and the sale is expected to be completed within one year; and (iii) it is unlikely significant changes to the plan will be made or that the plan will be withdrawn. In isolated instances, assets held for sale may exceed one year due to events or circumstances beyond the Company’s control. Upon being classified as held for sale, the recoverability of the carrying value must be assessed. Evaluating the recoverability of the assets of a business classified as held for sale follows a defined order in which property and intangible assets subject to amortization are considered only after the recoverability of goodwill and other assets are assessed. After the valuation process is completed, the assets held for sale are reported at the lower of the carrying value or fair value less cost to sell, and the assets are no longer depreciated or amortized. An impairment charge is recognized if the carrying value exceeds the fair value. The assets and related liabilities are aggregated and reported on separate lines of the balance sheet.

Fair Value of Financial Instruments

ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.

The carrying amounts of cash and cash equivalents, cash held in attorney trust, restricted cash, accounts receivable, accounts payable, accrued expenses, note payable, long term debt and short-term loans approximate fair value because of the short-term nature of these items. Per ASC Topic 820 framework each of these, except for those noted below, are considered Level 2 inputs where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. Cash and cash equivalents, cash held in attorney trust, and restricted cash are each considered Level 1 inputs.

Reclassifications

To conform to the basis of presentation adopted in the current period, certain figures previously reported have been reclassified.

NOTE 3 - RECENTLY ISSUED ACCOUNTING STANDARDS AND RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

Changes in Accounting Policies Including Initial Adoption

In October 2009, the FASB issued ASU No. 2009-13, Multiple Deliverable Revenue Arrangements - a consensus of the FASB Emerging Issues Task Force (“ASU 2009-13”) (codified within ASC Topic 605). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010.

In January 2010, the FASB issued an amendment to ASC 820, “Fair Value Measurements and Disclosures”, to require reporting entities to separately disclose the amounts and business rationale for significant transfers in and out of Level 1 and Level 2 fair value measurements and separately present information regarding purchase, sale, issuance, and settlement of Level 3 fair value measures on a gross basis. This standard is effective for interim and annual reporting periods beginning after December 15, 2009 with the exception of disclosures regarding the purchase, sale, issuance, and settlement of Level 3 fair value measures which are effective for fiscal years beginning after December 15, 2010.

In April 2010, the FASB issued ASU No. 2010-17, Revenue Recognition - Milestone Method. The objective of this Update is to provide guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. The amendments in this Update are effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010.

In April 2010, the FASB issued ASU No. 2010-013, Compensation - Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades a consensus of the FASB Emerging Issues Task Force. ASU 2010-13 addresses the classification of an employee share-based award with an exercise price denominated in the currency of a market in which the underlying equity security trades. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.

The adoption of each of these new policies did not have a material effect on the Company’s consolidated financial position, results of operations, cash flows or related disclosures.

Recently Issued Accounting Pronouncements

In August 2010, the FASB issued ASU No. 2010-22, Accounting for Various Topics – Technical Corrections to SEC Paragraphs this update amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics. The Company is assessing the potential effect this guidance will have on its financial statements.

In August 2010, the FASB issued ASU No. 2010-21, Accounting for Technical Amendments to Various SEC Rules and Schedules. This updates various SEC paragraphs pursuant to the issuance of Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. The Company is assessing the potential effect this guidance will have on its financial statements.

In May 2011, the FASB issued ASU No. 2011-4 to clarify the application of some of the existing fair value measurement and disclosure requirements. These changes are effective for interim and annual periods that begin after December 15, 2011. The Company is assessing the potential effect this guidance will have on its financial statements.

In June 2011, the FASB issued an ASU No. 2011-05 relating to the presentation of other comprehensive income (“OCI”). This ASU does not change the items that are reported in OCI, but does remove the option to present the components of OCI within the statement of changes in equity. In addition, this ASU will require OCI presentation on the face of the financial statements. These changes are effective for interim and annual periods that begin after December 15, 2011, and are applied retrospectively to all periods presented. Early adoption is permitted. The Company plans to adopt the ASU beginning January 1, 2012

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited interim condensed consolidated financial statements.

The Company believes the above 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.

NOTE 4 – PRIOR PERIOD RESTATEMENT

In March 2011, the Company obtained finalized independent third party appraisals for the fair values of the assets and liabilities acquired from the acquisitions of Javaco and Pak-it, which occurred in August and September 2009, respectively. After the assessment of these appraisals, the Company concluded that the original purchase price allocations for these acquisitions were required to be restated. Since the finalization of these appraisals did not occur until after the one-year measurement period, and therefore did not meet the technical requirements of accounting for business combinations, ASC 805-10-55-16, the Company concluded that the 2009 consolidated financial statements should be restated to reflect these finalized appraisals.

This restatement was completed and reported in the 2010 consolidated financial statements and included full details as to the nature and extent of the restatements. One aspect of the restatement caused the carrying amount of intangible assets as at December 31, 2009 to be increased from $10,014 to $3,091,587. These intangible assets are subject to amortization and the amortization expense previously reported for the period ended September 30, 2010 was not based upon these restated carrying amounts. The effect of revising the amortization expense in accordance with these restated carrying amounts is summarized as follows:

Consolidated Statement of Operations for the nine month period ended September 30, 2010:

	Previously Reported on 10Q			Increase / (Decrease)			Effect of Discontinued Operations			Restated

Sales	$	10,652,232		$	-		$	5,069,027		$	5,583,205
Cost of sales		9,097,626			-			4,217,540			4,880,086
Gross profit		1,554,606			-			851,487			703,119
Operating expenses		8,741,838			-			2,482,147			6,259,691
Amortization of intangible assets		-			261,609			178,493			83,116
Loss from operations		(7,187,232	)		(261,609	)		(1,809,153	)		(5,639,688	)
Other income		54,465			-			60,666			(6,201	)
Future income tax recovery		-			(643,149	)		(629,643	)		(13,506	)
Net loss	$	(7,132,767	)	$	381,540		$	(1,118,844	)	$	(5,632,383	)

Consolidated Statement of Operations for the three month period ended September 30, 2010:

	Previously Reported on 10Q			Increase / (Decrease)			Effect of Discontinued Operations			Restated
Sales	$	3,287,059		$	-		$	1,794,934		$	1,492,125
Cost of sales		2,656,379			-			1,370,530			1,285,849
Gross profit		630,680			-			424,404			206,276
Operating expenses		2,407,416			-			869,430			1,537,986
Amortization of intangible assets		-			88,161			60,151			28,010
Loss from operations		(1,776,736	)		(88,161	)		(505,177	)		(1,359,720	)
Other income		11,918			-			19,734			(7,816	)
Future income tax provision (recovery)		-			(215,546	)		(262,853	)		47,397
Net loss	$	(1,764,818	)	$	127,385		$	(222,590	)	$	(1,414,933	)

The increase in net loss did not result in a change in the Company’s basic and diluted loss per share reported for the period.

The restatement had no impact on the Company’s net cash flows from operating, investing or financing activities

NOTE 5 – INVENTORIES, NET

Inventories consist of the following:

	September 30, 2011			December 31, 2010

Finished goods	$	434,311		$	418,065
Obsolescence reserve		(43,125	)		(115,000	)

Total inventories	$	391,186		$	303,065

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

September 30, 2011	Cost		Accumulated Amortization			Net Book value

Leasehold improvements	$	56,624	$	(7,972	)	$	48,652
Machinery and office equipment		3,137,167		(612,522	)		2,524,645
Vehicles		7,370		(7,370	)		-
Furniture and fixtures		17,993		(8,716	)		9,277
Land		163,915		-			163,915
Office and industrial buildings		737,736		(31,307	)		706,429

	$	4,120,805	$	(667,887	)	$	3,452,918

December 31, 2010	Cost		Accumulated Amortization			Net Book value

Leasehold improvements	$	533,272	$	(102,804	)	$	430,468
Machinery and office equipment		1,621,502		(316,258	)		1,305,244
Vehicles		7,370		(7,370	)		-
Furniture and fixtures		17,993		(9,005	)		8,988
Land		163,915		-			163,915
Office and industrial buildings		341,357		(10,695	)		330,662

	$	2,685,409	$	(446,132	)	$	2,239,277

Machinery and equipment as at September 30, 2011 includes assets with a cost of $53,257 (2010 - $Nil) that were acquired under a capital lease (Note 10).

Office and industrial buildings as at September 30, 2011 include assets with a cost of $737,736 (2010 - $341,357) that are subject to mortgage obligations (Note 10).

NOTE 7 – INTANGIBLE ASSETS

Intangible assets consist of customer related, marketing related and technology based intangible assets associated with the acquisition of Javaco in August 2009. As at September 30, 2011 the Javaco intangible assets had been determined to be impaired and their carrying value was reduced to $Nil.

			Accumulated						Net Book
September 30, 2011	Cost		Amortization			Impairment			Value

Customer - Related	$	602,000	$	(119,146	)	$	(482,854	)	$	-
Marketing - Related		287,000		(59,034	)		(227,966	)		-
	$	889,000	$	(178,180	)	$	(710,820	)	$	-

			Accumulated						Net Book
December 31, 2010	Cost		Amortization			Impairment			Value

Customer - Related	$	602,000	$	(101,911	)	$	(295,307	)	$	204,782
Marketing - Related		287,000		(48,488	)		(60,643	)		177,869
	$	889,000	$	(150,399	)	$	(355,950	)	$	382,651

NOTE 8 – SHORT-TERM LOANS AND NOTE PAYABLE

(a) Short-term loans
	September 30, 2011		December 31, 2010
On October 15, 2010, the Company entered into an unsecured short-term loan agreement with a shareholder. The loan, in the amount of $200,000 Canadian dollars, bears interest at an annual rate of 6%. The entire principal of the loan, together with all accrued interest is due and payable on October 15, 2011. The loan was used for working capital purposes.	$	190,412	$	199,820
On December 1, 2010, the Company entered into a secured short-term loan agreement with shareholder. The loan, in the amount of $100,000 Canadian dollars, was used for working capital purposes and bears interest at an annual rate of 6%. The entire principal of the loan together with all accrued interest is due and payable on December 1, 2011. The loan is secured against the receivables and assets of Pak-it.		95,206		100,781
In December 2010, a member of the Board of Directors entered into an unsecured short-term loan agreement with the Company. The loan, which was repaid in the current period through the issuance of shares, bears no interest and was due on November 22, 2011. The loan was used for working capital purposes.		-		35,000
In November 2010, a member of the Board of Directors entered into an unsecured short-term loan agreement with the Company. The loan bears no interest and is due on November 22, 2011. The loan was used for working capital purposes.		30,000		30,000
	$	315,618	$	365,601

(b) Note payable
	September 30, 2011		December 31, 2010
Note payable is secured by inventory of Javaco Inc., a subsidiary of the Company, bears interest at an annual rate of 6% and is due on December 31, 2011. As at September 30, 2011, the carrying value of the security was $391,186 and is required to be maintained at a minimum value of $400,000, on average.	$	37,500	$	112,500

NOTE 9 - INCOME TAXES

	September 30			September 30
	2011			2010
Statutory tax rate:
U.S.		34	%		34	%
Foreign		27	%		31	%

Loss before recovery of income taxes:
Continuing operations – U.S.	$	5,325,108		$	4,310,535
Continuing operations – Foreign		5,189,833			1,223,636
		10,514,940			5,534,171
Discontinued operations – U.S.		2,589,953			1,860,205
		13,104,893			7,394,376
Expected income tax recovery		(4,064,676	)		(2,514,088	)

Permanent differences		261,458			1,129,735
Tax rate changes and other adjustments		526,585			269,621
Increase in valuation allowance		3,150,411			471,583

Income tax recovery		(126,221)			(643,149	)
Income tax recovery from discontinued operations		(126,221)			(582,246	)
Income tax recovery from continuing operations		-			(60,903	)

The Company’s income tax recovery is allocated as follows:

Current tax expense	$	-		$	-
Future tax recovery		(126,221)			(643,149	)

	$	(126,221)		$	(643,149	)

The Company’s future income tax assets and liabilities as at September 30, 2011 and December 31, 2010 are as follows:

	September 30, 2011			December 31, 2010
Future Income Tax Assets:
Non-capital losses	$	5,815,972		$	3,187,580
Reserve – Contingency		-			106,250
Property, plant and equipment		107,346			83,347

		5,923,318			3,377,177
Less: Allocated against future income tax liabilities		(111,156	)		(715,426)
Less: Valuation allowance		(5,812,162	)		(2,661,751	)

Total	$	-		$	-

Future Income Tax Liabilities:
Section 481 (a) adjustments	$	(7,613	)	$	(30,451	)
Intangible assets		(103,543	)		(811,196	)
Less: Reduction due to allocation of applicable future income tax assets		111,156			715,426

Total	$	-		$	(126,221	)

NOTE 10 – LONG TERM DEBT

	September 30, 2011		December 31, 2010
Equipment loan bears interest at 3.9% per annum, secured by the equipment and matures on May 10, 2015, repayable in monthly installments of approximately $1,194	$	45,831	$	-
Mortgage in the amount of $280,000 Canadian dollars, bears interest at 7% per annum, secured by the land and building, and matures on June 15, 2015. Principal and interest are due, in their entirety, at maturity.		266,577		280,561
Mortgage, non-interest bearing, secured by the land and building, and matures on October 4, 2011. Principal is due, in its entirety, at maturity.		216,832		-
		529,240		280,561
Less: current portion equipment loan		11,621		-
Less: current portion mortgage payable		216,832		-
Total current portion of long term debt		228,453		-
Total long term debt	$	300,787	$	280,561

The following annual payments of principal are required over the next five years in respect of these debts:

	Annual Payments
To September 30, 2012	$	228,453
To September 30, 2013		12,328
To September 30, 2014		12,818
To September 30, 2015		275,641
To September 30, 2016		-
Total repayments	$	529,240

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Commitments

One of the Company’s subsidiaries entered into a consulting service contract with a shareholder. The minimum future payment is equal to fifty percent of the operating income generated from the operations of two of the most profitable devices and 10% from all the other devices in marine industries.

The Company leases facilities and equipment under leases with terms remaining of up to 20 years. The leases include the Javaco, Pak-it and JBI recycling facilities.

All future payments required under various agreements are summarized below:

To September 30, 2012	$	205,593
To September 30, 2013		132,826
To September 30, 2014		125,052
To September 30, 2015		106,308
To September 30, 2016		97,514
Thereafter		1,550,186
Total	$	2,217,469

The Company entered into a consulting service agreement with a shareholder. The Company is committed to issue the following number of shares in exchange for the consulting service.

On or before November 1, 2011:		75,000 common shares
On or before February 1, 2012:		50,000 common shares

The Board resolution authorizing the share issuance due November 1, 2011 was executed November 21, 2011.

Contingencies

In August 2010, a former employee filed a complaint against the Company’s subsidiary alleging wrongful dismissal and seeking compensatory damages. The Company denied the validity of the contract which was signed by the former employee as employee and as president of the subsidiary. The Company entered into negotiations with the former employee to trade-off some of the benefits of the alleged employment agreement in return for repayment of debts to the Company incurred by the former employee while in the employment of the Company’s subsidiary. At December 31, 2010 the debt in the amount of $346,386 was written off and an estimated settlement of $26,000 was accrued. During the period the Company received $75,000 in cash, recorded as a recovery of bad debts, and $10,973 in inventory returns relative to the debt previously written off.

During the 2010 fiscal year, the former owner of one of the Company’s subsidiaries filed a complaint against the Company’s subsidiary alleging wrongful termination of his employment contract and seeking compensatory damages. The Company paid $48,335 during the second quarter of 2011 as full settlement of this claim. The Company had previously accrued and expensed $48,000 in the consolidated financial statements for fiscal 2010 in respect of this matter.

In September 2010, an investor filed a lawsuit against the Company for failure to timely remove restrictive legends from his shares in the Company. The outcome of this claim is not determinable at the time of issue of these interim condensed consolidated financial statements and the costs, if any, will be charged to income in the period(s) in which they are reasonably determinable. This investor has filed other lawsuits against the company however they were dismissed.

In March 2011, a former employee filed a complaint against the Company and its subsidiaries alleging wrongful dismissal and seeking compensatory damages. The outcome of this claim is not determinable at the time of issue of these interim condensed consolidated financial statements and the costs, if any, will be charged to income in the period(s) in which they are reasonably determinable.

On July 14, 2011, the Securities and Exchange Commission's (“SEC”) Division of Enforcement issued a "Wells Notice" to the Company indicating that the staff intended to recommend that the SEC file a civil lawsuit alleging that the Company violated certain provisions of the federal securities laws. Based on communications with the SEC`s Enforcement staff, the Company believes that the proposed lawsuit relates to the Company's restated financial statements for the third quarter of 2009, which were included in its Form 10-Q filed on November 16, 2009 and its financial statements for the year ended December 31, 2009, which were included in its 2009 Form 10-K filed on March 31, 2010. The restatement concerned the Company's valuation of media credits, accounting for certain acquisitions, and equity issuances. The Company believes that the staff may also recommend naming one or more current and former officers of the Company as defendants in the proposed lawsuit. Subsequent to receipt of the “Wells Notice”, there have been a number of announcements in respect of individual class action law suits against the Company that are pending and that have been lodged. The Company cannot predict the outcome of the dispute with the SEC or any separate class action litigation which may result, including whether a lawsuit will be filed or the terms of any settlement that may be reached. The Company has been given an opportunity to respond to the Wells Notice, and will decide on how to proceed based on consultation with its litigation counsel. The Company does not anticipate that the notice will negatively impact its business operations.

On July 29, 2011, the Company entered into a revenue sharing agreement to convert mill by-product waste into fuel using the Company’s Plastic2Oil technology. Under the agreement, the Company has an exclusive ten-year license with a renewal option to build and operate Plastic2Oil processors at the counterparty`s facilities.

At September 30, 2011, the Company is involved in litigation and claims in addition to the abovementioned legal claims, which arise from time to time in the normal course of business. In the opinion of management, any liability that may arise from such contingencies would not have a significant adverse effect on the interim condensed consolidated financial statements of the Company.

NOTE 12 – SHAREHOLDERS’ EQUITY

Common Stock and Additional Paid in Capital

On March 25, 2011, the Company closed an asset purchase agreement to purchase land and building from an independent party. Under the terms of the aforementioned agreement, the Company was to issue 44,964 shares of common stock, par value $0.001 per share, valued at $26,979 as part of the consideration. During the period, the Company issued the 44,964 shares to the vendor.

In December 2010, the Company consummated a confidential private placement for the issuance and sale of 2,430,000 shares of common stock at a price of $0.50 per share. The Company received proceeds in the amount of $1,189,000, net of share issue costs of $26,000. The 2,430,000 common shares were issued on January 19, 2011.

On January 19, 2011, the Company issued 223,334 shares of common stock as compensation to various parties. The shares were valued at $145,167 and were charged to operations in prior year.

On January 28, 2011, the Company issued 100,000 shares of common stock to a former employee as severance expense of $82,000. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On March 1, 2011, the Company issued 375,000 shares of common stock to two individuals at an expense of $300,000 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On March 12, 2011, the Company issued 240,924 shares of common stock to various parties at an expense of $192,739 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On April 15, 2011, the Company issued 184,099 shares of common stock to various parties at an expense of $390,290 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On May 17, 2011, the Company issued 214,286 shares of common stock valued at $150,000 to an individual for reimbursement for expenses incurred on the Company’s behalf ($50,000) and repayment of temporary cash advances provided to the Company ($100,000). The $50,000 of shares issued have been reported as operating expenses in the interim condensed consolidated statement of operations and $100,000 of shares have been applied against the temporary cash advance provided to the Company.

On May 17, 2011, the Company issued 125,000 shares of common stock valued at $408,750 to an individual for investor relations and other related services to be rendered to the Company. The shares issued have been valued at the closing share price on the respective issue date and was reported as operating expenses in the interim condensed consolidated statement of operations.

In June 2011, the Company consummated a confidential private placement for the issuance and sale of 2,010,484 shares of common stock at a price of $0.70 per share. The Company received gross proceeds in the amount of $1,407,338, net of share issue costs of $Nil. The Company also had subscriptions for an additional 407,143 shares for proceeds of $285,000. The 407,143 common shares were issued September 22, 2011.

On June 12, 2011, the Company issued 210,000 shares of common stock to various parties at an expense of $178,500 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On June 15, 2011, the Company issued 205,307 shares of common stock to various parties at an expense of $164,246 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On June 22, 2011, the Company issued 49,658 shares of common stock to various parties at an expense of $206,081 as a compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On June 23, 2011, the board of directors authorized the issue of 266,971 shares of common stock to certain employees at an expense of $1,049,196 as compensation for services provided. The shares were valued at the closing share price on the respective dates of approval and were reported as operating expenses in the interim condensed consolidated statement of operations. The 266,971 common shares were issued July 5, 2011.

In June 2011, the Company consummated a confidential private placement with certain accredited investors for the issuance and sale of 8,157,057 shares of common stock. The offering was at $0.70 per share and the Company had subscriptions for these shares which amounted to proceeds of $5,709,940. The Company received $5,688,940 of these proceeds. The balance of $21,000 was not received and resulted in 30,000 shares not being issued. The 8,127,057 common shares were issued July 8, 2011.

On July 19, 2011, the Company issued 313,460 shares of common stock to various parties at an expense of $912,169 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On July 28, 2011, the Company issued 1,228,857 shares of common stock to various parties as a finders’ fee related to the confidential private placements consummated in June 2011.

On August 17, 2011, the Company issued 60,000 shares of common stock to an individual at an expense of $138,000 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

In August 2011, the Company consummated a confidential private placement for the issuance and sale of 1,428,571 shares of common stock at a price of $0.70 per share. The Company received gross proceeds in the amount of $1,000,000 and is obligated to issue 142,857 common shares as a finder’s fee related to this placement. The 142,857 common shares were issued August 23, 2011.

On August 25, 2011, the Company issued 75,000 shares of common stock to various parties at an expense of $141,750 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the statement of operations.

On September 13, 2011, the Company issued 40,000 shares of common stock to various parties at an expense of $74,400 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

On September 22, 2011, the Company issued 82,500 shares of common stock to various parties at an expense of $152,625 as compensation for services provided. The shares issued have been valued at the closing share price on the respective issue date and were reported as operating expenses in the interim condensed consolidated statement of operations.

In August 2011 the board of directors authorized the issue of shares of common stock to certain directors as payment of directors’ fees. The shares are to be issued in two lots with each lot having an aggregate value of $35,000. The number of shares to be issued in the first lot was determined based upon the closing market price on the approval date of August 1, 2011 and resulted in the issuance of 19,444 common shares on September 30, 2011. The number of shares to be issued in the second lot will be determined based upon the closing market price on December 31, 2011. The expense of $35,000 related to the first payment was reported as operating expenses in the interim condensed consolidated statement of operations. No provision has been made relative to the second lot as they represent payment for future services.

On September 30, 2011, the Company approved the issuance of 24,009 shares of common stock to an individual at an expense of $31,932 as compensation for services provided. The shares issued have been valued at the closing share price on the respective approval date and were reported as operating expenses in the interim condensed consolidated of operations.

Subsequent to September 30, 2011 the Company issued the 1,428,571shares due in accordance with the private placement transaction from August, issued the 24,009 shares approved for issuance September 30, 2011, and issued an additional 902,323 shares for services at an aggregate value of $1,232,450. No provision has been made in these interim condensed consolidated financial statements for the 902,323 shares as they relate to services rendered after the end of the period.

NOTE 13 – RELATED PARTY TRANSACTIONS AND BALANCES

On December 14, 2010 the Company entered into a short-term loan agreement with an existing shareholder in the amount of $35,000 (Note 8(a)). This loan was settled with the issuance of common stock during the period (Note 12).

NOTE 14 – SEGMENTED REPORTING

The Company has three principal operating segments, Plastic2Oil, Javaco and Corporate. These operating segments were determined based on the nature of the products and services offered. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker in deciding how to allocate resources and in assessing performance. The Company’s chief executive officer has been identified as the chief operating decision maker, and directs the allocation of resources to operating segments based on the profitability and cash flows of each respective segment.

The Company evaluates performance based on several factors, of which the primary financial measure is net income. The accounting policies of the business segments are the same as those described in “Note 2: Summary of Accounting Policies.” 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:

Nine Months Ended September 30, 2011
	Corporate			Plastic2Oil					Javaco			Total
Sales	$	38,225		$	221,653				$	1,681,928		$	1,941,806
Net Loss	$	(4,807,655	)	$	(5,295,058	)	(1	)	$	(427,680	)	$	(10,530,393	)
Total Assets	$	4,127,771		$	3,076,634		(2	)	$	614,085		$	7,818,490
Accounts Receivable	$	11,295		$	202,042				$	156,148		$	369,485
Inventories	$	-		$	-				$	391,186		$	391,186

Three Months Ended September 30, 2011
	Corporate			Plastic2Oil			Javaco		Total
Sales	$	-		$	140,552		$	651,443		$	791,995
Net Income (Loss)	$	(1,914,473	)	$	(1,461,498	)	$	34,174		$	(3,341,798	)

Nine Months Ended September 30, 2010
	Corporate			Plastic2Oil			Javaco			Total
Sales	$	46,464		$	-		$	5,536,741			$	5,583,205
Net Income / (Loss)	$	(4,396,099	)	$	(1,223,636	)	$	(12,648	)		$	(5,632,383	)
Total Assets	$	5,909,836		$	2,033,070		$	4,659,742			$	12,602,648
Accounts Receivable	$	-		$	483,615		$	1,486,930			$$$	1,970,545
Inventories	$	-		$	-		$	500,265			$	500,265

Three Months Ended September 30, 2010
	Corporate			Plastic2Oil			Javaco			Total
Sales	$	9,479		$	-		$	1,482,646		$	1,492,125
Net Loss	$	(439,486	)	$	(894,717	)	$	(80,730	)	$	(1,414,933	)

(1)	This includes R&D Expense items that have gone into the development of Plastic2Oil.

(2)	These assets include the Company headquarters and various machinery and equipment used at the aforementioned sites and at the Niagara Falls Facility.

Neither the Company nor any of its segments depends on any single customer, small group of customers, or government for more than 10% of sales.

NOTE 15 – SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES

	September 30, 2011		September 30, 2010
Common shares issued in connection with acquisition of property, plant and equipment	$	26,979	$	-
Short-term loan settled through share issuance	$	35,000	$	-
Inventory recovery reducing allowance for doubtful accounts	$	10,793
Mortgage and lease obligations arising on acquisition of property, plant and equipment	$	270,089	$	-

NOTE 16 – DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

During the second quarter of the current fiscal year, management determined that the operations of Pak-it were no longer aligned with the Company’s future strategic focus on conversion of waste plastics to fuel. Sale criteria for Pak-it were developed and active marketing has been commenced to sell certain assets of Pak-it. The table below summarizes the assets of Pak-it that are held for sale at September 30, 2011 as compared to the balances at December 31, 2010. The values of these assets reflect previous impairment losses recognized to reduce their respective carrying amounts to fair value.

	September 30,		December 31,
	2011		2010

Inventory, net of reserve	$	481,543	$	530,533
Property, plant and equipment, net		243,145		266,554
Intangible assets, net		304,539		1,993,205

Net assets held for sale	$	1,029,227	$	2,790,292

The results of operations from these assets have been reclassified and presented as results of discontinued operations for all periods presented in these interim consolidated financial statements. Our condensed statements of operations from discontinued operations related to Pak-it for the three and nine months ended September 30, 2011 and 2010 were as follows:

Condensed Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010

Revenues	$	308,311		$	1,794,934		$	2,935,342		$	5,069,027
Cost of sales		485,717			1,370,530			2,561,345			4,217,540
Gross profit		(177,406	)		424,404			373,997			851,487
Operating expenses		240,618			929,582			1,132,868			2,660,641
Impairment of intangibles		-			-			1,900,000			-
Other income		40,407			19,735			77,407			60,667
Loss before income taxes		(377,617)			(485,443)			(2,581,464	)		(1,748,487	)
Future income tax recovery		-			(262,853)			(128,553	)		(629,643)

Loss from discontinued operations, net of taxes	$	(377,617	)	$	(222,590	)	$	(2,452,911	)	$	(1,118,844	)

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 should be read in conjunction with the unaudited consolidated financial statements of the Company as at September 30, 2011, together with the accompanying notes. This discussion contains forward-looking statements that involve certain risks and uncertainties, and that reflect estimates and assumptions. See the section entitled “Cautionary Statement Regarding Forward-Looking Information” for more information on forward-looking statements. Our actual results may differ materially from those indicated in forward-looking statements. Factors that could cause our actual results to differ materially from our forward-looking statements are described in “Risk Factors” and elsewhere in this report.

Business Overview

JBI is a company with a diverse array of products and services, including three key business operations: (1) Plastic2Oil (“P2O”), an alternative oil and gas company that converts waste plastic into fuel; primarily diesel, #2 fuel oil, and #6 fuel oil; (2) Javaco, a retail/wholesale telecommunications distributor; and (3) Corporate, a data recovery and migration business.

Prior to 2009, the Company had no significant activity. In 2009, however, management began executing its business plan by acquiring three revenue-generating sources, the Data Business, Javaco and Pak-it, a manufacturer of cleaning chemicals whose operations were subsequently discontinued during the second quarter of 2011. In addition to generating revenues, Javaco and Pak-it were each assessed at the time as having strategic benefits relative to the commercialization of the P2O business. In particular, Javaco was acquired for its potential as an alternate conduit for placement of P2O machines in Mexico and South America in the event North American operating permits for P2O processors could not be obtained in a timely manner. Pak-it was acquired for its cleaning chemical business and ability to provide the Company with the proprietary catalyst necessary for P2O processors.

The Company remains focused on the development of its P2O business and will be concentrating the Company’s resources on the commercial scaling and operations of its P2O business during the remainder of 2011 and going forward.

Significant Developments and Strategic Actions

Plastic2Oil Business

JBI has developed a commercial processor to convert waste plastics into diesel, #2 fuel oil and #6 fuel oil.

Validation

The following labs have validated our technology: IsleChem, LLC (process), Conestoga-Rovers and Associates (Stack Test), Intertek, Petrolabs, Alberta Resource Council, and Southwest Research Institute (fuel testing). Islechem determined our waste plastic solution to be repeatable and scalable, converting 85-90% of the hydrocarbons into low sulphur fuel, with no evidence of air toxins or toxic residue.

In addition, the Company’s fuel has been tested by customer labs and their 3rd party tests including Coco Paving, Oxy Vinyl, and numerous others. In addition, a rigorous permit process with the New York State Department of Environmental Conservation (NYSDEC) was conducted and operating permits were issued. Chrysler conducted an extensive audit and continues to ship free plastic to our factory. After months of comprehensive due diligence, RockTenn (NYSE:RKT) executed a 10-year exclusive agreement for conversion of their waste plastic into fuel which has been measured at thousands of tons per day. In addition to many other local plastic feedstock sources, General Motors also continues to provide free waste plastic to our P2O facility.

Facilities

In March 2011 the Company completed the acquisition of the facility in Niagara Falls, New York where its 20 metric tonne (“MT”) P2O processor is located. On October 4, 2011, the Company paid out the outstanding mortgage for the facility. In addition, on October 27, 2011 the Company was permitted by the city of Niagara Falls to erect a 7200 square foot building on the Niagara Falls, NY property. The foundation has been poured and a prefabricated building has been purchased. The Company anticipates construction to be complete at the end of Q4 2011. The Company plans to move its fabrication unit from the existing facility to the new building shortly after construction is complete. The construction of a secondary location for fabrication was imperative as it will allow the Company to continue manufacturing processors without interrupting operations and fuel production going forward. The Company has worked diligently to obtain all permits necessary to allow the commencement of commercial operations at this facility and all required permits have been obtained. The expansion of this facility represents an advancement in the Company’s manufacturing capability, and reduces impediments for commercial operations and fuel production while supporting its plan for long term growth.

Permits

On June 17, 2011 the Company obtained an Air State Facility permit and a Solid Waste Management permit from the New York State Department of Environmental Conservation (NYSDEC) to operate three P2O processors at its Niagara Falls, NY facility. In addition, after extensive preparation and numerous site visits by the Canadian Technical Standard and Safety Authority, the Company received its Bulk Fuel Blending License on October 13, 2011. This permit will enable the Company to dye, blend and ship both industrial and transportation grade fuel from its 250,000 gallon fuel blending facility in Canada.

In accordance with NYSDEC air permit regulations, the P2O processor must undergo a second stack test within 6 months of the initial permit issuance. This second stack test has been tentatively scheduled for December 2011 and is to be conducted by Conestoga-Rovers and Associates (CRA). Management does not foresee any problems arising and anticipates lower emissions results in comparison to the first stack test. Due to the addition of the premelt system, the Plastic2Oil processor will be stack tested at a higher feed rate.

Priorities

The Company focused resources in Q3 on finalizing and completing the construction of the premelt system, ordering components for and fabricating processors #2 and #3, and initializing site preparation for the rollout of processors at the first RockTenn site. The premelt system is now complete. In addition to these priorities the Company also continues to develop long term relationships with multiple feedstock sources as well as negotiating and finalizing large fuel supply agreements. The Company expects to finalize fuel supply agreements as soon as anticipated fuel demand from prospective customers can reasonably be met. Management’s highest priority continues to be bringing processor #2 and #3 online so the Company can become cash flow positive.

Patents

Shortly after completing the backend refining of the plastic2oil processor, the company sought protection of its intellectual property for its plastic2oil process by filing for international patent protection. The Company's management is working with its IP council at Osler and anticipates filing more applications in the near future for various aspects of the plastic2oil process. The Company has filed confidential patent applications with the USPTO to protect its intellectual property.

Present Status

The Company continues to strategically build the foundation for its Plastic2Oil business that it expects will create long-term value and a profitable business. The completion of the premelt was critical to the efficiency of commercial operations and expansion to third party locations. The Company continues to be successful in securing free sources of feedstock supply for the processing plant, both independently and through its recycling facility that accepts, separates and processes paper, plastics and other materials. The Company has also constructed tank containment in New York, which added 49,000 gallons of on-site fuel storage in addition to the 250,000 gallon fuel blending site in Canada. This extra storage will support growing operations and fuel transport flexibility in Niagara Falls, NY.

On July 29, 2011, the Company entered into a Revenue Sharing Agreement with RockTenn to convert mill and MRF waste plastic into fuel using JBI’s Plastic2Oil technology. Prior to executing the Revenue Sharing Agreement and Addendum for the first site, JBI visited numerous RockTenn sites to plan installation priorities. The Company has been meeting regularly with RockTenn representatives in order to prepare for the first installation of processors on their site. The Company met with environmental authorities in the state where the first processors are being placed. Due to the ultra-low emissions from the Company’s P2O processor, the Company sought a permit exemption. During September 2011, the Company proposed and submitted an application for exemption and met with several of the State’s environmental engineers. The Company also presented before the environmental committee composed of citizens, environmental engineers, and permit engineers. The Company has retained contractors to install services on site at the first RockTenn location. The site has an existing pad and small building already in place, which will be used for P2O operations. In preparation for the construction of the first processors, the Company has hired and trained new operators and fabricators in Niagara for future relocation to this initial RockTenn site.

The Company expects to have the kilns from fabrication shops for processor #2 and #3 in Niagara Falls, NY by the time the final stack test is conducted in December 2011. Catalyst towers, heavy fuel, naptha and natural gas towers for both of these new machines have already been constructed.

Processor Enhancement

Q1: The Company’s CEO designed further enhancements to the P2O processor in early 2011, including two columns supporting 4 catalyst trays. In addition, he added significant technology to guarantee fuel quality, along with installing an inline fuel additive injection system on both heavy and light fuel condensing systems. He has also engineered a hot-tap residue removal process. Quality control includes two columns for control and specificity of fuel fractions, a cyclone (particulate removal in vapor), fuel filters (particulate removal in liquid), and a centrifuge (additional redundant particulate trap), as well as column enhancements to guarantee particulate free fuel. Fuel additives are injected inline while fuel is being produced to increase their effectiveness. The new residue removal system works while the processor is running, so the reactor does not have to be cooled down or stopped to remove residue.

Q2: During the second quarter of 2011, the Company built a fully equipped fuel testing laboratory at the Niagara Falls, NY site to facilitate instant certification of fuel products. The P2O processor is capable of producing #6 fuel, #2 fuel, diesel, and light naphtha. The Plastic2Oil processor has been tuned to reduce naphtha production to less than 2% because the market price for naphtha is significantly less compared to #2 or #6 fuel and therefore the Company does not intend to make Naptha contracts a priority. The Company’s management has invested much time, testing, and production efforts towards large companies to execute significant contracts such as RockTenn. During the first quarter of 2011 the processor was primarily used to test feedstock from large sources of free waste plastic in order to pass "Cradle to Grave" audits from feedstock to end user fuel. During the second quarter of 2011 the Company designed and engineered a premelt loader for the Plastic2Oil processor to eliminate handling, shredding, and bagging of waste plastic. During the modularization of the processor, the CEO was able to eliminate the off gas compression system in favor of a simplified low-cost off gas handling rack (4’ x 4’ x 4’) for better control and at 1/5 of the cost. The cost savings through modularization has been used to offset the cost of the premelt loader.

Q3: The Company successfully designed, engineered and fabricated a plastic premelt system. The premelt system is now capable of accepting mixed, un-shredded plastics in addition to plastics that are comingled with various metals. The premelt system operates from the waste heat of the original P2O reactor system and has the ability to separate the comingled metals from the plastic. This capability became especially critical for processing RockTenn material such as raggertail, as well as other large bales of compacted plastic. The raggertail was demonstrated to be successfully processed during a visit by RockTenn representatives and will significantly increase process efficiency at RockTenn sites, as well as alleviating a great deal of sorting efforts from many of the Company’s current and future plastic feedstock suppliers. In addition to the completion of the premelt system, the Company further enhanced the New York processor by installing Low Nox (Nitrogen Oxide) burners. This addition will further reduce emissions and was important when seeking permit exemptions in other States. This improvement enabled the Company to seek an air permit exemption in another State, eliminating many months of extra work and cost.

Agreements

On June 10, 2011, JBI, Inc. entered into a Supply and Service Agreement with Coco Asphalt Engineering, a division of Coco Paving whereby the Company has agreed to supply Coco on a weekly per demand basis with petroleum distillate at a cost of $109.80 per barrel. The Company continues to ship tankers of petroleum distillate to Coco Paving in third quarter at $109.80 per barrel. Coco Paving has stated it is pleased with our Plastic2Oil fuel.

On July 29, 2011, the Company entered into a Revenue Sharing Agreement with Rock-Tenn Company (RockTenn) to convert mill by-product waste into fuel using JBI's Plastic2Oil technology. Under the agreement, JBI, Inc. has an exclusive ten-year license with a renewal option to build and operate P2O processors at RockTenn facilities to process RockTenn's waste plastic at paper mills and Material Recovery Facilities and to mine and process plastic from RockTenn's plastic-filled monofill sites.

Processor Production

The Company has contracted two fabrication shops to manufacture the reactors and towers in racks. The Company has also ordered a prefab building for its P2O factory property for fabricating proprietary and trade secret components for the racks. The racks have been standardized to limit the number of parts and vendors in the supply chain that the Company must depend upon. Transient delays in Q3 were related to supplier companies being bought out, moving, or ceasing operations. The Plastic2Oil processor system is now 10’ wide by 120’ long. On November 15, 2011, the Company was granted Honeywell Maxon OEM (Original Equipment Manufacturer) status. This certification will allow the Company to order and receive key processor parts on a priority basis. It is anticipated that this will save the Company significant time and money moving forward.

Expanding Plastic2Oil Factory in Niagara Falls, NY

Due to the inability to negotiate mutually beneficial sales terms, The Company did not purchase the machine shop it set out to acquire in Q2. Alternatively, the Company is constructing a 7200 square foot building on its existing Niagara Falls, NY property. This building will house the Company’s fabrication operations. The new building will allow the Company to fabricate and assemble processors without disrupting processor operations and fuel production.

Free Plastic

The Company receives free waste plastic for our Plastic2Oil processor(s) from Chrysler, General Motors, major food packagers, dairy companies, agricultural plastics, and many other sources. The company is recycling thousands of gas tanks, bales of plastic film and many other free plastics that are usually sent to landfill. The Company does not pay for any plastic. None of the plastic that the Company has received to date at the P2O factory has required sorting. The Company continues to receive large supplies of plastic feedstock at both its Niagara Falls, NY and Thorold, Ontario facilities, and retains a significant backlog of feedstock. The Company anticipates continuous processing of this supply upon completion of the second stack test and assembly of processors #2 and #3.

In August 2011, China implemented regulations that greatly limit waste plastic importing. The regulation strictly limits waste import licenses and the waste plastic product must be used as a raw material in a new product. This regulation was implemented to curb pollution caused by burning waste plastics. As of November 2011, the regulation was tested and enforced in Guangzhou province and it successfully resulted in reducing waste plastic imports by 80%. China warns that strict enforcement of the new regulations will soon be extended to the entire country. The Company expects this regulation to be very beneficial in securing long term feedstock supply.

Javaco Business

Javaco, which the Company acquired in 2009, distributes over 100 lines of equipment used in the telecommunications industry and operates out of its facility in Columbus, Ohio. Aside from operating Javaco, management had intended to utilize Javaco’s expertise to launch P2O processing sites in Mexico and South America if the Company had encountered construction and/or permitting difficulties in establishing a P2O processing site at the New York Facility. With the prospect of these difficulties now eliminated the focus will return to streamlining the operations of Javaco with a view to enhanced profitability.

The Company uncovered inefficiencies in Javaco’s operations and consolidated the workforce at this subsidiary in order to reduce liabilities and improve working capital turnover. Javaco has shifted its focus towards higher profit margin sales, and the Company is identifying these customers and tailoring an integrated sales approach that we expect to improve this subsidiary’s earnings although it has resulted in sales reduction in the shorter term.

Corporate

In 2009, the Company purchased the Data business from John Bordynuik, Inc., thereby providing the Company with the ability to operate what was once John Bordynuik, Inc.’s data restoration and recovery business, a business originally developed by John Bordynuik in 2006.

The Data Business is not as financially intensive as the other businesses of JBI, but is time consuming with regards to the allocation of the time of John Bordynuik, the President and CEO. However, the Company continues to maintain operations of this business segment and has received several thousand tapes for reading and data preservation. The Company expects to be generating revenue from the Data Business segment in future periods.

Discontinued operation - Pak-it Business

In 2009, the Company acquired 100% of the membership interests of Pak-it, which manufactures cleaning chemicals, and owns a patent that allows for the delivery of cleaning chemicals in a water-soluble film package used mainly in institutional and industrial cleaning operations. Pak-it operates out of a leased manufacturing facility in Philadelphia, Pennsylvania.

The acquisition of Pak-it was primarily driven by the Company’s desire to access Pak-it’s unique patents, and the fact that the Company could potentially utilize Pak-it’s chemical expertise to produce the proprietary P2O catalyst in-house. Secondarily, the Company believed Pak-it was undervalued due to inefficient internal controls and operating procedures arising from an outdated and inadequate accounting system, various ineffective production processes, and an over extended product line. Pak-it’s R&D department continues to support Plastic2Oil by developing and testing fuel additives, optimizations, and other research support in the process.

Following the acquisition, the Company analyzed Pak-it’s operations and began a focus on restructuring Pak-it’s internal controls and procedures. Several operational policies were changed or implemented to increase production efficiencies and reduce costs including; product line consolidation, standardized packaging, revised sales policies and product pricing, and a restructuring of the workforce. Accounting procedures needed an upgrade in order for Pak-it to increase production capacity, but they were also necessary for the Company to efficiently meet its financial reporting obligations.

Despite these measures actual and anticipated revenue and profitability performance at Pak-it failed to meet expectations and the Company determined that a selective divesture of Pak-it’s assets was warranted in order to focus on its P2O segment. During the second quarter, sale criteria in respect of certain assets of Pak-it was developed and active marketing commenced to sell these assets.

The table below summarizes the carrying amounts relating to the assets of Pak-it at September 30, 2011 as compared to the balances at December 31, 2010.

	September 30,		December 31,
	2011		2010

Inventory, net of reserve	$	481,543	$	530,533
Property, plant and equipment, net		243,145		266,554
Intangible assets, net		304,539		1,993,205

Net assets held for sale	$	1,029,227	$	2,790,292

The results of operations from these assets have been reclassified and presented as results of discontinued operations for all periods presented in these interim consolidated financial statements. Our condensed statements of income from discontinued operations related to Pak-it for the three and nine months ended September 30, 2011 and 2010 are as follows:

Condensed Statements of Operations

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010

Revenues	$	308,311		$	1,794,934		$	2,935,342		$	5,069,027

Cost of sales		485,717			1,370,530			2,561,345			4,217,540
Gross profit		(177,406	)		424,404			373,997			851,487
Operating expenses		240,618			929,582			1,132,868			2,660,641
Impairment of intangibles		-			-			1,900,000			-
Other income		40,407			19,735			77,407			60,667
Loss before income taxes		(377,617	)		(485,443	)		(2,581,464	)		(1,748,487	)
Future income tax recovery		-			(262,853	)		(128,553	)		(629,643)

Loss from discontinued operations, net of taxes	$	(377,617	)	$	(222,590	)	$	(2,452,911	)	$	(1,118,844	)

Results of Continuing Operations

Three and Nine month period ended September 30, 2011 compared to September 30, 2010

Three Months Ended September 30, Nine months Ended September 30.
	2011			2010			2011			2010
Sales	$	791,995		$	1,492,125		$	1,941,806		$	5,583,205
Cost of sales		491,857			1,285,849			1,417,436			4,880,086
Gross margin		300,138			206,276			524,370			703,119
Selling, general and administrative expenses		3,125,686			1,438,659			9,468,254			6,037,064
Depreciation of property, plant and equipment		105,007			99,327			274,610			222,627
Amortization of intangible assets		-			28,010			27,781			83,116
Research and development expenses		390,350			-			896,836			-
Impairment loss		-			-			354,870			-
Total Operating Expenses		3,621,043			1,565,996			11,022,351			6,342,807
Loss from operations		(3,320,905	)		(1,359,720	)		(10,497,981	)		(5,639,688	)
Other income (net)		(20,893	)		7,816			(32,412	)		6,201
Loss from continuing operations before income taxes		(3,341,798	)		(1,367,536	)		(10,530,393			(5,645,889	)
Future income tax recovery		-			47,397			-			(13,506	)
Loss from discontinued operations, net of income taxes		(377,617			(222,590	)		(2,452,911	)		(1,118,844	)
Net loss	$	(3,719,415	)	$	(1,637,523	)	$	(12,983,304	)	$	(6,751,227	)

For the nine month period ended September 30, 2011 we have reported revenues in the amount of $1,941,806 and a loss from continuing operations of $10,530,393. During the comparable period one year earlier our revenues amounted to $5,583,205 with a net loss from continuing operations of $5,632,383, following restatement. The net loss from continuing operations for the nine month period ended September 30, 2010 has been restated to include $83,116 in amortization of intangible assets and a future income tax recovery of $13,506 The amounts previously reported as amortization expense and future income tax recovery for that period were $Nil. As a result of this restatement the net loss for the nine month period ended September 30, 2010 is $69,610 more than we previously reported.

At December 31, 2010, the Company restated all amounts related to our 2009 acquisitions of the Javaco and Pak-it business segments. These restatements were done to adjust the allocation of the purchase prices paid in accordance with an independent valuation of the assets of the companies acquired. As a result of these restatements the value associated with intangible assets increased and, by extension, the amortization of those assets for the year ended December 31, 2010 was amended. The recognition of the intangible assets at the date of acquisition also gave rise to the recognition of a future income tax expense and asset for the 2009 fiscal year and a recovery of a portion of this asset in 2010. The comparative amounts presented in the September 30, 2011 interim condensed consolidated financial statements have been amended to include the pro-rata share of this adjustment to amortization and the appropriate amount of future income tax recovery. Full disclosure as to the nature and description of this restatement were included in the Form 10-K report that the Company as amended and filed with the Commission on July 18, 2011.

Revenue Sources

The Company currently derives revenues from three defined and active business segments: (1) Javaco; through the sale and distribution of electronic components; (2) P2O: through revenues derived from the sale of fuel outputs and processing and recycling of waste materials; and (3) Corporate: through data recovery and migration services Revenues for each period are summarized as follows:

	Three Months Ended September 30,				Nine months Ended September 30.
	2011		2010		2011		2010
Javaco	$	651,443	$	1,482,646	$	1,681,928	$	5,536,741
P2O/ Other		140,552		-		221,653		-
Corporate		-		9,479		38,225		46,464

	$	791,995	$	1,492,125	$	1,941,806	$	5,583,205

For the three months ended September 30, 2011, Javaco revenues declined $831,203 (56%) from the same quarter in the prior year. For the nine months ended September 30, 2011, Javaco revenues declined $3,854,813 (70%) from the same period in 2010. These revenue declines reflect:

a)	Loss of significant customer volumes following the Company’s termination of employment of the prior owner of Javaco during the third quarter of 2010;
b)	Realignment of sales activity to eliminate revenues not considered to have adequate profit contributions

For the nine month period ended September 30, 2011, revenues of P20 include fuel sales from the conversion of waste plastic at the Niagara Falls, New York facility of $132,957 and revenue from the sale of processed waste product (primarily paper fibre) of $88,696. These sales in the three month period then ended amounted to$85,477 for fuel and $55,075 for processed waste product. There were no similar sales during the comparable periods ended September 30, 2010.

Corporate revenues for the nine month period ended September 30, 2011 amounted to $38,225 arising from tape reading, representing a decline of $8,239 in comparison to the nine months ended September 30, 2010. There were no corporate revenues earned during the three month period ended September 30, 2011 while $9,479 was earned during the similar period in 2010. Tape reading is currently done when and if time permits as the operating focus remains on P2O operations.

Cost of Sales

Cost of Sales consist primarily of raw materials related to delivery of fuel, dying and blending, scenting of the fuel (to smell green at the request of customers), and processed recycled waste products, the cost of the products and direct labor associated with the sale of finished goods by Javaco and material input costs associated with Corporate (i.e. Data) services. The Company does not pay for any waste plastic for the Plastic2Oil process. These costs are summarized as follows for the three and nine month periods ended September 30:

	Three Months Ended September 30,				Nine months Ended September 30.
	2011		2010		2011		2010
Javaco	$	468,847	$	1,281,407	$	1,366,897	$	4,848,145
P2O		23,010		-		50,539		-
Corporate		-		4,442		-		31,941

	$	491,857	$	1,285,849	$	1,417,436	$	4,880,086

Gross Profit

The gross profit, by business segment, is as follows:

	Three Months Ended September 30,				Nine months Ended September 30.
	2011		2010		2011		2010
Javaco	$	182,596	$	201,239	$	315,031	$	688,596
P2O		117,542		-		171,114		-
Corporate		-		5,037		38,225		14,523

	$	300,138	$	206,276	$	524,370	$	703,119

For the three months ended September 30, 2011 Javaco gross margin performance was 28.0% compared to 13.6% for the prior year. The prior year’s quarter margin was reduced by a high mix of low margin international sales while the current period margin reflects a reduction in the inventory allowance recorded as a result of the sale of certain items previously allowed for. For the nine months ended September 30, 2011, Javaco gross margin performance was approximately 18.7% compared to approximately 12.4% in the prior year. While the improved gross margin percentage in comparison to the prior year is encouraging significant revenue growth at Javaco is still required in order to generate satisfactory operating results.

For the three and nine month period ending September 30, 2011, P2O gross margin performance was approximately 83.6% and 77.2% respectively (2010: N/A). The Company continues to refine and enhance the capacity and capabilities of the fuel processing plant at the Niagara Falls, NY Plastic2Oil facility and is in process of assembling additional processing plants which will further increase capacity. In addition, following the end of the quarter, the Company became able to dye its own fuel thereby eliminating the need to blend or have 3rd parties perform this service. These changes, in combination with a declining number of test runs required for base-lining emission and other fuel standards tests are expected to result in continuous performance and enhanced throughput.

The limited work conducted by the Data segment in 2011 has been very specialized. The only items consumed during this process were Data supplies previously written down due to the decline in this revenue stream and accordingly the gross margin is equivalent to revenues. During the three and nine month periods ended September 30, 2010 the Company realized margins of 53.1% and 31.3% respectively with the three month figure reflecting the impact of the aforementioned write-down. Although demand remains for these services, the operation of the Data segment in future periods is expected to be both limited and inconsistent as the Company’s resources remain focused on the growth of the P2O business segment.

Operating Expenses from Continuing Operations

Operating expenses amounted to $11,022,351 for the nine month period ended September 30, 2011 compared to $6,342,807 for the same period in the prior year. These expenses are comprised of the following elements:

	Three Months Ended September 30,				Nine months Ended September 30.
	2011		2010		2011		2010
Selling, general & administrative expenses	$	3,125,686	$	1,438,659	$	9,468,254	$	6,037,064
Depreciation of property, plant and equipment		105,007		99,327		274,610		222,627
Amortization of intangible assets		-		28,010		27,781		83,116
Research and development expenses		390,350		-		896,836		-
Impairment loss		-		-		354,870		-


	$	3,621,043	$	1,565,996	$	11,022,351	$	6,342,807

Selling, general and administrative (“SG&A”) expenses consist primarily of personnel-related costs, legal costs, accounting costs and other professional, regulatory and administrative costs. The total SG&A expenses incurred during the three and nine month periods ended September 30, 2011 were $3,125,686 and $9,468,254 respectively. The costs for the quarter are $1,687,027greater, and the nine-month figure is $3,431,190 more, than was incurred during the corresponding periods ended September 30, 2010. The largest single element of SG&A in each period is compensation costs that were paid through the issuance of the Company’s shares. The total at September 30, 2011 was $4,541,393 including $1,620,875 which arose in the third quarter. During the nine month period ended September 30, 2010 these compensation costs were $3,314,609 with only $301,589 having been incurred in the final three months. It is anticipated that the company will continue to utilize its shares as a means of compensating parties for services rendered. Professional fees, which include legal, audit and consulting fees related to accounting, legal and financial advisory services are the second most significant element of SG&A and they continue to rise as a result of additional audit and legal services required in connection with the Company’s statutory financial reporting and current legal proceedings. (See Part II – Item 1 “Legal Proceedings “).

Depreciation and amortization costs are determined on a consistent basis for each of the periods with no revision to any estimated useful lives of the property, plant and equipment or the intangible assets to which these charges relate. The depreciation charges recognized in the three and nine month periods ended September 30, 2011 exceed the amounts for the corresponding periods of the prior year as a consequence of increased investment in property, plant and equipment.

Research and development expenses of $391,350 and $896,836 for the three and nine month periods ended September 30, 2011 relate primarily to the continuing development and refinement of the P2O process. Although the Company is embarking upon commercial operation of this business segment, enhancements to the process will continue to be investigated as opportunities arise.

During the first quarter of 2011, an assessment was done of the carrying value of the intangible assets of the Javaco business and it was determined that they had become impaired. This assessment was prompted by a reduction in revenues that exceeded the estimates made when a similar valuation was completed at December 31, 2010. The impairment of $354,870 that was recognized reduces the carrying value of these intangible assets to $Nil at September 30, 2011

Stock-Based Compensation

The Company periodically issues shares of common stock for services rendered or in settlement of other amounts. Such shares are valued based on the market price on the transaction date.

The Company intends 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 21, 2011.

Liquidity and Capital Resources

As of September 30, 2011 the Company had cash and cash equivalents of $2,407,638 on hand. The Company does not currently have a formal cash management policy in place but continues to investigate the potential for implementing one to manage future cash flow.

The Company’s increase in cash from continuing operations in relation to the preceding fiscal year end for the comparative nine month periods ended September 30 can be summarized as follows:

	2011			2010
Net loss from continuing operations	$	(10,530,393	)	$	(5,632,383	)
Items not affecting cash		5,030,572			3,639,216
Working capital changes		463,227			(448,949	)
Investing activities		(1,270,489	)		1,253,327
Financing activities		8,298,854			2,911,256
Increase in cash from continuing operations	$	1,991,771		$	1,722,467

In each of the periods the Company had significant charges included in the reported Net Loss that had no effect on cash flows. In both periods, these charges included depreciation of property, plant and equipment, amortization of intangible assets, allowances for uncollectible amounts, and stock issued for services. In addition, during the current period, the Company incurred net foreign exchange losses related to debts denominated in a foreign currency and an impairment charge related to intangible assets with no corresponding amounts having arisen in the prior year.

Investing activities for the current period include the Company’s investment in property, plant and equipment for its P2O business amounting to $1,910,950, of which $1,614,973 was funded in cash. The Company expects to continue to make significant investment in property, plant and equipment in future periods.

Financing activities represent the cash received upon the issuance of common shares during the period. We expect to rely upon funds raised from private placements, as well as future equity and debt offerings to implement our growth plan and meet our liquidity needs in future.

As at September 30, 2011, the Company reported net working capital of $1,913,880, of which $1,029,227 pertains to Pak-it assets held for sale. By comparison, at December 31, 2010 the Company had net working capital of $2,815,541, of which $2,970,292 pertained to Pak-it assets held for sale.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Transactions with Related parties:

On December 14, 2010 the Company entered into a short-term loan agreement with an existing shareholder in the amount of $35,000. This loan was settled with the issuance of common stock during the period.

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.

Estimates

Accounts Receivable

Intangible Assets

Intangible assets consist of customer related, marketing related and technology related intangible assets.

The Company continually evaluates the remaining estimated useful life of its intangible assets being amortized to determine whether events and circumstances warrant a revision to the remaining period of amortization.

Intangible assets are amortized on a straight-line basis over their estimated useful life of 8 to 10 years. Amortization expense for the nine month periods ended, September 30, 2011 and 2010 was $27,781 and $83,116, respectively. Amortization expense for the three month periods ended, September 30, 2011 and 2010 was $Nil and $28,010, respectively.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, cash held in attorney trust, restricted cash, accounts receivable, accounts payable, accrued expenses, notes payable, mortgage payable and short-term loans approximate fair value because of the short-term nature of these items. Per ASC Topic 820 framework these, except for cash and cash equivalents, are considered Level 2 inputs where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. Cash and cash equivalents are considered Level 1 inputs.

Discontinued Operations

Assets Held for Sale

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Not required for a Smaller Reporting Company

Item 4.

Controls and Procedures

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 the effectiveness of our disclosure controls and procedures, (as defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act)) as of the period ended September 30, 2011. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are ineffective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure..

We have taken numerous steps to address the underlying causes of the internal control deficiencies, primarily through the development and implementation of policies, improved processes and documented procedures, the retention of third-party experts and contractors, and the hiring of additional accounting personnel with technical accounting and inventory accounting experience.

Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

During the 2010 fiscal year, the Company’s former consultants and an executive officer claimed money owed to them for consulting work performed in fiscal 2010. The Company entered into a settlement agreement on February 28, 2011 to pay the consultants and the former executive officer the sum of $312,500. The Company paid $200,000 immediately in cash and issued a note payable for the remaining settlement amount of $112,500. The amount remaining under this note was further reduced to $37,500 as at September 30, 2011.

In August 2010, a former employee filed a complaint against the Company’s subsidiary alleging wrongful dismissal and seeking compensatory damages. The Company denied the validity of the contract which was signed by the former employee as employee and as president of the subsidiary. The Company entered into negotiations with the former employee to trade-off some of the benefits of the alleged employment agreement in return for repayment of debts to the Company incurred by the former employee while in the employment of the Company’s subsidiary. At December 31, 2010 the debt in the amount of $346,386 was written off and an estimated settlement of $26,000 was accrued. During the period the Company received $75,000 in cash and $10,973 in inventory returns relative to the debt previously written off.

In September 2010, an investor filed a lawsuit against the Company for failure to timely remove restrictive legends from his shares in the Company. The outcome of this claim is not determinable at the time of issue of the interim condensed consolidated financial statements and the costs, if any, will be charged to income in the period(s) in which they are reasonably determinable. This investor has filed other prior lawsuits against the Company however they were dismissed.

In March 2011, a former employee filed a complaint against the Company and its subsidiaries alleging wrongful dismissal and seeking compensatory damages. The outcome of this claim is not determinable at the time of issue of these consolidated financial statements and the costs, if any, will be charged to income in the period(s) in which they are reasonably determinable.

On July 14, 2011, the Securities and Exchange Commission's (SEC) Division of Enforcement issued a "Wells Notice" to the Company indicating that the staff intended to recommend that the SEC file a civil lawsuit alleging that the Company violated certain provisions of the federal securities laws. Based on communications with the SEC`s Enforcement staff, the Company believes that the proposed lawsuit relates to the Company's restated financial statements for the third quarter of 2009, which were included in its Form 10-Q filed on November 16, 2009 and its financial statements for the year ended December 31, 2009, which were included in its 2009 Form 10-K filed on March 31, 2010. The restatement concerned the Company's valuation of media credits, accounting for certain acquisitions, and equity issuances. The Company believes that the staff may also recommend naming one or more current and former officers of the Company as defendants in the proposed lawsuit. Subsequent to receipt of the “Wells Notice”, there have been a number of announcements in respect of individual class action law suits against the Company that are pending and that have been lodged. The Company cannot predict the outcome of the dispute with the SEC or any separate class action litigation which may result, including whether a lawsuit will be filed or the terms of any settlement that may be reached. The Company has been given an opportunity to respond to the Wells Notice, and will decide how to proceed based on consultation with its litigation counsel. The Company does not anticipate that the notice will negatively impact its business operations.

Item 1A. Risk Factors

The following risk factor along with the risk factors disclosed in our Form 10-K should be considered in evaluating our businesses and future prospects. These risk factors represent what we believe to be the known material risk factors with respect to our business and the Company. Our business, operating results, cash flows and financial condition are subject to these risks and uncertainties, any of which could cause actual results to vary materially from recent results or from anticipated future results.

Substantial legal liability or significant regulatory action against JBI could have material adverse financial effects or cause significant reputational harm to JBI, which in turn could seriously harm our business prospects.

We face significant legal risks in our businesses, and claims damages and penalties in litigation and regulatory proceedings. See “Legal Proceedings” in Part II, Item 1 of this Quarterly Report on Form 10-Q for a discussion of certain legal proceedings in which we are involved.

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

Such securities were not registered under the Securities Act. The issuance of these securities was exempt from registration under the safe harbor provided by Section 4(2) of the Securities Act.

On July 28, 2011, the Company issued 1,228,857 shares of common stock to various parties as a finders’ fee related to the confidential private placements consummated in June 2011.

The offering and issuance of shares to the investors was an unregistered sale of securities conducted pursuant to Rule 506 of Regulation D or Regulation S promulgated thereunder. Such securities were not registered under the Securities Act of 1933.

Such securities were not registered under the Securities Act. The issuance of these securities was exempt from registration under the safe harbor provided by Section 4(2) of the Securities Act.

In August 2011 the board of directors authorized the issue of shares of common stock to certain directors as payment of directors’ fees. The shares are to be issued in two lots with each lot having an aggregate value of $35,000. The number of shares to be issued in the first lot was determined based upon the closing market price on the approval date of August 1, 2011 and resulted in the issuance of 19,444 common shares on September 30, 2011. The number of shares to be issued in the second lot will be determined based upon the closing market price on December 31, 2011. The expense of $35,000 related to the first payment was reported as operating expenses in the statement of operations. No provision has been made relative to the second lot as they represent payment for future services.

Such securities were not registered under the Securities Act. The issuance of these securities was exempt from registration under the safe harbor provided by Section 4(2) of the Securities Act.

Item 3.

Defaults Upon Senior Securities

None

Item 4.

(Removed and Reserved)

Item 5.

Other Information

None

Item 6.

Exhibits

(a) Exhibits

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 Extension 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.

*Furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise not subject to liability under these sections.

In accordance with SEC release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed

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 21, 2011	By:	/s/ John Bordynuik
		Name: John Bordynuik
		Title: President and Chief Executive Officer (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)