"Techisbest" shares his thoughts on JBII

"Techisbest", another iHub poster, shares his thoughts to new and prospective investors on JBII as an investment.

Posted by: techisbest Date: Friday, January 08, 2010 8:41:08 AM

New JBII investors...

I'm writing this as much for myself as I am for you. I think that is true for anybody posting here - we all want to reinforce our current thinking.

I've been following JBII since before the recent run up from the $1.10 range. I had a small position at that time because this story definitely has a "too good to be true" feel to it. And the company had just increased the number of authorized shares setting off alarm bells in my mind. The synergies of all the various entities that made up the new JBII didn't completely make sense and the P2O process only worked as a prototype with the CEO, John Bordynuik, saying that he has complete confidence it will work on a commercial level.

As usual, I underestimated the strength of a stock that has a great story and a lot of new believers. The move up started after John Bordynuik's interview on the Wall Street Reporter. I still think a lot new investors confuse the Wall Street Reporter with the Wall Street Journal, giving more weight to that interview than it probably deserved.

But it was a great interview demonstrating the capabilities of John Bordynuik as a leader. He clearly stated his goals and what he was doing to achieve those goals.

Enough people/institutions(?) listened to the Wall Street Reporter penny stock/small cap report to make a decision to take a position. I got out too soon. I got back in when it was higher with a still small, but larger position. I took some off the table when it was near its high and put those funds back in with a GTC order that executed near its recent low (I do have a credible witness who can attest to that). Now my position is the biggest it has been. But certainly no where big as those who have believed, either in the story of the company or the stock's ability to outperform, and took the big gamble early (some much earlier than when it was above a dollar).

So here the stock sits, nearly 7x its price from only a month ago. If I did not already have a winning position I would be wary of starting a position after such a move and given the fact that the home run piece of the puzzle, P2O, remains unverified by an independent third party.

BUT (this is the BIG BUT)...

The behavior of John Bordynuik is unlike anything I have seen in the penny stock world, or even the general stock market. And it is this behavior that has led to the strength of JBII, the stock, even as it has reached these levels.

Here are the behaviors that should not be overlooked:

1) When the company increased its number of authorized shares from 75 million to 150 million, John Bordynuik returned 22 million of his shares to the treasury in exchange for 1,000,000 preferred shares with super voting rights to retain control of the company. He also stated that those authorized shares would only be used for acquisitions that would be accretive to earnings. At this point there are only about 47 million shares outstanding and 13.5 million in the float. This small number of shares in the float, held in the hands of a lot of believers, is largely responsible for the strength of the stock.

2) John has used his own wealth to position the company where it is today. And he is only taking $1/year in salary and will only profit from JBII if the company is successful. He has taken a huge risk with his own money. The company is not indebted to VC's or the like for getting to its current state.

3) Another example of John using his own money to better position the company came recently when he eliminated all debt. JBII is now debt free.

4) John's track record for executing on his goals has been outstanding to date. The clearest statement of his longer-term goals for JBII, specifically P2O, can be read at this link:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45155102

The message was delivered via his Facebook page. John has taken some heat (including from me) for using Facebook as a vehicle to deliver some of his messages. He has not crossed the line by providing material information in that forum. I think he has skated close to that line a few times. John considers his statements on FB part of his policy of transparency, as well as an opportunity to address misinformation about the company.


A lot of numbers have been thrown around about potential revenues based on joint ventures and the assumed throughput of the P2O processors. The numbers are huge. Even the more conservative numbers are huge. Those saying that JBII is cheap at this price are basing that on the potential. Here's a link to some of those numbers:

http://lighthousenova.com/0JBIIPriceMatrix.xls

As I have stated multiple times, I can not be totally convinced of the legitimacy of JBII until P2O is proven in a way that shareholders can verify the process. The best verification will always be revenues generated, but if an independent third party is able to state unequivocally that the processor works as has been stated by the company, then the market will not wait for revenues.

The price may pull back from here if the P2O process takes a long time to be verified. If the focus is removed from P2O and the emphasis is placed on marketing the PakIt products (a necessary ingredient for moving P2O forward?), I'm not convinced that the shareholders will remain as enthused. Does PakIt have a chance to be successful? Perhaps, but the cleaning products space is huge and it will take a flawless marketing campaign to break into that space in a significant way.

So big risks and big rewards are the name of this game. You either believe in John Bordynuik's word and his ability to deliver on the potential or you don't.

It is his word, and prior actions, that places this one in the "glass half full" category. There are a lot of "interesting" penny stock stories. This is the most interesting one I have found due to how the CEO has treated his shareholders. No debt and a small float. The market cap (300-400 million) is big for a company reporting limited revenues to date.

But it's all about the potential. You will have to decide how much you are willing to risk given what is known about the company.
Techisbest