Rawnoc analyzes JBII's "smart" acquisitions

Look at Javaco as their investment in the JBII P2O IPO.

JBII was an empty shell this time 1 year ago. It had no assets. No operations. Nothing.

Around 1 year ago it acquired the assets of the tape biz and the P2O operations which were completely unfunded and incapable of getting off the ground without funding.

Javaco and and PAK-IT agreed to "sell" themselves in exchange for a small piece of P2O basically and some token cash. Because of these profitable operations and assets, it gave credibility to the business plan of P2O in the eyes of the market. Enough so that the market agreed to finance P2O and the acquisitions via a PIPE. That PIPE acted very similar to a P2O.

So was Javaco worth 2.5 million shares? It's kind of a chicken and an egg scenario. By acquiring these businesses first, they were able to raise millions of dollars and thus fund P2O with zero dilution. If P2O is wildly successful and some day goes to $100 per share then, of course, in hindsight Javaco will have been overpaid for being that the 2.5 million shares would then have cost JBII $250 million in hindsight. But if he didn't do it then P2O may not have happened. So which is it? I suppose John could have just the JBII shell and tried to a do a PIPE on the stock with zero assets and zero operations, but I don't think that would have worked out too well. He needed to reverse merge with some profitable businesses first no matter how small and unexciting just to have a real public company instead of a shell to present to raise money. I think he learned this strategy from his mergers and acquisitions course at Harvard. By doing this he didn't become a slave to private equity and he was able to raise millions of dollars and acquiring nicely profitable businesses while still maintaining complete and total control of the operation without having to answer to anybody. Pretty slick and smart whether P2O works out or not.

PAK-IT is a wild card with a lot of potential on its own, though I'm only betting on JBII for its P2O, I like the PAK-IT wild card and possible cash-generating business FOR P2O. Hell, with the market cap at only $60 million now it wouldn't even take much success by PAK-IT alone to justify a higher market cap of a couple more bucks per share. So maybe we'll go to $105 instead of just $100 :)

I think the point of the revenue-generating capability of the blending site was not the sales nor profits that it once had, but rather the level of volume it's capable of handling. That's what is key. That capacity. What's perhaps more meaningful would be to express it as a number of barrels of oil/fuel/gas rather than the dollar amount in a way a refinery's size is expressed based on its daily capacity/ability of barrels per day.

Raw