PLASTIC2OIL, INC. The following management's discussion and analysis (the"MD&A") of the results of operations of the Company should be read in conjunction with the consolidated financial statements of the Company, together with the accompanying notes, as well as other financial information included elsewhere in this Report. This discussion contains forward-looking statements that involve certain risks and uncertainties, and that reflect estimates and assumptions. See the section titled, "Cautionary Statement Regarding Forward-Looking Statements" for more information on forward-looking statements. Our actual results may differ materially from those indicated in forward- looking statements.
Business Overview
For the three and nine months ended
Plastic2Oil Business
Our P2O business has elements of both a recycling business and a fuel refiner/
production business, which makes it difficult to identify and make direct
comparisons to competitors. Both the recycling and energy sectors are
characterized by rapid technological change. Our future success will depend on
our ability to achieve and maintain a competitive position with respect to
technological advances in both of these sectors. We believe that our business
currently faces competition in the plastics-to-energy market, including
competition from PK Clean, Vadxx Energy,
We continue our business strategy with the goal of becoming a leading North American company that transforms waste plastic into ultra-clean, ultra-low sulphur fuel.
When in operation, we provide environmentally friendly solutions through our processors and technologies. Our primary offering is our Plastic2Oil®, or P2O®, solution, which is our proprietary process that converts waste plastic into fuel through a series of chemical reactions (our "P2O business"). We collect mainly mixed plastics from commercial and industrial enterprises that generate large amounts of waste plastic for use in our process.
Generally, this waste plastic would otherwise be sent to landfills and its
disposal potentially can be quite costly for companies. We use this waste
plastic as feedstock to produce Fuel Oil No. 2, Naphtha, and Fuel Oil No. 6 for
various uses by our customers. We own our P2O processors and have the capability
to produce and store the fuels at, and ship from, our facilities in
Our P2O processors have evolved to be modular solutions with the completion of processor #3 in 2013. We use third party contract manufacturers for the manufacture of many of the key modular components of our processors, including the kilns and distillation towers as well as certain other key components that require specialized machining and fabrication.
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Our P2O business is a proprietary process that converts waste plastic into fuel
through a series of chemical reactions. We began developing this process in 2009
and began very limited production in late 2010 following our receipt of a
consent order from the
Listing on the OTCQB
At
Sources of Revenues and Expenses
Results of Operations - Three months ended
Revenue
We had no revenues during the three months ended
We had no fuel production or processor sales in the three and nine months ended
The Company has recently entered into a Master Agreement and Purchase Order to provide several units and other services that is awaiting an initial deposit to commence work. The initial deposit is tied to final governmental approvals and contract awards that are currently working its way through the procurement cycle. There can be no assurance that these awards will be made and that the initial deposit due under the Master Agreement and Purchase Order will be honored.
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The Company's operating expenses consisted of the following:
Operating Expenses
For the Three Months Ended
September 30,
2019 2018
Professional Fees $ 18,309 $ 27,834
Compensation 104,370 104,446
General and administrative expenses 35,016 51,304
Depreciation and Accretion 7,373 87,663
Total Operating Expenses $ 165,068 $ 271,247 We incurred operating expenses of
Non-Operating Expenses Interest Expenses
For the three months ended
Income Tax Expenses
For the three months ended
Net Loss
As a result of the above, we incurred a net loss of approximately
Results of Operations - Nine months ended
Revenue
We had no revenues during the nine months ended
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The Company's operating expenses consisted of the following:
Operating Expenses
For the Nine Months Ended
September 30,
2019 2018
Professional Fees $ 87,324 $ 83,118
Compensation 318,221 359,231
General and administrative 117,433 181,252
Depreciation and Accretion 22,120 275,231
Total Operating Expenses $ 545,098 $ 898,832 We incurred operating expenses of
Non-Operating Expenses Interest Expenses
For the nine months ended
Income Tax Expenses.
For the nine months ended
Net Loss
As a result of the above, we incurred a net loss of approximately
Liquidity and Capital Resources
We do not have sufficient cash to operate our business, which has forced us to
suspend our operations until such time as we receive a capital infusion or cash
advances on the sale or license of our processors and or related technology. We
intend to source additional capital through the sale of our equity, debt
securities, and other financing methods. We plan to use the cash proceeds from
any financing to either complete the repairs on Processors #3 to resume
production of fuels for pilot runs and customer demonstrations and or review
other options including but not limited to licensing intellectual property and
or pursuing other operational alternatives that may become available to
management as we review the options available to the Company. At
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As discussed earlier in this MD&A, our processors are currently idle and, thus, we are not producing fuel or generating fuel sales or processor sales. Our current cash levels are not sufficient to enable us to make the required repairs to our processors or to execute our business strategy as described in this Report. As a result, we intend to seek significant additional capital through the sale of our equity and debt securities and other financing methods to enable us to make the repairs, to meet ongoing operating costs and reduce existing liabilities. We also intend to seek cash advances or deposits under any new processor sale agreements and/or related technology licenses. Management currently anticipates that the processors will remain idle until the company can raise additional capital. While management has recently secured additional debt financing to attempt to re-initiate the limited production of processing used fuel oils and plastic films, management cannot determine if it will be successful and or if additional capital will be required to be successful. Due to the many factors and uncertainties involved in capital markets transactions, there can be no assurance that we will raise sufficient capital to allow us to resume operations in 2019, or at all. In the interim, we anticipate that our level of operations will continue to be nominal, although we plan to continue to market our P2O processors with the intention of making P2O processor sales and technology licenses, along with attempting to restart fuel oil processing.
Our limited capital resources, lack of revenue and recurring losses from operations raise substantial doubt about our ability to continue as a going concern and may adversely affect our ability to raise additional capital. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
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